24 Jan 2017

Riyadh – The Saudi ICT market will rebound in 2017 to reach a value of $33.8 billion for the year, according to the latest insights presented yesterday by International Data Corporation (IDC). Hosting its annual 'IDC Predictions 2017' event at The Ritz-Carlton, Riyadh, the global technology research and consulting services firm said it expects Saudi Arabia's ICT market to grow 2.4% year on year in 2017, which represents a considerable improvement on the -5.1% downturn experienced in 2016.

"Last year was certainly a challenging one for vendors, services providers, channel partners, and end users alike," says Hamad AlSaghir, IDC's country manager for Saudi Arabia. "The year was characterized by weak oil prices and increasing inflation, resulting in lower-than-usual spending by the government, which has traditionally been the leading spender on technology and associated services. In order to counter the negative impacts of economic dependence on oil, the Saudi government has initiated its Vision 2030 initiative, of which the National Transformation Program (NTP) forms an integral part."

"The NTP's influence on the kingdom's ICT market will be far reaching in 2017," says Hamza Naqshbandi, principal analyst at IDC Saudi Arabia. "For example, we expect to see a considerable evolution of the cloud marketplace as NTP-related initiatives gather momentum and make use of cloud-based services to achieve the stipulated objectives of the program. We are also anticipating increased investment in the areas of big data and advanced analytics, a trend that will contribute considerably towards improving the provision of citizen-centric services in line with the goals of the NTP."

As organizations across Saudi Arabia embrace this evolving ICT landscape and address the challenge of having to do more with less, the shift towards software and IT services is gathering considerable momentum. Indeed, IDC expects spending on software and IT services to see year-on-year growth of 5.5% and 9.9%, respectively, in 2017. This is significantly faster than the anticipated growth across the market's hardware and communications segments, where IDC forecasts spending to increase at a much more modest 0.6% and 1.7%, respectively.

The hardware market's growth potential is being impacted directly by declining mobile phone shipments due to consolidation and the 100% Saudization of the kingdom's mobile phone industry. This policy has resulted in the enforced closure of around 40% of mobile phone retailers operating in the country. IDC expects the government, communications, and finance verticals to be Saudi Arabia's biggest-spending verticals in 2017, while healthcare, transportation, and education are expected to be the fastest growing over the longer-term five-year forecast period.

At 35.4%, spending on mobile devices will continue to account for the biggest share of the Saudi IT market's revenue in 2017, although this share has fallen considerably from 42.5% in 2015 and 37% in 2016. Meanwhile, IT services will account for 30.6% of total IT spending in 2017, up from 23.5% in 2015 and 28.9% in 2016.

Looking beyond data, the 'IDC Predictions 2017' event emphasized the importance of public-private-partnerships and the convergence of government and non-government organizations in shaping the future dynamics of the ICT market, placing a particular focus on how such collaboration can help deliver success for the numerous smart city initiatives planned or currently underway across the kingdom. In line with this, IDC said it expects the development of smart cities to take on a more pragmatic approach, with a growing focus on deploying dedicated smart solutions such as smart parking, traffic management systems, smart buildings, and intelligent operation centers, to name just a few.

The event also examined ongoing digitalization efforts across the kingdom's key industries, exploring the associated omnichannel opportunities that are helping to reshape the customer experience across the banking & finance, retail & wholesale, and telecommunications verticals. IDC explained that the telecommunications vertical will undergo considerable transformation in 2017 as initiatives such as 'Unified Licenses' will drive a new approach to implementing go-to-market strategies, facilitating quality of service, and improving the overall customer experience.

From a security point of view, IDC said it expects Saudi organizations to face an increasing number of targeted and zero-day attacks over the course of 2017, spurred by a combination of regional instability and sociopolitical factors. And as innovative new IoT use cases continue to emerge, a growing number of industries and verticals are expected to show interest in deploying IoT solutions. IDC believes this expansion of the IT surface area will further reinforce the need for more comprehensive data privacy and information security measures to be put in place.

IDC concluded the event by highlighting the importance of innovation accelerators such as augmented reality, cognitive systems, robotics, and 3D printing, to name a few, and explaining how the early adoption of these solutions will enable a new wave of digital disruption across the kingdom's entire vertical spectrum.