Dubai Future Economy Strategy - EngageDXB

Dubai Future Economy StrategyDubai’s ICT & Publishing Sector, 2017 – Outlook and Trends



Dubai is a global ICT hub – Increasing demand for ICT solutions in the future is expected to attract international companies

• The ICT industry in the UAE is monitored by the Telecommunications Regulatory Authority and is the most developed in the MENA region.

• High per capita IT spending and a young tech-savvy population have led to increase in demand for IT products with latest technology.

• The ICT sector is expected to create 45,000 jobs between 2014 and 2021.

• EXPO 2020 and ‘Smart City’ initiatives have led to increase in spending and thereby resulting in creation opportunities and innovations.

• In the UAE, the IT industry was valued at AED 17 Billion in 2015 and is expected to reach AED 22 Billion by 2019.

• The per capita spending in the IT market in the UAE was AED 1,785 in 2014 and is expected to cross AED 2,000 by 2018.

• The mobile penetration rate in the UAE is more than 200% and has an extensive 4G coverage.

• Dubai’s business friendly environment and dedicated free zones for media, IT, printing & publishing to attract international companies.

Image Source: Frost & SullivanSource: Government of Dubai Website; TRA; Frost & Sullivan


IT Services FirmsHeavy investments in IT projects to enhance Dubai’s digital transformation of the economy

• The IT Services market in the UAE is the fastest growing segment in the IT market.

• It was worth ~AED 6.5 Billion in 2016 and is expected to reach AED 8.5 Billion by 2019.

• It is expected to grow at CAGR of 10% between 2016 and 2020.

• Managed services is expected to present significant opportunities for IT Services firms with an increase in outsourcing done by both the private sector and public sector.

• The MENA region is the world’s second largest outsourcing market after China and is expected to be worth ~AED 26 Billion by 2018.

• Dubai Outsource City is a business park similar to free zones dedicated for outsourcing companies. It supports the development of the IT services firms in Dubai.

Dubai Outsource City (DOC)

• It is a business park with world-class infrastructure facilities dedicated for outsourcing companies both local and international.

• The processes supported by DOC are HR outsourcing, IT outsourcing, Business Process Outsourcing and call centres.

• Even though it is not a free zone, some similar benefitis enjoyed by DOC are- 100% ownership, and- Tax-free income

Image Source: Freepik.comSource: Dubai Chamber; TECOM; Frost & Sullivan


Hardware FirmsHardware’s make up for 50% of the UAE’s IT sales and mobility factor has led to shift in demand from PCs to notebooks and handhelds

• Hardware is the largest segment in the UAEs IT industry, which was worth ~AED 8.5 Billion in 2015 and is expected to reach AED 8.7 Billion by 2019. .

• However, IT hardware sales has been affected due to the shift from PCs to tablets as a result of the mobility factor.

• An emerging segment within the IT hardware market is the gaming segment.

• While the general PC market is seeing a decline, the gaming PC market experienced growth in the UAE and globally.

• This is mainly due to the gamers who spend high on stylish and advanced hardware products, upgrading on a regular basis.

• The global gaming PC market was worth ~AED 110 Billion in 2016 and is expected to grow further due to increasing demand.

• There is an increasing demand for entry-level and mid-level gaming PCs and laptops in the UAE.

• Convertibles and detachable hardware products are also expected to have growth in demand.

• However, the growth in the gaming segment is expected to have only a meager impact on the overall hardware market as the other segments are declining.

Image source: Freepik.comSource: Dubai Chamber; Frost & Sullivan


Software FirmsDubai is a software hub in the Middle East and is expected to grow at 9% due to rise in demand for enterprise software solutions

• Dubai is an emerging software hub for the GCC region.

• The software industry in Dubai has been growing rapidly compared to the hardware industry.

• The software market was worth ~AED 3.5 Billion in 2016 and is expected to reach AED 4.7 Billion by 2019.

• The ‘Smart Dubai’ initiative by the Dubai Government is expected to be the key driver of the application and software industry in Dubai.

