Back with a smile

Egypt seems to be at the heart of Microsoft's plans for the region as Bill Gates visits for the second time. Wael Gamal reports

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The visit of Bill Gates, the chairman and chief software architect of IT multi- national giant Microsoft, is a promising omen for the sector in Egypt. Gates was warmly received by prominent members of the government and business communities upon his arrival on Saturday for a two-day visit, the only one of its kind to a country in the region.

Gates met officials, businessmen and media representatives at a banquet organised by the American Chamber of Commerce. Gates told the attendants that he is returning to the country with a smile on his face. "It is a very short period since the last time I was here, but I followed closely the developments that took place in recent months. The very strong and positive steps that have been taken enhance our opportunity to make business here. I am very optimistic," he said.

His visit was crammed with events revealing the interest of Microsoft in the Egyptian IT sector, starting with the launching of an investment portal for the Egyptian Ministry of Investment. He also inaugurated the proceedings of the Microsoft Middle East Developers Conference.

The conference, which is being held in Egypt for the third year, is designed to allow developers and programmers to share their experiences with various Microsoft software programmes. Accompanied by the prime minister and the minister of communications and information technology, Gates also inaugurated a number of projects in the Smart Village located in 6th of October City, including the Egyptian Microsoft Innovation Centre and the E-Government Centre of Excellence for the Middle East and Africa.

Gates announced that his company will be doubling its $150 million investments in Egypt in the near future. While the Egyptian IT sector has several weaknesses, namely high rates of software piracy (around 52 per cent compared to the international rate of 39 per cent), low per capita spending on technology (less than 0.5 per cent of individual incomes), the technology gap between Egypt and countries in the Gulf and the lacklustre participation of small and medium enterprises (SMEs), there is still cause for optimism.

The first and most important reason is that the immature nature of the sector inherently allows for high growth rates. The Egyptian IT sector has been growing at a steady rate of 16 per cent, almost eight times the growth of real GDP, and as the level of automation in Egypt is still low, the prospects for continuing growth are rosy. This was reflected in the increase of the number of workers employed in the IT sector between 1999 and 2003 from just under 11,000 to 30,000.

Another factor is the rising costs in countries benefiting from the IT boom, especially India. Egypt is gaining a competitive advantage in this regard, as the cost of IT specialists and professionals in Egypt is still low. Moreover, with its strategic position and large population, Egypt can constitute a base for regional expansion.

Nevertheless, perhaps the most important factor behind Microsoft's expansion is that it enjoys a partial monopoly in Egypt due to its partnership with the government and the education sector. While Microsoft is being pressured by monopoly cases in the US and Europe, the question of competition in the software industry is not raised in Egypt.

The company does not see a threat in open source software competition or in the recent issue of the anti-trust law in Egypt. "The anti-trust law won't have any effects on our operations. We have worldwide experience in working under such laws in more open and competitive markets than Egypt. The IT market in Egypt was open even before issuing the law," said Karim Ramadan, the general manager of Microsoft Egypt.

The recent trends of the international market have begun to affect Egypt. IBM Egypt announced last September that Linux open source software will be playing a central role in its products. Microsoft, which holds 55 per cent of software world market, was compelled to reveal its operating code to major partners in an attempt to counter the transparency advantage of the open source software.

With the anti-trust law not applicable for companies with a public share, Gates was confident of his experience and close ties with the government to allow Microsoft to thrive in the face of competition. "Although our agreements are not exclusive, you have to take into consideration the developed experience of Microsoft software in Egypt and worldwide, which makes it the best option for the Egyptian government," he told Al-Ahram Weekly in a press conference.

Microsoft Egypt fact sheet

1995

* Microsoft opens a fully owned subsidiary in Egypt with three employees.

2000

* Microsoft Egypt (MS Egypt) signs the campus agreement with the Ministry of Higher Education.

* MS Egypt signs an agreement with the Egyptian government.

2001

* MS Egypt signs the e-government agreement with the Ministry of CIT.

2002

* MS Egypt launches the Microsoft Partner Academy.

2003

* MS Egypt signs the education school agreement with the Ministry of Education.

* MS Egypt holds the first Middle East Developer Conference.

* MS Egypt's new premises at the Smart Village are inaugurated by President Hosni Mubarak.

2004

* Bill Gates visits Egypt for the first time and launches Egypt's portal " bawaba ".

* MS Egypt signs the partners in learning agreement with the Ministry of Education.

* MS Egypt signs a government security agreement with the Ministry of CIT.

* MS Egypt launches the Microsoft developer support centre.

* MS Egypt named as the company's best subsidiary in Europe, Middle East and Africa.