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22 June 2024

GCC to invest $9.1 billion in technology in 2008

By Shuchita Kapur




The Middle East and Africa (Mena) region will be one of the world’s leading hotspots for technology investment in 2008, alongside China and India, according to new research from leading analyst house IDC.

This year, total investment could reach $40.5 billion (Dh148.7bn) – growing by more than 13 per cent over 2007 – with Gulf Co-operation Council investment amounting to $9.1bn. Nearly 40 per cent of this investment will be in support of new initiatives, in sharp contrast to markets such as Europe and the United States, where most input is going toward replacing and updating technology infrastructure.

Frank Gens, senior vice-president and chief analyst, IDC, said: “Our forecast for 2008 is that the total IT market in the Mena region will reach nearly $40.5bn – an all-time high for this region. Set against the relatively flat growth of the US market, and the much lower growth levels of Europe, the Middle East will be a bright spot in the world market.”

IDC’s forecast for 2007 to 2011 suggests that Egypt, Saudi Arabia, Kuwait and the UAE will emerge as the markets with the highest compound annual growth rate. Egypt is set to realise 14.1 per cent Compound Annual Growth Rate (CAGR) over the five-year period, Saudi Arabia is set to realise 12.8 per cent, Kuwait is set for 11.9 per cent and the UAE 11.3 per cent.

Such significant sector growth – more than double the predicted gross domestic product growth rates – indicates the long-term potential of the Middle East technology market.

By way of contrast, only fast-growing markets like India (17 per cent estimated CAGR) and China (8.6 per cent) are expected to match the development levels of the Middle East market. Established markets such as Western Europe (5.7 per cent), US (5.1 per cent) and Japan (1.7 per cent) will record much lower rates.

The ongoing development of key industry sectors, including energy, the public sector, aviation, real estate and retail, is one of the factors driving the growth of the information technology sector. Much of the forecast investment for 2008 will focus on building infrastructure, including security, storage, customer relationship management and enterprise resource planning.

The surge in investments is also due to the growing digital universe in the region. Worldwide, it is bigger and growing more rapidly than original estimates as a result of accelerated growth in worldwide shipments of digital cameras, digital surveillance cameras and digital television sets as well as a better understanding of information replication trend. The Middle East and other emerging markets are seeing significant growth in the use of these devices, and the storage of the information generated by their content.
Electronic information is also on the rise in emerging countries.
According to a new study, the number of electronic information “containers” – files, images, packets, tag contents – in these countries is growing 50 per cent faster than the number of gigabytes.

Fast-growing areas within the expanding Middle East market include increasing internet access, sensor-based applications, data centres supporting “cloud computing”, social networks and images generated by surveillance cameras in airports, oil sites and banks.

“Internet access is growing at an exponential rate in specific markets across the region such as Saudi Arabia, Egypt and Pakistan. This increase in users will create a significantly larger digital universe within the Mena region,” said Mohammed Amin, regional manager for Mena, EMC.

“In the updated study, we discovered that only about half of your digital footprint is related to your individual actions – taking pictures, sending e-mails, or making digital voice calls,” said John Gantz, chief research officer and senior vice-president, IDC. “The other half is what we call the ‘digital shadow’ – information about you – names in financial records, names on mailing lists, web surfing histories or images taken of you by security cameras in places such as airports or urban centres. For the first time your digital shadow is larger than the digital information you actively create about yourself.”

The Numbers


13%: Percentage by which regional technology spending is set to increase in 2008. GCC countries will account for $9.1 billion of the investment

281: The number in billion gigabytes (281 exabytes) by which the digital universe in 2007 was 10 per cent bigger than originally estimated

60%: The compound annual growth rate at which the digital universe is increasing and is projected to be 1.8 zettabytes (1,800 exabytes) in 2011, a 10-fold increase