Notebooks drive Gulf States' PC market as it passes the million unit mark, says IDC

According to a new IDC study, unit shipments rose by nearly 40% to more than 1.13 million units while revenue rose 34% to more than $1.27 billion. A surge in oil prices pumped money into the region and in turn spurred investment in IT hardware last year. IDC expects the market to stay healthy, with unit shipments rising by 26% this year and by approximately 23% in 2006.

The GCC PC market was driven by demand for notebooks, with unit shipments for portables shooting up by almost 90% in 2004. Nevertheless, desktops still dominated, as vendors and channel sellers cut prices and developed sales packages to entice buyers. According to IDC, in 2004 the segment expanded a healthy 20.1% and the machines accounted for 58.5% of shipments. x86 servers represented 2.5% of shipment volume. "Notebooks will remain the engine of growth in the Gulf States PC market in the coming years," says said Omar Shihab, Senior Analyst, IDC Middle East. "Increased awareness of mobility, competitive vendor pricing, and high demand in the SOHO segment will all spur sales of portable PCs over the next few years."

Saudi Arabia was the largest country market for PCs in the GCC, but the UAE was close behind and Kuwait was the third largest market. Together these three countries represented almost 87% of shipment volume in the region. The notebook segment was the most dynamic, expanding by more than 65% in four of the six GCC counties in IDC's study. In the UAE, the segment increased a dramatic 96.6% and in Saudi Arabia, it more than doubled. "Even though these growth figures are high, they could have been higher in some countries," says Shihab. "In Saudi Arabia, attacks on foreigners and delays in government projects actually dampened growth. Having said that, the change in leadership in the UAE, brought about by the death of Sheikh Zayed bin Sultan al-Nahyan, had no effect on the PC market."

HP led the PC market in the GCC states in 2004. It was followed by Dell, which was barely ahead of third-ranked Acer. IBM took fourth and Toshiba fifth. Together, these five vendors represented more than 71% of the unit shipments in the GCC last year. Although local assemblers have a firm foothold in GCC states, their machines accounted for less than 1 in 4 of those sold in the region last year and a number of smaller assemblers vanished from the market. "Name brand vendors are very aggressive with their promotions in the region," says Shihab. "They've also greatly expanded their portfolios in the last few years, offering services, storage, high-end servers, and sometimes even software. All this helps to strengthen their position in the market."

Small and medium sized businesses were crucial end-user groups in the growing GCC PC market in 2004. According to IDC, SMBs accounted for just under 43% of all shipments and still remain under-penetrated. The small office and home office segment was also important, representing nearly 24% of total PC sales in the region. Due to desktop rollouts to schools and colleges across the Gulf, and special purchasing options for students, the education sector was the most dynamic last year, with shipments to the vertical more than doubling compared to 2003. "States in the Gulf are using the boom in oil revenue to really invest in education," says Shihab. "This includes renovating schools as well as supplying them with state-of-the-art IT to help improve the overall quality of education, and by extension, the economy, as many GCC states are looking to diversify away from oil and gas."

IDC's Gulf States Personal Computing Forecast 2005-2009 and 2004 Vendor Shares (IDC# ZJ03M), provides detailed analysis, conclusions, and forecasts regarding the evolving market for personal computers in Saudi Arabia, the UAE, Kuwait, and other GCC states (Bahrain, Qatar, and Oman). The information in this study is intended to provide an understanding of the changes and challenges facing the PC industry in these emerging markets. IDC's 2004 figures and analysis are based on information gathered from interviews with the leading IT companies (vendors, distributors, assemblers, system integrators, value-added resellers, and dealers) in the region.