Saudi Arabia Information Technology Report Q3 20007

Overview

The Saudi Arabia Council of Ministers' launch in May 2007 of a National Plan for the IT sector demonstrates the growing importance of this market to a country and government which is seeking to channel revenues from high oil prices towards economic diversification and infrastructure modernisation. For many IT vendors Saudi is clearly the most important market in the region and most recorded significant sales growth in 2006. Saudi Arabia's computer market has continued to demonstrate strong growth in H107 driven by falling prices and growing demand for notebooks. Strong growth in sales of both computers and associated services is being driven by high oil prices and substantial budgets allocated for e-government infrastructure development.

Overall, the value of the Saudi Arabian IT market is estimated to have reached US$2.5bn in 2006 and is expected to rise to US$3.9bn by 2011, representing a CAGR of 9%. High oil prices have been stimulating increased spending on IT products and services by government as well as in sectors such as manufacturing and transport. Going forward, telecommunications liberalisation, a push for broadband, and government spending programmes on IT in Education and other areas should reinforce the potential of the market. In the enterprise sector, smaller companies are realising the opportunities to apply IT to achieve efficiencies in such areas as finance and logistics as well as marketing and other functions. The government has recently announced some US$32bn of infrastructure projects in the Riyadh area, including construction of an Information Technology park. The context is a business environment that is becoming increasingly competitive and open, as the country became a membership. Particularly significant is the planned further liberalisation of the telecoms sector, with new fixed-line and mobile licences awarded in 2007. In terms of PC and notebook sales, the market was the largest in the region in volume sales in 2006, with annual per-capita expenditure on IT reaching US$330, and Saudi Arabia continuing to account for around 40% of IT spending in the Middle East region in 2006, the market looming large in the regional calculations of multinational IT companies.