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Israel Information Technology Report Q1 2013

Israel Information Technology Report Q1 2013

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Meta Description Israel Information Technology Report Q1 2013
Publisher Business Monitor International
Date of Report Sep 1, 2013
Quick Overview
BMI View: Israeli IT spending is expected to reach US$6.0bn in 2012, up 5%. In Q112, several
indicators suggested moderating consumer demand, but vendors still reported a solid trading
environment for IT services across industrial, government, defence and financial services segments. The
current rate of PC penetration, while high for the region, represents potential for organic growth.
Household penetration is estimated at around 75%. The Israeli IT market should gain enough momentum
from key sectors to expand at a CAGR of 7% over BMI's 2013-2017 forecast period, due to momentum
from key segments.
Headline Expenditure Projections
Computer Hardware Sales: US$2.5bn in 2011 to US$2.6bn in 2012, +3% in US dollar terms. Forecast
in US dollar terms downwardly revised due to macroeconomic factors, but Israeli businesses are investing
more to facilitate expansion and development.
Software Sales: US$1.3bn in 2011 to US$1.3bn in 2012, +6% in US dollar terms. Forecast in US dollar
terms downwardly revised due to analyst modification, but device and data proliferation will drive
spending on customer relationship management (CRM), databases and business intelligence.
IT Services Sales: US$2.0bn in 2011 to US$2.1bn in 2012, +6% in US dollar terms. Forecast in US
dollar terms downwardly revised due to analyst modification but key segments such as government and
defence will be a continued source of opportunities.
Risk/Reward Ratings: Israel's IT rating score was 66.3 out of 100.0, up on the previous quarter. Israel
has regained first place in our latest RRR table, ahead of both Qatar and the UAE.
Key Trends & Developments
?? BMI forecasts overall solid growth for the Israeli IT market for 2012, despite a deteriorating
external economic environment. Businesses will maintain a cautious attitude to IT investments
due to uncertainty about a sustainable global economic recovery in key export markets. There
should, however, be growth in areas such as business intelligence, server virtualisation, mobile
devices and cloud computing.
?? New cloud computing offerings and increased competition in this segment should fuel further
demand from users. Particular areas of opportunity for cloud computing include banking and
retailing as organisations in those fields look to save money on hardware investments.
Businesses will, not only seek to make cost savings, but will look to boost efficiency and
increase flexibility of response to customer needs.
?? The growing emphasis of many multinational IT vendors on software and services revenues, has
led companies such as Dell and SAP to direct more investment in R&D at the Israeli
market. However, Israel's domestic IT service companies have strong advantages owing to local
knowledge and contacts. For example, Ness Israel's long-term relationship with the Israeli
Department of Defence makes it a strong player in the defence and homeland security vertical.
Despite their global ambitions, Israel remains an important market for these companies and
typically accounts for 40-50% of revenue.
Table of Contents
Executive Summary ......................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................. 7
Israel IT Sector SWOT ........................................................................................................................................................................................... 7
Israel Telecommunications Sector SWOT .............................................................................................................................................................. 8
Israel Political SWOT ............................................................................................................................................................................................ 9
Israel Economic SWOT ........................................................................................................................................................................................ 10
Israel Business Environment SWOT .................................................................................................................................................................... 11
MEA IT Risk/Reward Ratings ........................................................................................................................ 12
Table: Middle East And Africa IT Risk Reward Ratings, Q113 ........................................................................................................................... 14
MEA IT Markets Overview.............................................................................................................................. 15
IT Penetration ........................................................................................................................................................................................................... 15
Sectors And Verticals ................................................................................................................................................................................................ 18
Market Overview ............................................................................................................................................. 22
Government Authority ............................................................................................................................................................................................... 22
Background ............................................................................................................................................................................................................... 22
Table: Government Initiatives ............................................................................................................................................................................. 23
Hardware .................................................................................................................................................................................................................. 24
Software .................................................................................................................................................................................................................... 26
Services ..................................................................................................................................................................................................................... 28
Industry Developments.............................................................................................................................................................................................. 30
Industry Forecast ........................................................................................................................................... 32
Table: Israel IT Industry - Historical Data And Forecasts (US$mn unless otherwise stated), 2009-2017 .......................................................... 34
Industry Forecast Internet ............................................................................................................................. 35
Table: Internet Data And Forecasts, 2010-2017 .................................................................................................................................................. 35
Competitive Landscape ................................................................................................................................. 37
Internet Competitive Landscape................................................................................................................................................................................ 40
Macroeconomic Forecast .............................................................................................................................. 42
Table: Israel - Economic Activity, 2011-2016 ..................................................................................................................................................... 44
Company Profiles ........................................................................................................................................... 45
Ness ..................................................................................................................................................................................................................... 45
IBM ...................................................................................................................................................................................................................... 49
Hewlett-Packard .................................................................................................................................................................................................. 54
Matrix .................................................................................................................................................................................................................. 60
Microsoft Corporation ......................................................................................................................................................................................... 63
Country Snapshot .......................................................................................................................................... 68
Table: Israel's Population By Age Group, 1990-2020 ('000) ............................................................................................................................... 69
Table: Israel's Population By Age Group, 1990-2020 (% of total) ...................................................................................................................... 70
Table: Israel's Key Population Ratios, 1990-2020 ............................................................................................................................................... 71
Table: Israel's Rural And Urban Population, 1990-2020 .................................................................................................................................... 71
BMI Methodology ........................................................................................................................................... 72
How We Generate Our Industry Forecasts .......................................................................................................................................................... 72
IT Industry ........................................................................................................................................................................................................... 72
IT Ratings - Methodology .................................................................................................................................................................................... 73
Table: IT Business Environment Indicators ......................................................................................................................................................... 74
Weighting ............................................................................................................................................................................................................. 75
Table: Weighting Of Components ........................................................................................................................................................................ 75
Sources ................................................................................................................................................................................................................ 75




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