Lebanon Information Technology Report 2010

Market Overview The total size of Lebanon's IT market in 2010 is estimated by BMI at around US$276mn, up from US$261mn in 2009. BMI expects a market compound annual growth rate of 7% for 2010-2014. There are potential opportunities for IT vendors in sectors such as telecoms, banking, utilities, real estate and government, but much will depend on the political stabilisation necessary to implement economic reforms.

Many uncertainties continue to surround the Lebanese IT market, with considerable latent potential mitigated by an unstable political outlook and a mixed picture with regards to economic policy. Further recovery fuelled by government and vendor IT-related reconstruction initiatives and normalisation processes may be slow, but the market could surpass US$300mn by 2012.

Smaller business are a key opportunity, as small and medium enterprises (SMEs) account for a majority of Lebanon's 700,000 businesses, although lack of access to financing is a barrier. Growing internet penetration should gradually boost IT demand, given that internet penetration in Lebanon is among the lowest in the region.

Industry Developments Following the elections in June 2009, Lebanon faced a wide variety of challenges. These included infrastructure rebuilding, economic and social stabilisation, restoring trust in politics and improvement of the security situation. At the same time, there were a number of specific ICT challenges on the government's agenda. These included improving ICT infrastructure, overcoming the digital divide, investing in IT skills, making businesses more efficient through technology and e-government.

A number of significant developments in ICT policies happened in 2009. In May, prior to the elections in June, the government announced plans for a partial privatisation of the telecom sector. In 2009, the government also announced a number of targets for broadband penetration and coverage, with all population centres to be covered by DSL by the end of 2010. In February 2009, the government awarded one-year contracts to operators Zain and Orascom to manage mobile operators MTC Touch and Alfa, respectively.

In 2009, the Lebanese government also finalised plans for a comprehensive overhaul of the public healthcare system. The plan was to achieve savings through computerisation of medical records concurrent with the introduction of a mandatory health card system. The government said that the eHealth system will be implemented by a combination of private companies and government institutions.

Competitive Landscape In 2009, multinational IT vendors continued to work to gradually improve distribution and logistics in Lebanon and strengthen co-operation with regional partners. Vendors such as IBM and Oracle have found opportunities with local clients such as Beirut Bank, Cedarcom and Middle East Airlines.

Patience is needed, although a lack of physical presence may mean companies missing out on orders due to prohibitive shipping costs.

The 2006 conflict had a disruptive impact on vendor distribution channels in the previously emerging market of Lebanon and even beyond. The disruption led to complete shutdown in some cases and in many cases the damage has still not been fully repaired. Sales remain below potential and another challenge for vendors is the size of the 'informal' sector and 'grey market'.

Computer Sales Lebanese computer sales are projected to reach US$141mn in 2010, up from US$135mn in 2009. The computer market should grow at a CAGR of 7% a year to US$185mn by 2014, according to BMI estimates, boosted by economic growth, broadband infrastructure development and government programmes.

The market is still far from saturated, with PC penetration at about 12%. Going forward, however, much will depend on the ability of government to push through reforms in various industries and unlock credit flow for smaller enterprises in particular. Higher fixed and mobile broadband penetration would also be a key driver.

Software BMI estimates a legal software market of US$37mn in 2010 and a 2010-2014 CAGR of 7%. Due to the continuing problems with piracy, the domestic software market is expected to grow relatively slowly, but should be boosted by some government projects. The dominance of locally assembled PCs in the Lebanese computer market is a major barrier to reducing software piracy.

The market is predominantly an SME market, with most enterprise customers prioritising affordability.

Most smaller companies are still in a developmental phase in terms of IT infrastructure, representing a big potential market for basic ERP and ERM applications.

Services The Lebanon IT services market was expected to be worth around US$66mn in 2010 according to BMI estimates, accounting for around 24% of all IT spending in Lebanon. Spending on services is predicted by BMI to continue to expand thereafter, as government agencies, telecoms companies, banks and other customers spend on modernisation.

In 2009, the Lebanese government granted licenses to five international companies to establish contact centres in the country and the growth of this sector should generate opportunities for IT vendors.

• Executive Summary
• SWOTS
• Lebanon IT Sector SWOT
• Lebanon Political SWOT
• Lebanon Economic SWOT
• Lebanon Business Environment SWOT
• Middle East IT Markets Overview
• Market Growth And Drivers
• Sectors And Verticals
• IT Business Environment Ratings
• Middle East and Africa IT Business Environment Ratings
• Regional IT Business Environment Ratings
• Lebanon Market Overview
• Government Authorities
• Background
• Hardware
• Software
• Services
• End-User Analysis
• Industry Developments
• ICT Infrastructure
• Industry Forecast Scenario
• Macroeconomic Forecast
• Lebanon - Economic Activity
• Competitive Landscape
• Company Profiles
• IBM
• HP
• Computer Business Machines (CBM)
• Oracle
• Microsoft
• Country Snapshot: Lebanon Demographic Data
• Section 1: Population
• Section 2: Education And Healthcare
• BMI Methodology
• IT Ratings – Methodology
• Ratings Overview
• Weighting
• How We Generate Our Industry Forecasts
• IT Industry
• Sources
• List of Tables
  • Table: Lebanon's IT Industry - Historical Data & Forecasts (US$mn Unless Otherwise Stated)
  • Table: Demographic Indicators, 2005-2030
  • Table: Education, 2002-2005
  • Table: Vital Statistics, 2005-2030
  • Table: IT Business Environment Indicators
  • Table: Weighting Of Components