Frost & Sullivan’s recent analysis report titled ‘Innovative Business Models Spur Growth of Middle East ICT Market, Outlook 2021’, points that the Digital transformation initiatives undertaken by the government and enterprise’s acceptance of disruptive technologies are set to accelerate the Middle East ICT market growth.
As a result, it is expected to reach $95.05 billion by 2025 from $84.23 billion in 2020 at a compound annual growth rate (CAGR) of 2.4 percent.
“Rising demand for technologies, including artificial intelligence (AI), machine learning, and internet of things (IoT), will drive market growth. 5G, classrooms of the future, eGovernance, next-generation healthcare, smart cities, smart mobility, and smart tourism are key focus areas for governments and enterprises.”, said Shibapriya Saha, Program Manager at Frost & Sullivan.
She further added that as enterprises in the Middle East move to the cloud-based model, the region will become one of the most profitable markets for global cloud and data center providers.
Industry and technology convergence is redefining organizational boundaries, and the focus is on developing innovative, cross-industry business models, such as FinTech (financial services), EdTech (education), and MarTech (marketing).
Iraq, Oman, and Egypt will drive the next wave of growth in the Middle East.
Qatar, along with Egypt, will witness the fastest growth, while Saudi Arabia will remain the largest market throughout the forecast period. In addition, the improvement of diplomatic ties between UAE and Israel, the revival of the relationship between Qatar and other GCC countries will provide a significant boost to regional economies, the report added.
Middle East ICT Market Highlights
To monetise 5G investment, operators are gradually shifting focus from the consumer segment to the business segment by developing enterprise-centric service portfolios.
In October 2019, STC became the first operator in the region to launch an exclusive 5G connectivity service for enterprises. Key solutions provided by STC are dedicated access to data and internet, and on-demand services, such as CCTV and cloud PBX.
In the Middle East, 5G services became available from 2019. The first commercial launch of 5G mobile networks happened in Qatar (Ooredoo in May), UAE (Etisalat in May and du in June), and Bahrain (BATELCO in June).
In June, several operators also launched the 5G-based fixed wireless access (FWA) service; for instance, Zain, Ooredoo, and STC in Kuwait; STC in Saudi Arabia; du in UAE; and STC and BATELCO in Bahrain.
As leading global data centre and cloud computing providers look to expand capacity and strengthen their geographic footprint in the Middle East, they are making significant investments in cloud infrastructure.
In June 2019, Microsoft launched its first data centers in the Middle East in Dubai and Abu Dhabi; in July 2019, Amazon Web Services, Inc. (AWS) opened three data centers in Bahrain.
Tapping the growing demand for M2M and IoT applications, including fleet management, geo-location, and gas, water, and electricity telemetering, operators in the region have been investing heavily in the expansion of IoT networks.
For example, in October 2019 Vodafone Qatar launched a nationwide narrowband-IoT (NB-IoT) network.
Following the formal recognition of Israel in Q4 of 2020, UAE re-established diplomatic ties with Israel, and Egypt followed the suit.
This was a major milestone and will have a significant impact on the regional economies. Emerging opportunities are expected to be driven by technology exchange, cross-country trade, and co-investment in national projects.
Industries, such as retail, construction, professional services, hospitality, and trade are expected to be the first ones to ride the wave.
Growth Prospects
5G networks’ ability to provide massive machine-type communication will accelerate its adoption in the GCC IoT/M2M (machine to machine) industry and will support use cases such as connected cars, grid management, fleet management, utility meter reading, and track-and-trace systems for logistics.
The adoption of IoT will primarily be driven by the manufacturing and industrial sectors as they look toward adopting and implementing concepts such as Industry 4.0 and predictive maintenance.
Banking, retail, and healthcare are expected to be the forerunners in the large-scale adoption of AI in the Middle East. These are labor-intensive sectors and will provide immense scope for industrial automation.
Business risks associated with cyber-attacks and the consequent negative impact on enterprises’ brand value and perception will drive future cybersecurity investment in the Middle East.
The growing consumer appetite for on-the-go gaming and the surge in in-app micro-transactions will support the development and the transformation of the eSports and gaming industry in the region.
