Microsoft sees Gulf sales crash

Microsoft's sales in the Gulf have fallen by more than 50 per cent since July as the recession has hit computer hardware and software purchases, the company's regional general manager said. A declining global economy and robust competition saw companies spending less on new computer hardware and software products. Many are also setting up ways to incorporate new technologies such as virtualisation to help cut their IT costs.
Major technology companies such as Intel, Microsoft and IBM all saw their sales impacted over the course of the past year. Microsoft's sales growth in the Gulf region has declined from about 35 per cent to about 15 per cent in the second half of last year, said Charbel Fakhoury, the general manager of Microsoft Gulf office in Dubai. "In these times, that's very good," Mr Fakhoury said. "When you look at the longer term, I believe we can enter the 20 [per cent area]."
Microsoft does not break down its revenue by geographic location. However, the company reported annual sales outside America of US$25.29 billion (Dh92.89bn) in the fiscal year ending in July, up from $24.4bn in 2008. Mr Fakhoury said that the while the computer hardware market and consumer demand had declined in the region, the company was able to offer other services such as productivity, business intelligence and virtualisation software to meet the economic conditions of its customers.
Despite the high penetration of computers in the UAE and Saudi Arabia markets, the large number of long-term infrastructure projects in the Gulf were a positive sign for Microsoft, Mr Fakhoury said. "Most of these markets are moving from 'emerging' to 'developed'," Mr Fakhoury said. "When you move to developed, growth rates do slow down." The worldwide personal computer (PC) market, to which Microsoft is heavily exposed, was expected to have shown a rise of about 2.8 per cent in 2009 to 294.1 million units sold as more consumers opted for low-priced netbooks, the technology consultancy Gartner recently said.
"We just don't see consumers buying new PCs solely because of Windows 7," said Gartner analyst George Shiffler in a recent statement. "We are expecting a modest bump in fourth-quarter consumer demand as vendors promote new Windows 7-based PCs, but the attraction will be the new PCs, not Windows 7." The company has also found ways to use its own technology to cut costs internally. Mr Fakhoury said that the Microsoft office in Dubai Internet City has replaced all of its phones with the company's "unified communication" system, a way of using broadband internet to make phone calls.
"By just reducing outside telephone calls, our costs went down by 50 per cent," he said. Windows 7, Microsoft's latest update of its operating system, has had a "high" adoption rate in the Middle East, Mr Fakhoury said. Although business adoption has been slow, Mr Fakhoury said he expected more than 50 per cent of all companies that use Windows software to begin upgrading to Windows 7 in the next 18 months.
Late yesterday, Microsoft chief executive Steve Ballmer gave a keynote address at the annual Consumer Electronic Show in Las Vegas. In the speech he revealed that Microsoft would partner with Hewltt-Packard on a touch-screen slate PC running the Windows 7 operating system. @Email:[e-mail]