Date 15.09.15 Our ref. RDR

Date
Our ref.
15.09.15
RDR
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Keywords ..................................................................................................................... 2
Abstract ........................................................................................................................ 2
Market Introduction ................................................................................................... 2
Consumer Electronics ................................................................................................ 4
Information Technology (IT) .................................................................................... 5
Software and Services .............................................................................................................. 5
Hardware ................................................................................................................................... 5
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Telecom ........................................................................................................................ 5
Dubai Internet City ..................................................................................................... 6
ICT Events ................................................................................................................... 7
Conclusion and Recommendations .......................................................................... 7
Consumer electronics, TV, Phone, IT, Computer, Entertainment, Cloud,
Hardware, Software, Service, Smart City, Smart Government, Telecom, Dubai
Internet City, Arab Future Cities Summit, Communication, Business IT.
The main purpose of this report is to give a short introduction to the ICT sector in
the UAE. It can be concluded from the report that the UAE displays great
opportunities for companies operating within this sector since the UAE is
experiencing an increase in GDP, population and spending. Consumers, businesses
and the government of the UAE are increasing their demand within Telecom, IT
and Consumer Electronics. The free zone Dubai Internet City promotes doing
business in the UAE and offers company set ups with lucrative advantages for
foreign firms within this industry.
The UAE is an interesting market for Danish companies within the ICT market
due to the very favorable future prospects. The GDP growth rate in the UAE has
been estimated to be 3.5% in 2015 and has been forecasted to be 3.6% from 20152019 (on average). Furthermore there has been estimated an annual growth of 10%
in the population. Finally other factors make UAE an interesting market in terms
of ICT such as the massive investments in Expo 2020 and UAE as a strategic
location in the MENA region.
The ICT sector in UAE has already a positive growth outlook based on current
market dynamics. However the anticipated increase in investments and visitors into
UAE in the run-up to Expo 2020 will strengthen the market volume and value
growth forecast in the country.
The UAE is a regional outperformer in the following sectors: telecom, information
technology (IT) and consumer electronics. This is due to positive industry-specific
factors such as ICT free trade zones i.a. Dubai Internet City and macroeconomic
fundamentals including relative political stability and economic growth. For more
information about free zones in UAE please see the section about Dubai Internet
City.
The positive trend is expected to continue before and after Expo 2020, creating a
stable, positive long-term growth opportunities for companies along the value
chain of the ICT sector. The organizers of Expo 2020 expect the event to bring in
23 billion dollars whereas the UAE government is spending approx. 6.5 billion
dollars on infrastructure projects including IT/Telecom infrastructure1.
Business IT spending in the UAE reached 4.63 billion dollars in 2014 which means
an increase of 8.3% compared to the year before according to International Data
Corporation. IDC has made a forecast that shows a stable and positive growth in
the ICT market in the period 2015-2017. The reason is the governments of Abu
Dhabi and Dubai continue to spend resources on upgrading the country’s
infrastructure. The public sector which includes government, education and
healthcare organizations will account for the most of the business IT. “Combined
Finance” is the second-largest contributor to the spending in business IT in UAE.
Combined Finance accounts for banking, insurance and securities. Next Consumer
IT spending in the UAE accounted for 30.5% of total IT spending in 2014,
however it will decrease 8.4% year on year due to the stagnating PC market that is
being cannibalized by the growing demand for tablets2.
A new study shows the IT Sector in the UAE will grow 8.8% in 2015 and reach
5.09 billion dollars. BMI Research Center sees software and service at the leading
industry in 2015 and the main reason for the positive growth-rate. The UAE is one
of the regions fastest growing Enterprise Resource Planning (ERP) markets as
modernization initiatives continue in an effort to increase international
competitiveness3.
IDC's United Arab Emirates Vertical Markets 2013–2017 IT Spending Forecast
The Networked Readiness Index (NRI) measures the capacity of an economy to
fully leverage ICT for increased competitiveness and development amongst 148
countries. In 2014 the UAE was ranked:
http://www.bmiresearch.com/news-and-views/expo-2020-a-boon-for-the-ict-sector:
BMI
Research, Expo 2020: A boon for the ICT Sector
2 http://www.idc.com/getdoc.jsp?containerId=prAE24765314: IDC, IT Spending by UAE
3 http://www.emirates247.com/business/uae-it-sales-in-2015-to-grow-8-8-to-dh18-68bn-2015-0122-1.577659: Emirates 24/7 Business, UAE IT sales in 2015
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1st in mobile network coverage, in terms of the percentage of the
population covered
1st in the importance of ICT to the Government’s vision of the future
2nd in Government success in ICT promotion
2nd in ICT use and Government efficiency
2nd in the impact of ICT on access to basic services
3rd in Government procurement of advanced technologies products
This shows how important the UAE Smart Government initiative is. This initiative
will put a greater focus on mobility, not just within the devices area, but also in
terms of mobilisation of enterprise applications4.