• The UAE is the fastest growing Enterprise Resource Planning (ERP) market in the GCC region.

• This is mainly due to large number of modernization initiatives undertaken by both the public and private sector in the UAE to increase the efficiency and attain international competitiveness.

• Rapid digitization in the UAE and the other Middle East countries has resulted in increased demand for cyber security products to protect themselves from cyber attacks.

• The Government’s and companies must develop their capabilities to handle both preventive and reactive, in order to reap the full benefits of digitization.

• The Government to ensure that all companies that deal with sensitive data such as banking firms are required to follow stringent safety measures against cyber attacks as directed by National Electronic Security Authority.

Cyber Security market in the GCC to reach ~AED 40 Billion by 2022

Image source: freepik.comSource: Dubai Chamber; Frost & Sullivan


Telecommunication Firms (1/2)UAE is ranked 1st in the world for mobile phone penetration; Mobile data earnings to grow the fastest due to high demand

Telecommunication market in the UAE is a duopoly market; Etisalat and du are the two players partly owned by the Government.• Etisalat had a market share of 52%, while du

had a market share of 48% in 2016. • The revenue of the UAE’s telecom sector was

~AED 33 Billion in 2016 and is expected to grow at a CAGR of 5.4% between 2016 and 2020.

• Mobile services had the major share of revenue followed by Internet services and fixed telephone services.

• The UAE’s telecom market is expected to grow at a CAGR of 3.7% between 2016 and 2021.

• The UAE has the highest mobile phone penetration rate in the world with 200%.

• In 2016, Dubai had 6.35 Million mobile subscriptions and 1.39 Million fixed line subscriptions.

• Use of fiber optic technology and 4G services are expected to boost the mobile data and fixed broadband subscriptions.

• Voice Over Internet Protocol (VoIP) is another fast growing segment in the telecom sector and only Etisalat and du are allowed to provide VoIP services in the UAE.

• The telecom operators are expected to mainly focus on improving mobile broadband, which is expected to drive the telecom market.

• Managed services and cloud computing services by the telecom operators to add to their revenues.

The UAE is ranked 1st in mobile network coverage (in terms of % of population covered)

Telephone Lines in Dubai

Internet Lines by Type

(in Million) 2016

Number of Active Mobile Telephone Lines 6.35

Number of Telephone Lines 1.39

(in Million) 2016

Residential 494,950

Business 128,429

Image Source: Frost & SullivanSource: TRA; WEF; Frost & Sullivan


Telecommunication Firms (2/2)Digital transformation in Dubai happening at a swift rate due to high internet and mobile phone penetration levels

• Earlier, there was competition only in mobile phone services and no competition in fixed line services with du operating only in Dubai’s newly developed areas.

• But, with the agreement to share infrastructure between the two operators, it is expected that there will be competition in fixed line, broadband and TV services. Phase 1 will have competition in fixed line and broadband services, while Phase 2 will allow competition in TV services.

• This is expected to result in more competition and enable customers to choose their operator and result in competitive pricing.

• Emirates Integrated Telecommunications Company, the parent company of the du brand has launched Virgin mobiles as a third operator in the UAE targeting the young population who are brand conscious.

• Increased competition in the UAE’s telecom sector is expected to benefit the customers and Etisalat is expected to shift its focus to the domestic market to retain its leading position in the UAE.

Source: Dubai Statistics Center; Frost & Sullivan


Media and Broadcasting FirmsDubai is the hub for media & production activities in the Middle East and is expected to grow rapidly due to its world-class facilities

• The media industry in the UAE spent ~AED 2 Billion, which was 15% of the total GCC spend.

• Dubai Media City (DMC) and Dubai Studio City (DSC) are two dedicated free zones that provide infrastructure facilities for firms in the UAE’s media industry.

• National Media Council regulates the media industry in the UAE.

• There are more than 2,000 media companies in the DMC.

• Almost 80% of the UAE residents use smartphones for watching television, which is the highest in the GCC. This is mainly due to high penetration of smartphones and digital devices in the UAE.

