Bahrain enhances IT prospects

Bahrain is often assumed to be a land of limited opportunity for the IT masses, but rapid growth in a number of key sectors is beginning to explode this perception in dramatic fashion. It is also leading to a level of self-sufficiency among locally based entities that can only bode well for the enduring health of the domestic market.

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By  Andrew Seymour Published  August 18, 2008

"It is also important for them to have the right technical and sales resources in place to cater to growing customer demand," counselled Microsoft's Esbai. "Going forward I believe that resellers need to focus on selling solutions for specific industry verticals with dedicated go-to-market campaigns.

Last but not least, a key element for success is to focus on value added services and after-sales support," he concluded. It is clear that if resellers and integrators are to prosper then they have to accept that clients will drive a hard bargain.

The major issue with the Bahrain market is expenditure - everyone is now very cautious about their capital expenditure and operating expenses, and they are carefully studying different options and evaluating alternatives regarding the cost," said Nortel's Ismail.

"Terms like ‘return on investment' and ‘total cost of ownership' are becoming more familiar and they are taken into greater consideration by Bahraini customers," he added.

Such challenges are unlikely to deter outside parties from pursuing the lucrative project opportunities available in the market. Desai at Zayani, which also serves as a service centre for certain Acer and HP products in the Kingdom, admits local integrators are feeling the heat from global IT providers that are now investing in the Gulf region and can exploit economies of scale.

Far from being intimidated, however, Zayani intends to be one of the first companies to respond with an offensive strategy of its own.

"We are starting to look at other markets in the GCC because the Bahrain market is too small to stay alive," revealed Desai. He insists the company has enough skills and resources to use in surrounding markets, while the growing acceptance of managed services - especially those that can be carried out remotely - will support its aspirations. Saudi Arabia heads the list of markets the company plans to target first due to its proximity.

Although Bahrain has developed into an increasingly self-sufficient market, the constraints of its size lead to an inevitable reliance on the Dubai market for some IT products. Many first-tier resellers deal directly with vendors when it comes to high-end enterprise kit, but volume products like PCs, servers and printing equipment are regularly sourced from distributors in Dubai.

Ishaq at GBM believes that the merits of independence hinge on the circumstances of the organisation concerned. "From our point of view, everything is done here in Bahrain, but if there is a specific case where a part is not available then we may call Dubai. On the opposite side of the coin, some of the companies in Bahrain prefer not to stock anyway. They are happy buying from two or three big distributors in Dubai."

Whatever their preference, local resellers need to make the decisions that are most practical for the development of their business as the golden days of the Bahraini IT market redefine the channel landscape.

Bahrain by numbers

The Bahraini channel continues to go from strength to strength, but there is no escaping the fact that the size of the opportunity isn't as attractive as some of the surrounding markets in the Gulf. Data released by IDC last year valued the Bahraini market at US$275m and the PC sector at around 65,000 units.

Research from local technology group Mars IT, meanwhile, suggests that trade liberalisation, strong demand from the financial sector and government IT initiatives will bolster the value of the IT market to US$315 million by 2010 - almost US$100m more than just two years ago.

Not surprisingly, Mars tips software and services to exhibit the fastest growth over the next two years following a spike in projects from vertical sectors such as banking and real estate.

Although hardware continues to account for the majority of IT spend, the domestic software sector is expected to be worth more than US$65m within the next two years, with enterprise applications likely to represent at least a third of that figure.

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