RIYADH, 1 July 2004 — New opportunities may soon open up for high-tech entrepreneurs when the second mobile operator is launched later this year. With a new provider in the Kingdom, the market is expected to develop quickly with new valued-added services, new technologies, and new types of businesses.
It is commonly accepted among IT industry sources here that mobile networks are more than just base stations, telecommunications cables and handset sales: They facilitate the introduction of new services with the potential to reach literally millions of customers.
Nokia estimated that of the $460 billion earned from global mobile services in 2002, about 10 percent came from data/messaging. It is expected to jump to $751 billion by 2007, of which 10 percent will be made up of messaging, 10 percent entertainment and media, and another five percent pure data. A service as basic as ringtones is already a multibillion-dollar business. Although the Arab world has yet to see many of these value-added services take off, the liberalization of the Kingdom’s mobile services sector could provide the required boost.
“Liberalization of the mobile market offers enormous growth potential for advanced mobile services and content in Saudi Arabia, where most consumers use their mobiles for voice and SMS only,” said Phuthuma Nhleko, CEO of the MTN Group, Africa’s leading mobile operator, and a bidder for the second mobile license in the Kingdom.
Part of the business model of the new operator must be a strategy to nurture and encourage growth of Saudi mobile application and content providers. According to Gartner, end users in Western Europe spent a staggering $1.09 billion in mobile applications in 2003. Ringtones, logos and screensavers accounted for $691 million of this, with $121 million on games and $317 million spent on applications.
Another research group, Strategy Analytics, estimated in a 2003 report that downloadable games (downloaded and stored on handsets) hit $655 million worldwide, and predicted that this market will reach $6.2 billion by 2008. The local market potential is big as Saudi users become attuned to using their mobiles for more than voice.
“Wireless Application Service Providers (WASPs) in South Africa have developed a range of world-class services, and similar business models can be effectively applied in Saudi Arabia,” said Nhleko. Products range from simple, fun services (such as real-time wind reports for people sailing) to high-end business applications.
Mobile commerce applications allow small contractors such as electricians to take payment on the spot for services, while mobile banking applications used by some major banks allow customers to manage their accounts or get notifications about payments coming in.
“The mobile operator plays a huge role in assisting entrepreneurs by giving them access to its network and billing systems to make it easy for customers to pay for the services, and to save the application provider the cost of having to manage their own billing,” adds Nhleko.
The future for mobile is definitely going to be a mixture of data and voice. Sun Microsystems, creator of the Java “device independent” platform, estimates that mobile handset manufacturers with combined market share of over 80 percent support J2ME (Java 2 Mobile Edition). Nokia estimates that 10 million Java applications are downloaded worldwide per month. As Microsoft’s mobile platform also gains popularity, the sky is the limit as more powerful applications are developed for mobile devices.