Numbers from BMI Research Center shows the three segments: PCs, audiovisual
and handsets will be the main drivers in the positive growing demand in consumer
electronics until 2020. Event organizers have estimated that there will be needed
81,000 new hotel rooms by 2020 in UAE. New and existing hotel rooms will drive
the demand for TV sets. To meet this growing demand a lot of companies invest
in the region. For example Samsung started their production of flat-screen TVs
and computer monitors in September 2013 at their MENA factory in Egypt. They
have invested more than 280 million USD in the project.
The handset segment is characterized as a more fragmented segment due to all
leading vendors and some local brand are competing in the market. These
companies have expanded their distribution channels in the UAE the last couple of
years because of the growth possibilities. Telecom firms as Huawei, Nokia,
Blackberry, Samsung and LG have signed agreements with local telecom products
distributor Axiom Telecom to retail and distribute their smartphones and other
mobile devices. Axiom manages hundreds of retail outlets across the UAE in
prime shopping locations as malls, forecourts and airports.
This diagram from BMI
Research Center visualizes the
growth perspectives for the
consumer electronics market in
the UAE5.
http://www.m-gov.ae/regionalictmarket.html: Regional ICT Market, 2014
http://www.bmiresearch.com/news-and-views/expo-2020-a-boon-for-the-ict-sector:
Research, Expo 2020: A boon for the ICT Sector
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BMI
As described under the market introduction, the software and service industry is
the main driver for the growth in 2015. The software sales has been estimated to
reach 3.549 billion AED in 2015 and compared to the sales from 2014 at approx. 3
billion AED this is an increase of 15.47% according to BMI forecast.
DCI Research firm has forecasted that managed services will be a leading growth
area, especially with growth of cloud computing and real-time analytics
accelerating. For example Etisalat has adopted Microsoft Lync, which can connect
people across Windows and other operating systems (including mobile devices).
This is one of the indications that there will be heavy investments in mobile
broadband networks also the smartphones has laid the foundations for growth in
the region’s enterprise mobility solutions market. BMI expects that Microsoft’s
cloud-based mobility solutions will continue to be a key selling point for its
software in the UAE and across the Middle East6. Furthermore DU (national tele
company) has made an analysis that shows Virtualization (data centers) and Cloud
services are still the top 2 of IT initiatives in the region7.
The UAE Computer market is forecasted to grow 8.47% annually until 2018
according to research note published by Dubai Chamber of Commerce and
Industry based on a research from Euromonitor International. The UAE IT Sales
market was in 2014 divided as follows: 52% hardware sales, 30% IT services and
18% software sales.
Portable computers and laptops have the dominant shares in the computer market
in UAE. According to NRI of 2014, the UAE ranks highly at 4th out 148 countries
in firm level technology absorption and about 85% of households have a personal
computer. Furthermore the tablet computers have become more and more popular
among consumers. Due to the growing demand for computers in developing
countries and UAE’s strategic geographical position at the cross roads between
Asia and Africa, The UAE has become an important trading hub for computers
manufactured in Asia to be re-exported to the growing consumer markets of
Africa8.
The Telecom market in the UAE is characterized as a duopoly between the two
state-owned companies Etisalat and DU. Both companies are set to benefit from
new subscriptions and roaming charges. In May 2013 the Telecommunications
Regulatory Authority (TRA) said that it will allocate the 700MHz and 800 MHz
frequency bands for the exclusive use of mobile broadband services. This allows
Etisalat and DU to extend their network coverage beyond urban areas into the
UAE’s desert regions. DCI expects Etisalat and DU to increase their capital
http://www.emirates247.com/business/uae-it-sales-in-2015-to-grow-8-8-to-dh18-68bn-2015-0122-1.577659: Emirates 24/7 Business, UAE IT sales in 2015
7http://vae.ahk.de/fileadmin/ahk_vae/Members/Committees/ICT_Opportunities_for_SME_and
_Large_Enterprises.pdf: Du, Top 5 IT initiatives
8 http://www.dubaichamber.com/en/news/dubai-chamber-analysis-shows-uae-computer-productmarket-to-grow-by-8-47-a-year-to-2018: Analysis of UAE computer product market
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expenditure over the next years and organize the new frequencies in order to
prepare their networks to manage the higher demand for communication services,
especially data.
