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French Version

Innovative Middle East firms look to grab bigger slice of IT pie

As regional sector grows, homegrown companies are hungry for market share. Aggressive strategies help local businesses compete with - and beat - multinationals

Massive stands representing the world's leading IT companies may have overshadowed a modest presence from indigenous hi-tech firms at this year's Gitex trade show, but record levels of regional growth are fueling a rising trend in homegrown innovation.

Though U.S. and Asian multinationals such as Microsoft, Hewlett Packard and Samsung are likely to dominate the lucrative Middle East IT market, which is expected to be worth $7.9 billion by 2005, local players will undoubtedly seize a growing slice of the pie.

Egyptian, Iranian and even Palestinian firms are becoming regionally recognized software and hardware producers, while, in the U.A.E. for example, telecom firms have grown well beyond their borders, sometimes beating out global leaders for lucrative international markets.

"We are very aggressive," said Obaid Saeed bin Meshar, senior executive vice president of Emirates Telecommunications Corporation, or Etisalat, which will soon announce an initial public offering for its ambitious venture into the Saudi market.

Etisalat is leading a consortium that won the license for the country's second GSM network at a bid of some $3.5 billion. It beat out U.K.-based Vodaphone, Spain's Telefonica and Egypt's Orascom for the deal, which will involve $5 billion of capital - one of the biggest start-ups in the region - said bin Meshar.

Etisalat, which is owned mostly by the U.A.E. government, is the sole provider in its local market and also has significant telecom holdings in Zanzibar, Sudan and Qatar.

"We had to prove that we can compete with the largest telecom companies in the world," said bin Meshar, in reference to the Saudi market, seen as the region's most valuable.

He said that Etisalat is also exploring new markets in Africa and Eastern Europe.

U.A.E.-based Thuraya is also emerging as a serious global competitor in the satellite phone industry, boasting sales of some 350,000 handsets since entering the burgeoning market just three years ago.

The majority-Arab company is preparing to launch its third satellite into orbit, boosting coverage from its current footprint, which covers Europe, the Middle East, Central Asia, the Indian subcontinent and much of Africa.

With an initial investment of $1 billion, Thuraya says it now dominates the market in those areas, competing against companies like U.K.-based Inmarsat and U.S.-based Iridium.

According to U.A.E. country manager Ahmed al-Shareif, Thuraya is also boosting its share in the maritime navigation market while embarking on new strategies, such as its public call office and global payphones, to make services more affordable to rural populations. Instead of villagers pooling resources to buy a single Thuraya handset, they are now able to purchase prepaid cards to communicate via stand-alone booths or at call centers.

But Shareif says the firm still has plenty of room to grow in developed countries. Only 70 percent of the U.S., for example, has signal coverage, he said.

"This is a critical time for us. We have a lot of ideas coming up," said Shareif. "Very soon you will be hearing a lot about Thuraya."

Yet smaller Middle East-based companies are also finding their niche in a number of IT related markets, albeit on a smaller scale. