By Ronan Shields
The demand for real-time connectivity among the enterprise sector is prompting advances in the push email segment in the Middle East and Africa. Ronan Shields speaks to some the region's major players to profile the development of the market.
The rapid development of the Middle East's business sector in the past decade has proven a boon for the mobile telecoms industry as companies increasingly embrace the concept of ‘always on' connectivity solutions.
This has typically been achieved using mobile voice telephony but technological advances have changed the nature of commercial demand with end-users increasingly demanding on-the-go email solutions as a basic.
In the previous five years the market has developed with ‘user-initiated' email services becoming available on GPRS handsets enabling users to connect to their office server, or webmail from remote locations.
However, the limited connectivity, and ‘user-initiated' nature of this solution has led the market's enterprise segment to turn towards ‘push email' solutions to increase their employees' productivity.
The region's consulting, financial and service sectors have thus far fuelled the push email solution market. Analysts suggest the regional enterprise market has been driven by the growing demand for real-time information services by these segments of the market, along with their willingness to pay the heady premiums associated with the service generally.
Ghassan Hasbani, principal communications and technology practice analyst at Booz Allen Hamilton, believes that the Middle East market is in the process of copying the progression of ‘mature' markets, such as the US and western Europe, with the enterprise sector effectively driving demand.
"The region will follow the typical push email market evolution with the development of the enterprise sector followed by the retail segment," states Hasbani. "This evolution pattern is due to the fact that enterprise customers are willing to pay a premium for real-time connectivity whereas the retail sector of the market is more cost sensitive. This pattern is clearly supported by the evolution of ‘developed' markets in the US, Europe and Japan," he adds.
Industry players surveyed by
also report that the regional push email market is enjoying a period of expansion and is currently bracing itself for exponential rates of growth in coming years.
Emitac Mobile Services (EMS), regional channel partner for mobile email industry leader BlackBerry, reports growing demand in the region having partnered with four network operators so far, including Etisalat, its subsidiary Mobily in Saudi Arabia, as well as Batelco and Fastlink in Bahrain and Jordan respectively.
"The acceptance of this technology in MEA has shown promise and we are anticipating the regional market for push email-enabled products will continue to grow in the coming years," says EMS chief executive, Babar Khan.
"Our strategy is to work with the carriers to enhance the awareness of the Blackberry solutions and products in the region and to provide affordable access to the solution in each of the markets."
EMS also reports that the ability of service providers to communicate the benefits of push email to the region's small and medium business (SMB) sector is crucial to the development of the market.
"The onus is on network operators to communicate with the market on the benefits of their tailored solutions and packages and how this can increase the efficiency of comparatively small work forces that need to maintain contact with colleagues and clients alike when they are on the move," says Khan.
Hasbani agrees, adding that a degree of price moderation is required to entice customers to make further use of push email services and applications.
"Network operators need to educate their customers on the value provided by such a service to stimulate the market. They would also benefit from promoting the fact that a wide range of handsets available today support push email and are affordable, and hence decrease the barrier to market entry," says Hasbani.
He also maintains that an increased level of cooperation between different tiers of the market is necessary to stir demand from the region's end-users.
"Operators need to make the push email services more affordable and potentially subsidise the handset price or work with vendors to make cheaper handsets available. This is particularly true for Blackberry handsets, which are currently market leaders in both push email technology and market share, and command very high handset prices," he claims.
Hasbani also believes that SMBs could potentially trigger a surge in demand for the market with a series of initiatives to accelerate user-uptake of the devices among their employees.
"With customer acquisition costs increasing, it will be expensive for regional companies to introduce handset subsidies especially since contracts cannot be easily enforced," he claims.
However, some segments of the industry claim that the introduction of ‘employer subsidies' in the handset market would undoubtedly serve to stimulate service adoption rates and usage. Hasbani maintains this would translate into increased utilisation of the current data networks and offset the cost associated with network subsidisation as well as bolster handset sales of push email-enabled handsets.
EMS' Khan believes the push email market will flourish in countries with rapidly developing business sectors, such as the Gulf states, where such economies have proven to be the strongest markets in this segment. "We expect countries with larger corporate sectors to provide the bulk of this growth in the region," Khan predicts.
