Smartphone Generation

In case you hadn’t noticed, the MENA region is undergoing a mobile Internet revolution.

By Khaldoon Tabaza

What’s the biggest indicator related to the online market opportunity in the UAE and Saudi Arabia that beats all other developed and developing countries? Just take a look at people in coffee shops, malls, or even at family gatherings, you’ll notice immediately that everyone has a smartphone. To be specific, 74 percent of all mobile phones in the UAE and Saudi Arabia are smartphone devices, beating South Korea, which comes in second place with a penetration rate of 73 percent. Other emerging online markets such as Russia and Brazil have smartphone penetration rates of only 36 percent and 26 percent, respectively.

The fierce competition between the GCC and South Korea in this regard becomes even more interesting when you know that the total population and GDP of the GCC are very similar to those of South Korea. The contrast, however, is that South Korea has produced mobile gaming and application companies that are worth billions of dollars, and is starting to spread the products of those companies worldwide. So what’s in it for local and regional online businesses in our region?

The proliferation of 3G and 4G networks, in addition to Wi-Fi networks in public places, has enabled successful online businesses with strong strategies to capture mobile users wherever they are. I believe the companies that iMENA Holding has investing in stand as a good example of this. Online food ordering business, Hellofood, receives almost 80 percent of its orders via mobile in Saudi Arabia. OpenSooq, an online classifieds business, gets approximately 50 percent of its traffic via its mobile site and its application, which was downloaded more than 2.5 million times in less than six months. In fact, certain online business models are built almost exclusively for mobile applications, including mobile taxi hailing, mobile messaging, and mobile gaming.

Not only do smartphones offer users the freedom to perform online actions anywhere and anytime, they also offer specific capabilities that aren’t always available on desktops and laptops. This includes location-based services, operator billing (overcoming the challenges of online payments), and a much easier integration of voice, photos, and videos.

In many ways, smartphones have brought online services to a new category of users in the Middle East, who weren’t users of desktop computers or laptops. This has particularly been the case in countries like Iraq, where mobile infrastructure has leapfrogged fixed-lined infrastructure.

Even in more mature online markets, new users—including teenagers and the elderly—view smartphones and connected smart devices as their primary online device, contrary to the traditional view that mobile is just an ancillary channel. In a couple of years, if not earlier, we shouldn’t be surprised if smart devices become the primary online channel for all users.

However, embracing online users isn’t exclusive to smart websites, but has extended to include “smart governments.” Here it’s important to mention the UAE’s e-government program, which is quickly making it the first country in the world to extend almost all government services to smartphone devices in record time.

The most notable sector that’s lagging behind in optimizing and focusing on mobile strategies in the region is traditional media, because while versions of traditional media are available online, mobile presence is poor. We are yet to see a powerful second-screen application that leverages the power of smartphones for leading TV or radio stations, and advertisers have not yet explored the powerful benefits of being able to interact with users who watch their TV or hear their radio advertisements while holding their smart devices. Additionally, print media that produced mediocre web versions haven’t invested beyond producing simple mobile sites and applications, while mobile screen advertising is yet to be fully leveraged to reap meaningful returns to advertisers.

The smartphone market dominance seemingly happened over night. It may have taken many media and commerce operators by surprise, but there’s no turning back and they’ll have to adapt to survive.