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Saudi Arabia sees e-service surge

Posted by Yaser on October 13, 2007

Saudi Arabia is rapidly catching up with the UAE and the rest of the world when it comes to accessing the internet and the good news doesn’t stop there. Greater online access has fuelled a revolution that extends across all areas including government services, e-commerce and personal use.

The number of internet users in the Kingdom has grown from 200,000 in 2000 to 4.8 million users by the end of 2006. By December 2006, internet penetration reached 20%, while the forecast for 2007 is 35%.

The market size for e-commerce in Saudi Arabia is estimated to be around US$15bn by end of 2007.

This is expected to grow at a healthy rate over the next three years due to several factors.

These include the increase in the number of internet users, their awareness of the internet and online services, and the government issuance of the e-transactions act and e-crime act, which will increase internet users’ confidence in online shopping. The demand for online transactions as well as for other e-commerce activities is expected to increase at a very healthy rate as a result.

In addition, the size of Saudi Arabia’s online advertising is expected to reach US$45m by end of 2007, but given the above reasons, it is expected to more than double and reach in excess of US$110m by the end of 2008.

The mobile sector has witnessed much higher growth rates over the past 12 months with the introduction of the second mobile operator Mobily. Is innovative marketing campaigns have helped to generate more than 4.5 million subscribers in less than two years. It is expected that by the end of 2007, the mobile penetration rate will reach 90%, up from 12% in 2001.

This sector has been growing at a healthy annual rate of 50%, and with the introduction of the third mobile operator MTC – now rebranded as Zain – the mobile sector will continue to witness similar, or even higher growth rates in the next few years.

Competing on call rates, however, is no longer the name of the game; it is the quality and variety of service and services that are now the priority.

Mobile operators have been competing against each other to offer more value added services (VAS) in order to retain or increase subscribers.

And there have been so many developments in this area that many subscribers have not been able to keep up with the increasing number of services being provided by operators.

The convergence of telecom services and the importance of having more than one arm to serve subscribers has led Mobily to acquire Bayanat, one of the two licensed data service providers in the KSA, for around US$500m.

Data service providers in the Kingdom are now working on laying down the largest fibre network cable in the region – one of the largest implementations of its kind in the world.

A large portion of that will be for ‘fibre to the home’, generally known as FTH. The initial investment is estimated at US$3bn over two to three years. These are certainly bright times for the Saudi information technology sector.

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