There can be no doubt that the market for consumer technology is increasing rapidly in the Middle East. This rising trend has taken some by surprise, but in fact it has been built on many different factors quickly coming together over recent years to create something of a whirlwind phenomenon.
As well as helping to drive economic growth across the region the uptake from all quarters has led to direct changes in the lives of many. Whether that means simply having access to a wealth of information online, or the ability to make purchases or sales on a global scale, the fact is that emerging markets across the region are benefiting from innovative technology.
Growing markets mean plenty of opportunities for new companies and those who invest in them. When it comes to the tech sector there seems to be a never-ending supply of new start-ups vying for investor interest. Of these, some will go on to change the landscape but of course the vast majority will fail or achieve only limited success. For investors the key is to know the needs of a market and work out which companies are likely to be able to take advantage of them.
With the massive increase in telecommunications tech in the Middle East, both from an industry and consumer point of view, investors looking for opportunities in this sector will have plenty of choice.
The growth in smartphone use has opened up new markets for many digital products, both in terms of hardware and software.
Counterpoint Research claims that smartphones currently make up about 50% of total phone sales in the Middle East and Africa but that figure is likely to increase by very wide margins as the infrastructure improves and offers faster and more reliable connections. With major international corporations, such as Google and Facebook, looking at innovative ways to improve internet access by using high atmosphere balloons and low orbit satellites, there is no doubt that areas previously ignored by major companies will soon be active telecoms markets.
An increasing youth population across the Middle East is also a driving force in the adoption and uptake of new technology. The Middle East media market is enjoying rapid digitization and the growth in population size and consumer spending levels are already well above the global average.
The Middle East and North Africa (MENA) media sector alone is expected to grow in value from $15.5 billion this year to $21.5 billion in 2019.
While population can create demand, individuals are often those who prove supply solutions. One example of this is the way in which Ehsan Bayat established a stable telecommunications infrastructure in his country of origin. Bayat had to deal with many large-scale problems setting up the Afghan Wireless Communication Company.
After establishing the Florida-based telecommunications company Telephone Systems International, Inc. in 1998 Bayat laid the groundwork for developing a commercial telephone network in his native Afghanistan. Bayat returned to Afghanistan in 2001 and a year later the Afghan Wireless Communications Company was founded in a partnership between his company and the Afghan Ministry of Communications. Infrastructure problems that needed to be overcome included power supplies, transportation and a banking system in crisis, but the ultimate success of his Afghan Wireless Communication Company shows how emerging economies can benefit from strong telecoms to create new jobs and help local economies develop.
Although high net worth individuals such as Bayat can make a singular impact, other investors can play an important role in emerging markets by choosing the right vehicles to become involved with.
Global companies are set to take advantage of new markets although their presence often needs to be re-evaluated and reaffirmed to make the most impact.
The Middle East is coming under the spotlight for international investment in certain sectors because of the unique mix of factors that are coming together to create a vibrant and dynamic tech market. While blue chip companies and newer global tech giants are obviously good bets for investors looking for long term returns, being adventurous and investing in locally based rivals could be where the smart money actually goes.
When it comes to tech, things move quickly and today’s giants can quickly become tomorrow’s also ran’s. The fall of Motorola and Blackberry from dominating market positions proves the point, and who knows whether the next Facebook might be entirely an Arabic-based online phenomenon.