• There are ~650 channels broadcast in the UAE and the GCC.

• Almost 90% of the total revenue come from the top 50 channels.

• The DSC is dedicated for companies that are into film production and post-production.

International Film Fund

• It was established by the Global Investment Bank.

• It acts as an investment vehicle to enable flow of

investment into Hollywood film production.

• Investors are a part of the production process and

own rights.

• This is expected to boost the local film industry in the

UAE.

Image Source: Frost & SullivanSource: DMC; Frost & Sullivan


Social MediaHigh smartphone & internet penetration to encourage the use of social media in Dubai

• Social media penetration in the UAE was 99% in 2016, mainly due to the high internet and smartphone penetration in the UAE.

• 88% of UAE’s social media users use social media through smartphones.

• The age group between 15 years and 49 years in Dubai is around 75% of the total population and use social media significantly.

• Residents of the UAE spend at least an average of 5 hours a day on social media.

• Facebook is the most popular social media

network in the UAE in terms of number of users followed by LinkedIn, Twitter, and Instagram.

• Due to strict social media laws, platforms such as Facebook, Twitter, etc., are monitored for offences.

• In Dubai, the use of social media by the SMEs and other businesses is increasing due to the connectivity with the customers and advertisement at a low cost.

Image Source: Frost & SullivanSource: Dubai Statistics Center; TRA; Frost & Sullivan


Digital MediaDigital transformation to drive the demand for digital signage’s in Dubai and is expected to grow at a CAGR of 24% between 2015 and 2020

• The UAE had the highest spending for advertisements in the GCC with a 46% share.

• The total advertisement spending in the UAE was ~AED 1.5 Billion in the Q1 of 2017.

• There is a shift in advertisement spending from traditional formats as businesses are increasingly using social media and other platforms to attract customers, especially telecom and banking sectors.

• However, healthcare, real estate, entertainment, leisure, clothing, F&B sectors are increasingly using digital format for advertising.

Digital Signage• Digital signage form of advertising using LCD,

LED to display messages and interact with the customers is a fast growing market.

• The global Digital Signage industry was worth ~AED 60 Billion in 2016 and is expected to reach ~AED 85 Billion by 2020, growing at a CAGR of 8% between 2016 and 2020.

• The UAE is expected to become a major hub for the digital signage industry due to high demand and presence of global companies that spend high on advertisements.

• The main spend is expected to come from the retail market, followed by tourism, travel, hospitality and other developments such as Dubai EXPO and FIFA World Cup in Qatar.

Share of different formats of advertisement spending

• Newspaper based advertising – 41%

• Outdoor advertising – 26%

• Radio – 20%

• TV – 9%

• Others – 4%

Image Source: Pixabay.comSource: Government of UAE; Frost & Sullivan


E-commerceE-commerce is a megatrend in and is expected to grow rapidly as a result of increasing consumer confidence in online services and ‘Smart Government’ initiative

• The E-commerce market is growing rapidly in Dubai and is seen as a megatrend for businesses in the UAE.

• It is mainly used for online shopping, online banking, internet marketing, and automated data collection.

• It has revolutionized the whole process of business transactions as it is able to facilitate a transaction at any time and also save the time taken to complete it.

• The E-commerce market in the UAE was valued AED 9.2 Billion in 2014 and is expected to reach AED 36.7 Billion by 2018.

• In Dubai, the E-commerce market was AED 3.1 Billion in 2015 and is expected to cross AED 8 Billion by 2020 and grow at a CAGR of 20.8%.

• The ‘Smart Government’ and ‘Smart City’ initiatives by the Government of Dubai are set to accelerate the growth of the E-commerce sector in the Emirate.

• In 2015, the Government of Dubai launched the first E-commerce hub of the world, Matajircom in the Emirate of Dubai to attract, promote and simplify the establishment of companies performing E-commerce activities.

• Souq.com is the major E-retailer in Dubai and has been acquired by Amazon.

