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Tapping the App market

Tapping the App market

In the increasingly tech-savvy Gulf mobile apps are becoming big business

A recent study by telecoms equipment firm Ericsson forecast that mobile subscriptions in the Middle East and North East Africa are set to reach 970 million by 2020. Of these, 40 per cent will be smartphones – indicating a substantial market for businesses to serve.

Apps have changed consumer habits in the region with users increasingly reaching into their pockets to fuel their app addiction.

According to the latest study by mobile market research firm On Device Research, almost 41 per cent of the users in the UAE downloaded paid apps over the last 30 days, increasing to 51 per cent in Saudi Arabia. More broadly 50 per cent of users in Egypt, Lebanon, Saudi Arabia and the UAE downloaded more than five apps – both paid and free – in the last month with gaming and social media the most popular choices.

Around 44 per cent of the consumers performed in-app purchase, the poll showed. Of which 39 per cent said that they paid to avoid advertisements while around 37 per cent paid to get additional content.

“People are more willing to pay to get more content, which is good news for the region,” says Nader Kobeissi, managing director, MENA, On Device Research.

“We also looked at whether the same people who paid for the apps do the in-app purchases and the answer is pretty much yes. Only 3 per cent paid for an app and did not do an in app purchase. To me it is that if you get somebody to pay for the app, you will definitely get somebody to pay for an app again.”

Noting that more than half of users (53 per cent) had not bought apps in the region, Kobeissi says there is still a significant opportunity for developers to tap into the market and monetise their offerings. Although, he noted several barriers preventing more app purchases in the four countries surveyed.

“One of the reasons that people don’t spend too much on apps is that they have trust issues with the mobile payments or they have privacy issues where they don’t want to give personal details. But that is not the number one reason here in the region. Users are looking for apps and they want to buy them but they don’t find the right ones. That is good news for developers.”

There is pent up demand for Arabic language apps in particular, he says, with 68 per cent of users searching for Arabic language content. This increased to 81 per cent in Saudi Arabia, although there was less demand in the UAE (39 per cent) where the high percentage of expats impacted the results.

“But if you look only at Emiratis and other Arab expats then that percentage is as high as 68 per cent,” Kobeissi clarifies.

Making business sense

As apps gain traction in the region, governments and businesses too are looking to make use of the medium to offer services.

The UAE has been at the forefront of transitioning to the app economy. According to a decree by UAE Vice President, Prime Minister and Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum all government services will be offered through mobile apps by 2015.

Businesses that have an online presence, especially e-commerce firms, are also taking app development seriously – experts say.

Performance marketing firm Criteo, which specialises in increasing user traffic to websites, says that businesses are waking up to the app potential.

“I think clients are a bit behind in terms of having the site on app up and running,” says MD Eastern Europe and Middle East and Africa Dirk Henke.

“But it is becoming more important as they are now launching it and are massively catching up. It is becoming a crucial part of an e-commerce business to not only offer a mobile friendly browser but an app as well.”

Much of Henke’s optimism about the relevance of apps also comes from the increasing role of mobile among Gulf consumers.

Criteo, whose clientele includes e-commerce players Souq. com and Marka VIP, reports that almost 30 to 32 per cent of all its clients’ business in the UAE comes from mobile phones, growing 9 per cent year-on-year.

“A year ago a lot of clients had not even started looking at it but now they have fully understood that this is what they need to do since it is a great market opportunity. You could be quite big in the desktop sphere but if you are not quick to transition to mobile then others could substitute you, even in desktop,” he adds.

Criteo was unable to provide data quantifying the amount of business that is being done by its e-commerce clients through mobile apps and mobile browsers. But Henke says that traffic from mobile has the potential to grow up to 50 per cent by the end of this year, owing to the rapid rate of adoption among users in the UAE.

Not an unbelievable figure given the growth of mobile in the local market.

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