Size isn't everything

High-profile CEOs are arriving thick and fast in the Middle East, but IT managers should not be fooled that vendors see the region as a major market – vendor interest is focused on the individual projects within it.

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By  Eliot Beer Published  May 6, 2007

|~||~||~|Steve Ballmer made the expected splash last month when he visited Qatar to sign an agreement with that country’s government on ICT expansion – what it will translate to in practical terms is another matter.

But the big news came from his comments on the Middle East’s IT sector as a whole when he described it as having the highest growth of any region in the world. In many ways, though, this was not actually news.

The recognition of the region’s growth by such a prominent figure as Ballmer is definitely worthy of note – but the Middle East IT industry has seen very high growth rates for some time. Vendors have often cited double-digit – or even triple-digit – growth rates as a symbol of how important the region is to their global strategies.

Unfortunately, the fly in the Middle Eastern ointment is that all this growth is almost always on a very small starting base – even with the growth levels the region is seeing, the overall size of the market will remain small for some time to come. Again, this is common knowledge in the industry.

Interestingly, the Middle East has seen a change lately, of which Ballmer’s visit is just the latest development. Chief executives of some of the world’s biggest vendors – including Intel and Cisco – have made high-profile visits to the region, extolling the opportunities available in the often-forgotten corner of the EMEA region.

There are several reasons for the growing numbers of high-level executive visits to the region – although all of them come back in the end to profit.

Vendors have started to recognise that the Middle East responds very well to individual attention, an extension of the culture of personal relationships which informs the business culture at all levels.

Another more concrete reason is the growing number of mega-projects springing up across the region, especially in the Gulf, but also in Iraq and the Levant with the reconstruction of Lebanon. Some of the most lucrative prizes are the Economic Cities in Saudi Arabia, with four announced, and more on their way.

Literally new cities in the desert – potentially of hundreds of thousands of people – the IT infrastructure needed for these projects makes them a valuable win.

The value increases if – as Cisco and Microsoft have successfully done – a vendor can make a ‘strategic alliance’ with the project developers, ensuring its technology is used exclusively – keeping out competitors.

So while it’s nice to see the vendors taking such an interest in the Middle East, end users should remember they’re only after your budgets.

But there is a certain satisfaction in knowing that the region’s smaller – but perfectly formed – projects are worthy of global attention.||**||

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