Image Source: Frost & SullivanSource: Dubai Chamber; Frost & Sullivan


Printing and PublishingTextile printing and other innovations expected to create new opportunities in the market and facilitate growth

• The printing industry in the UAE is under a transition from traditional form of printing to digital printing.

• Dubai Production City is a dedicated free zone for printing, publishing and packaging in Dubai.

• Major firms in Dubai’s printing industry are Al Ghurair printing and Dubai printing Press.

• Digital printing has increased the print speeds, and provides printing companies with more innovative options in printing.

• Textile printing in Dubai is a growing segment, which is expected to present big opportunities.

• The establishment of Dubai Design District and Dubai Textile City are expected to boost the growth potential of textile printing in the Emirate.

• The textile printing industry is dominated by Screen printing, but is expected to shift towards digital textile printing.

• This is expected to help designers and boost the printing industry.

• The Publishing industry is dominated by the ITP Publishing Group.

• The publishing industry in the UAE is also expected to grow and is expected to adopt the technological advancements such as digital technology to publish electronic and audio materials.

Image Source: Frost & SullivanSource: Frost & Sullivan


Industry Restraints (1/2)In spite of various measures by the Government, duopoly in the telecom sector, lack of skilled IT and media professionals, transformation in print media …

Duopoly in Telecom• Etisalat and Du are the two dominant players which control the

Telecom industry in the Emirate of Dubai. • Du has a market share of 48% while the rest of the market

about 52% is covered by Etisalat which is the biggest and oldest player in the Emirate.

• This dominance has resulted in high telecom charges in the UAE compared to the other GCC countries.

Lack of Skilled workers in IT and Media• Although there is a good supply of talents in the job market,

companies in the UAE depend on Asian countries for highly skilled IT and Media professionals.

• The UAE depends on skilled IT professionals from India and other countries for major professions in the IT industry such as the cyber security market.

• Also, the UAE media industry majorly buys content from other countries due to lack of original content developed in the Emirate.

Transformation in Print Media• Newspapers, Magazines and other form of print information

which are static in nature face competition from digital media, which is dynamic in nature.

• Information is available on internet and social media immediately and people need not wait for the next day for printed media such as newspapers to know what is happening around the world.

Image Source: Frost & SullivanSource: WAM; Frost & Sullivan


Industry Restraints (2/2)… screening of media content, strict monitoring of social media and lack of consumer confidence in e-commerce pose challenges

Government Screening in Media• The Media & Broadcasting content are screened by the

government and it creates restrictions for this segment to comply by government regulations.

• The UAE and other GCC countries have strong cultural and religious sentiments; any offensive content found to be against the culture and religion is screened.

Social Media• The content posted on Social media sites are strictly monitored

by the government.• Any abusive or obscene posts against the moral values are

not tolerated and leads to action against whoever posted such content.

• VoIP calls through Whatsapp or Snapchat and other platforms are not allowed in the UAE as they are restricted by the telecom operators.

E-Commerce• The people in the UAE are reluctant towards shopping online

and prefer to shop in the traditional way and continue to go to malls or other outlets for shopping products.

• There is also rapid development of malls and other retail spaces in different parts of the Emirate, which are well connected to the residential spaces attracting crowds.

• It is mainly due to customer preference, lack of e-commerce penetration and lack of confidence.

• The pricing offered by different payment gateways are not easily comparable

Image Source: Freepik.com, pixabay.comSource: Frost & Sullivan


Strategic initiatives, innovations and heavy ICT investments to lead the transformation of Dubai’s economy and drive the industry

• The UAE is leading the Middle East region in the digitization.• The key drivers of the ICT sector in Dubai are digitization measures by both the public and

private sector and EXPO 2020.• The telecom sector in the UAE is expected to play a key role in the digitization through the

development of mobile broadband services, by upgrading from 3G to 4G. Etisalat plans to deploy 5G by 2020 in the UAE.

• Mobile broadband services combined with high smartphone penetration rate in the UAE have resulted in high social media usage.

• Some of the developments in the ICT sector are

• Cloud Computing Technology – Public and Private cloud computing are increasingly adopted by businesses depending upon their preferences for safety, costs, etc.

