Shipments of computer systems and servers in the Gulf states are expected to grow an average of 16.3 percent annually in volume through 2008. According to a new IDC study, “Gulf States Commercial Systems and Servers 2004-2008 Forecast,” market value will rise a more modest 7.8 percent through 2008, as prices continue to fall. Nevertheless, IDC expects low-end volume servers to remain dominant in the price-sensitive markets of the Gulf.
E-government initiatives and economic diversification are helping to fuel IT spending in the Gulf states. Economic privatization and the move by some countries (like Kuwait and Oman) to make foreign ownership of business easier is giving foreign direct investment a solid boost. Moreover, according to IDC, small and medium businesses have started coming into their own in many of the countries of the Gulf.
“Although the key IT markets of Saudi Arabia and the UAE are increasingly saturated,” said Roshana Rehan, analyst, IDC CEMA’s Systems Group, “they will stay dynamic by adopting new technologies, undertaking upgrades and through SMB purchasing of the hardware necessary for staying competitive in the increasingly technology-dependent economy.”
The UAE represents the largest server market among the Gulf states in terms of volume, but Saudi Arabia represents the largest in terms of value. This will continue for the foreseeable future, with these two countries together expected to account for just under 73 percent of unit volume and just over 73 percent of shipment value in 2008, which is similar to today’s share levels.
According to IDC’s new study, volume servers are expected to account for more than 97 percent of total shipments but only 51.5 percent of value this year in the Gulf states. Small and medium-sized enterprises will keep the volume-server segment the most dynamic over the next five years. While midrange servers are only expected to constitute 2.9 percent of unit shipments this year, they should represent more than 38 percent of market value. High-end servers will account for the rest.
IDC expects the Gulf states’ server market to continue expanding in both volume and value through 2008. “With the pattern of investment shifting toward smaller and medium enterprises with limited financial means and basic computing needs, volume servers will be the most dynamic segment in this region in the coming years,” said Rehan. “Government commitment to IT development in both the public and private sector and heightened competition among vendors will also help drive the market.”