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Value of Kingdom's IT market forecast to rise to $5.6 billion by 2013
By Saudi Gazette Staff
Published in The Saudi Gazette on 15 - 05 - 2009

The value of Saudi Arabia's IT market is expected to rise to $5.6 billion by 2013 from $3.4 billion recorded in 2008, or a CAGR (compound annual growth rate) of 11 percent.
The Information Technology Report for the second quarter of 2009 showed that the Kingdom appears better placed than some other markets in the region to withstand the current global economic headwinds.
Saudi Arabia's IT market has a number of positive factors to help it avoid stagnation, including fairly resilient consumer demand, and ongoing infrastructure projects in major verticals such as oil and gas, power, education and telecoms.
The report predicted that per-capita IT spending will reach $170 by 2013, with PC penetration rising to nearly 30 percent. Youthful population demographics, retail sector development and economic diversification will all drive growth.
The Saudi Arabian IT services market was worth around $987 million in 2008, and is expected to grow at a CAGR of 7 percent over the 2008-2013 forecast period. The economic situation, and credit tightening, is likely to have an effect on demand in some key verticals which have been driving IT spending.
This includes not only oil and gas but government, education, construction and healthcare. In H208 there were reports of IT managers in various sectors looking to cut costs. However, the emphasis often seemed to be more on scaling back projects by 10-20 percent rather than cancellation. In the past two years, high oil prices have driven spending on large IT projects by government as well as in industries such as oil and gas, transport and utilities. The outsourcing opportunity was estimated around $178 milion in 2008.
The report further said that Saudi Arabia's internet penetration was around 22.8 percent in 2008, and is projected to rise to 29.8 percent by 2013.
However, the most dramatic growth will be in broadband penetration, which is projected to rise from 6.4 percent last year to 31.2 percent by 2013.
By 2012 there will be an estimated 8.9mn broadband users in the Kingdom. Investment in broadband and government initiatives has seen an improvement in e-services development and utilization, which was reflected in the UN's most recent e-government rankings, in which Saudi Arabia rose 10 places.
Moreover, computer sales including PCs, notebooks and accessories are expected to approach $1.6 billion in 2009, with the segment growing at a CAGR of 8 percent between 2008 and 2013. PC sales growth in 2008 remained strong, despite the global economic slowdown, with more than 500,000 units sold and the stock of installed computers increasing to around 4 million. Stronger demand in the notebook sector is the main factor driving retail segment growth, as consumer sales feel the benefits of aggressive channel promotions.
Despite the economic slowdown, notebook sales grew by around 50 percent across the Gulf region last year. PC penetration reached about 23 percent, and should increase to nearly 30 percent by 2013.
The report anticipates a software market value of $614 million in 2009, up from $654 million in 2008.
The sector should continue to grow at a CAGR of 7 percent over the forecast period. Some vendors reported cut backs in commercial purchases of software, particularly in the oil and gas sector. Oil and gas is the largest software vertical purchasing sector, followed by government and telecoms, but there is a growing interest in vertical solution in industries like retail, construction and engineering. Some large contracts have also been seen in some non-oil manufacturing sectors such as chemicals and automotive. The economic slowdown represents a challenge to software vendors. __


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