• Managed Services – Outsourcing in Dubai is expected to grow due to support from the Government in the form of Dubai Outsource City. It is expected to increase the efficiency of businesses and reduce the operational costs.

• Cyber Security – To secure data, companies dealing with large data are expected to adopt strict cyber security measures.

• E-Commerce is seen as a mega trend for businesses in the UAE. • Gaming PCs and Laptops – Gaming hardware is expected to have high demand in the

future, which is expected to result in companies develop dedicated gaming laptops and PCs at different price ranges.

Source: Frost and Sullivan


Abbreviation Expansion

AED United Arab Emirates Dirham

CAGR Compound Annual Growth Rate

DEWA Dubai Electricity and Water Authority

DIFC Dubai International Financial Centre

DMC Dubai Media City

DSC Dubai Studio City

DSOA Dubai Silicon Oasis Authority

Etisalat Emirates Telecommunications Corporation

GCC Gulf Cooperation Council

ICT Information & Communication Technology

IT Information Technology

MENA Middle East & North Africa

SDG Smart Dubai Government

SME Small & Medium-sized Enterprises

TECOM Technology, Electronic Commerce and Media

TRA Telecommunications Regulatory Authority

UAE United Arab Emirates

Definition

Middle East

Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, the United Arab Emirates and Yemen

Gulf Cooperation Council Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

United Arab Emirates

Emirate of Abu Dhabi, Emirate of Ajman, Emirate of Dubai, Emirate of Fujairah, Emirate of Ras al-Khaimah, Emirate of Sharjah, and Emirate of Umm al-Quwain

Glossary and Definitions

Source: Frost and Sullivan


Government’s initiatives strive to create world-class infrastructure; Key objective to have a sustainable development

Smart City Initiative

ICT Fund

Smart Dubai Government (SDG)

EXPO 2020

UAE Vision 2021

UAE’s ICT Strategy 2021

Mohammed bin Rashid Smart Learning Program

• Dubai plans to invest ~AED 30 Billion for the development of Smart City infrastructure.

• The smart city infrastructure will be built within the six pillars i.e. life, society, mobility, economy, governance and environment.

• A few ICT projects under the smart city initiative are Dubai m-Government initiative, free City Wi-fi and Parking App, etc.

• It was set-up under UAE Supreme Committee for the supervision of the Telecommunications sector.

• It receives its financing from 1% of the annual turnover of the UAE telecom operators Etisalat and du.

• The ICT Fund is utilized in research projects related to the sector and plans to build and operate a R&D centre.

• It will also support business incubators and educational institutions.

• ICT Fund worth AED 1.6 Billion has been invested in various ICT projects from 2008 to 2014.

• The SDG oversees the digital transformation in Dubai Government.

• It manages and supervises the official portal of Dubai Government: www.dubai.ae which features over 2,000 Government services provided by Government departments.

• The other sectors for which the SDG provides its smart services are eJob, eComplain, eSuggest, mPay, eSupply, AskDubai and Smart Dubai Government Magazine.

• The EXPO 2020 is expected to have 25 Million visitors, which is expected to boost the demand ICT infrastructure.

• The Government has launched ICT projects in line with the EXPO 2020 such as the Smart Dubai initiative, and digitization of public and private sector.

• One of the key themes is ‘A knowledge-based online community’ for which the Government plans to develop the information and communication technology in line with its vision for a knowledge-based economy.

• The aim is to increase the broadband speed by 15 times, number of safe servers by 20 times and subscribers by 5 times.

• It is also expected to create 45,000 jobs between the period 2014 and 2021.

• It aims to incorporate technology in education and create an advanced learning environment in the Government schools.

• It is estimated to cost ~AED 1 Billion and is implemented by the Ministry of Education and the TRA in 4 phases over a period of 5 years.

• The goal is to provide all students smart tablets with 4G connectivity by 2017.

Image Source: Frost & Sullivan Source: Frost & Sullivan

http://www.dubai.ae

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