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As possibly the most recognisable and prolific IT market in the Middle East - evidenced by the fact that it is to host its seventh annual Gitex exhibition this month - Saudi Arabia is snapping at the heels of the UAE. Channel Middle East asks key players in the Kingdom what the Saudi IT market has to do to capitalise on the incredible growth it has been enjoying.

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By  Julian Pletts Published  April 9, 2008

As possibly the most recognisable and prolific IT market in the Middle East - evidenced by the fact that it is to host its seventh annual Gitex exhibition this month - Saudi Arabia is snapping at the heels of the UAE.

Channel Middle East asks key players in the Kingdom what the Saudi IT market has to do to capitalise on the incredible growth it has been enjoying.

In the modern Gulf IT climate Saudi Arabia has always been, for volume, the commander of the region. In 2007, spending on IT services alone in the Kingdom almost reached $US900m, a jump of around 10% on the year before.

The high end of the market retains its strength as enterprise end-users in Saudi continue to spend more than their counterparts in the UAE, Kuwait or any of the other major markets in the region.

At the same time the SMB segment continues to gather pace with market commentators claiming that come the end of the decade this sector will account for a third of all IT spending across the nation.

Statistics from IT research house IDC suggest that the recent jump in IT services spending reflects the diversification of the market and a significant shift in its dynamics.

"As the Saudi economy continues to develop and its population grows, demand for IT services will increase strongly over the coming five years," claimed Barti Rajan, research analyst at IDC Middle East and Africa.

We are already seeing a move towards application development and managed services, IS consulting and customer application development in Saudi, and this will drive IT services spending in the near future.

Those that have not yet set up camp and established a firm channel reach across the three major territories of the country may well have already missed out because Saudi is now challenging Dubai and the UAE for the affections of the region's top IT vendors.

"Saudi is our biggest market in the region. We do 25% to 30% of all our revenue in Saudi. The potential is huge, we are only just touching the tip of the iceberg though," exclaimed Mohammad Hoda, regional manager at Linksys.

There is a definite upgrade going on from low-end, small-sized business solutions to high-end business solutions.

There are a lot of managed solutions from the local channel such as, in our market, they are offering data solutions and voice managed solutions," he added.

Hamed Diab, general manager for the Middle East at 3Com, whose partners in Saudi Arabia include ICC, Natcom and Al-Jassim Electronics, is just as positive about the significance of KSA in the Middle East IT realm: "We categorise Saudi as the number one market in the region for us," he confirmed.

"It is a great market for deploying and using new technology whereas in the UAE it is mostly re-export and a minority of products are used in-country. The Saudi market can have the title of being a major utiliser of new technology," he added.

Enterprise software vendor Sage is similarly impassioned by the Saudi market, but suggests barriers to entry are giving those vendors who make it in an advantage. "In terms of focus for the future and strategic growth, Saudi is more important than the UAE," said Marc Van der Ven, managing director at Sage (pictured left centre).

It is a beautiful market because there are a lot more barriers to entry, which means from our perspective that once we are in it is much easier to do business and there is much less competition. Saudi Arabia is the most important opportunity for us at the moment."

There are, however, niggling doubts about whether the Saudi channel is moving fast enough to be able to cope with this change. You can rest assured though that IT resellers and distributors have heard the call for 2008 as ‘the year of services'. It is not falling on deaf ears. But in many cases the infrastructure is not in place to facilitate the shift.

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