Equipment vendors are investing in the market to take advantage of these
opportunities. Last year Huawei Technologies announced the opening of a logistics
facility in Dubai. This will allow the company to cut delivery of ocean shipments to
30 days and quickly respond to urgent requests from regional customers. Huawei
has secured a number of high profile contracts in the Middle East and arises as
Ericsson’s major rival in the region.
This diagram from BMI Research
Center visualizes the growth
perspectives for the Telecom
market in the UAE9.
Dubai Internet City was established in 1999 and is one of the largest Information
and Communications Technology (ICT) business parks and free zones in the
Middle East and North Africa region. The ICT business park hosts a dynamic
international community of IT companies which include Fortune 500 brands as
well as a number of growing enterprises, entrepreneurships and ventures:
Microsoft, Dell, Intel, IBM, Canon, General Electric and Cisco. DIC provides an
environment that attracts all elements of the ICT value chain, and in addition, has
developed several programs that can be leveraged by the community to explore
and expand channel development opportunities.
In Dubai more than 20 free zones exist offering business licenses to foreign-owned
businesses. Each free zone is designed around one or more business industries and
offers comprehensive services for doing business in UAE and company set ups. A
company set up in a free zone is attractive, as it offers 100% ownership, tax
exemption and office and warehouse facilities.
Companies located at DIC also enjoy a host of free zone benefits including 100 per
cent ownership, absence of corporate and personal income taxes or customs
duties, as well as free repatriation of capital and profit in any currency. Companies
set up in DIC enjoy an environment that attracts different elements of the value
chain from Banking and Finance, Insurance, IT, Legal to Airlines and Hospitality.
DIC also offers a so called one-stop shop”. This is a package solution the free zone
offers companies in the zone and covers:
9http://www.bmiresearch.com/news-and-views/expo-2020-a-boon-for-the-ict-sector:
Research, Expo 2020: A boon for the ICT Sector
BMI
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Swift Registration Process
Company Incorporation
Trade License
Visa Services
Telecom and Internet Services
Data Services
Facilities Management
Health, Security and Safety Services
This is giving the business partners in DCI the freedom to focus on their core
operations.
Arab Future Cities Summit Dubai 2015
Arab Future Cities Summit Dubai is an exhibition held every year in November
and it is dedicated to the “Smart City” concept. The exhibition is hosted by the
Government in Dubai and Dubai Municipality. Arab Future Cities Summit Dubai
is considered to be the Middle East region’s foremost smart cities event and in
2014 there were more than 350 senior executives, city and government officials,
sustainability experts and smart city solution providers participating in the event.
The exhibition focuses on UAE’s commitment to innovation and the country’s
mission to be a global innovation engine. The seven pillars of municipality, groundtransport automation, police, national security & defence, utilities smart grid, travel
& tourism and retail are expected to power Dubai’s march towards attaining its
smart city goals in time for the World Expo 2020 and will be main subjects in Arab
Future Cities Summit Dubai 201510.
Interesting facts about AFCS Dubai:
 30+ industry expert speakers
 7+ hours of networking
 350+ delegates attend each year
Events by Dubai Internet City
Dubai Internet City is hosting several events during the year with its partners from
the free zone. These events are about everything from consumer electronics to
mobile innovations to even app building, just to mention a few examples. They will
keep updating their event list during the year on their homepage:
www.dubaiinternetcity.com/existing-partners/events.
The UAE is experiencing a positive and stable growth in the ICT market. The
growing demand caused by the government’s new investment plan until Expo
2020 will benefit the Telecom, IT and Consumer Electronics market significantly.
The government will focus on the smart government and the smart city concept
and therefore investments will be used on IT/Telecom infrastructure. Furthermore
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http://www.smartcitiesdubai.com/: about AFCS 2015
the needed 81,000 new hotel rooms, to meet the demand from Expo 2020, will be
the main driver in the growing consumer electronics markets, both TVs and data
subscriptions.
Due to Expo 2020 and the ambition of being a global ICT hub, investments in
ICT, especially the smart government and the smart city concept, are essential for
the UAE. In addition to that the government of Dubai has created things as Arab
Future Cities Summit Dubai and the free zone Dubai Internet City to attract
foreign companies.