Price war weighs down Saudi computer market
Saudi Arabia’s computer market is experiencing hard times as sales are reported to have plummeted 80 percent in the first half of the year 2002, according to the local Arab News daily. A number of large computer retailers operating in the kingdom have recently declared bankruptcy, following a decline in sales and a fall in prices since February 2002.
While some market sources attribute the slump primarily to a fall in demand, others say it is due to the rising number of distributors on the market. The ensuing price war has reportedly cut retailers’ per-unit profit from 200 Saudi riyals ($53) to SR35 (nine dollars), making it difficult for vendors to meet overheads.
Prices are also affected by the accelerated introduction of faster computers, which forces local distributors to sell off old stocks at low prices. Supplementing the market’s difficulties are the rising costs of insurance and transport fees, following the September 11 events.
More optimistic sources forecast that the market would recover towards the last quarter of this year, once vendors adjust to the changing conditions. Seasonal fluctuations in PC prices and sales are also anticipated to contribute to the market’s upturn, as the launch a new generation processors coincides with the opening of schools and the beginning of the new academic year.
Saudi Arabia has experienced unprecedented expansion in its Information Technology (IT) market in the last few years. The Saudi market for computers, peripherals, software and IT consultancy, remains the largest in the Middle East with applications software proving to be the key high growth segment.
A recent study by Frost & Sullivan has put the total annual IT spending (excluding telecoms spending) in the Gulf region at $2.1 billion in 2001, with Saudi Arabia accounting for 40 percent of that total. — (menareport.com)
© 2002 Mena Report (www.menareport.com)