Industry analysts separate the IT market into three segments: IT services, computer hardware and computer software. While the IT market has slowed down in the U.S. and Europe since 2000, mainly due to the ending of work related to the millennium bug and the bursting of the dotcom bubble, by contrast IT spending in Saudi Arabia for the year 2001 showed a 15% increase over the previous year. The most significant part of this increase was due to the growth in servers and LAN hardware as companies and government departments continued to update their IT architecture and infrastructure, but spending on hardware peripherals also increased buoyed up by strong sales of printers, which recorded a 31% increase in vendor shipments to the Kingdom.
“The computer hardware market has continued to increase at a healthy rate since 2001 in both units sold and value terms. A positive trend in the market is the strong demand for data communications hardware by corporate customers. Further development of the Internet in the region along with an increased acceptance of e-commerce as an effective business tool will ensure continued growth. As the Internet gains a greater presence in the Kingdom and the need for increased bandwidth expands, it will create increased demand for hardware, software and network integration,” said industry spokesperson Muhammad Al Agil, CEO of Jarir Marketing, whose company operates Jarir Bookstore. “Large infrastructure projects are also a spur to growth in the sector. For example, the government is in the process of a massive initiative to equip 21,000 schools with PC equipment, networks, internet access and peripherals, with hardware requirements alone valued at SR1,800 million over the project life. As a bonus, the Internet user base is growing rapidly as a result of this project. “
Microsoft, the world’s leading software developer, acknowledged Saudi Arabia as the biggest market in the GCC and North Africa when, in 1998, it established Microsoft Arabia with headquarters in Riyadh and branch offices in Jeddah and Al-Khobar.
“The enormous growth potential of the Kingdom’s IT infrastructure and the resulting demand for software by the government, commercial and domestic sectors is the reason why Microsoft established a permanent presence in Saudi Arabia,” said Bilal Sununu, Country Manager of Microsoft Arabia. “E- commerce is another growth area on which we are focusing. Worldwide Microsoft is investing $1 billion and forging formal alliances with top companies in readiness to support the growing global demand for e-commerce solutions.”
Forecasts for the development of computer hardware sales in the Kingdom, based on 2001 price levels, estimate that the total sales figure for 2004 will be SR 3,260 million, rising to a figure of SR 4,590 million for the year 2006. The demand for computer notebooks is particularly strong in Saudi Arabia where unit sales have increased at an average rate of 54% since 1999 as vendors increased distribution, particularly through indirect channels such as computer specialists and retailers. By the end of 2002 notebooks had achieved a 25% share of the market compared to PC sales, with a jump from 11,697 units sold in 1999 to 43,000 units sold in 2002. Trends indicate continuing strong growth, with notebook sales forecast as SR 400 million for 2004 rising to SR 560 million in 2006.
Although Jarir Bookstore was a late entrant into the IT market, beginning with computer software sales as recently as 1996, the company quickly discovered that their customers were asking them to supply computer hardware to accompany the software. Today the company is one of the biggest retailers in the Kingdom and represents many of the leading brand names including Compaq, Acer, Hewlett Packard, Toshiba and Fujitsu Siemens, is a reseller of IBM, and runs major promotions with other IT giants such as Microsoft and Logitech. Jarir sales of computer peripherals alone grew 100% in 2002 compared to 2001 and strong medium and long term growth is forecast for all segments of the company’s IT department.
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