The fast growing business sector of the regional enterprise segment has also led to speculation that the Middle East and Africa push email segment will achieve maturity at a faster pace than the established markets of the US, Europe and Japan.
"Like any emerging market, there is a nesting period, followed by a steep growth curve and then sustained linear growth. Given the GCC region's reputation as an early adopter market I would predict the regional growth of push email services to outstrip that of the mature markets in the coming years," suggests Khan.
According to Mohsen Malaki, research and consulting director of IDC in CEMA, telcos in the region have long talked about being customer-focused or customer-centric but few have really gone beyond the slogans to implement such strategies to date.
Vendors eager to buoy the market for their technology are leading the way in promoting the push email market segment in the Middle East and Africa, with 2007 earmarked as a make-or-break year.
Motorola, for instance, aims to exploit its recent acquisition of mobile computing software and service provider Good Technology to increase penetration rates in the region. "At present there is a low rate of penetration in the MEA region but in the next five years we do expect a period of single digit growth," states Bilal Saleh, director of applications services for Motorola, EMEA.
Saleh also maintains that regional network operators have expressed a strong desire to exploit the opportunities presented by the development of new telecoms infrastructure in the Middle East. "We are collaborating with our partners to minimise operational costs, given the comparatively low levels of revenue generated by providing push email services," says Saleh.
Kuwaiti-based network operator Wataniya Telecom has provided push email solutions for its enterprise customers since 1Q06. The company reports that the market segment is not as profitable as other market services.
"The push email segment does trail the other data services [SMS traffic] in terms of revenue generation but is it is growing as we highlight the benefits of utilising these services to end-users," claims Jukka Paasivaara, Wataniya Telecom's director of sales. "The compact nature of the Middle East market, combined with the relative wealth of end-users, means it is not as price-sensitive but this should change as the number of end-users increases."
Wataniya's introduction of its ‘Wmail' service last year targets youth subscribers in the consumer market, and Motorola's Saleh agrees with the view that tailoring solutions to target the region's youth is a key strategy.
"Successfully capturing this segment of the market will depend on the ability of network operators and vendors to extend push email services to be compatible with social networking services," Saleh believes. He says the emergence of the youth sector in the market will prove a push factor given the technology-savvy nature of youngsters.
Mobile handset market leader Nokia believes the region is witnessing the emergence of a new breed of end-user that is driving penetration higher. "In the Middle East and Africa markets there is a surge in what we call the ‘pro-sumer' segment," explains Joe Devassy, head of Nokia's enterprise solutions in the Middle and Near East. "At present I'd say they account for approximately 80% of the regional market [for push email] in terms of end-users, and I would define a ‘pro-sumer' as an end-user who will use their push email application [provided by their employer] for personal use as well."
Devassy highlights that compatibility is a key factor in the development of the regional email market saying the current nature of the market means that the majority of end users purchase their handsets without thinking if it will be compatible with push email services.
"This is why we made our solutions ‘device agnostic' meaning that end-users can connect to Nokia's services regardless of the brand of their handset," he says.
Nokia will concentrate on the Saudi Arabian market in 2007 citing the country's large population and high rates of adopting new technology as its principal motivation.
"Saudi Arabia will be the focus of our activities in 2007 across the Gulf region. Push email is a door opener for network operators that can revitalise existing business relationships and make themselves an attractive option for new ones," says Devassy.
IDC's Malaki also believes that in the wider Middle East and Africa market the economies of Turkey, Egypt and South Africa will see a notable rise in demand for push email solutions.
Further down the line he envisages Nigeria's burgeoning oil and gas industries triggering a similar effect on the market.
Booz Allen Hamilton's Hasbani maintains that the fate of the push email market depends on the ability of the region's network operators to increase service penetration and customer awareness.
He believes that as service penetration increases, and price decreases as customer awareness grows, there will come a time when the market experiences a swell in the number of early adopters in the consumer segment, followed by the retail mass adoption.
"It is not the priority of companies at present due to the relatively high cost of service and handsets, however if those issues are resolved, and I believe they will be, the Middle East and Africa could easily become a prime early-adopter market for push email," Hasbani concludes.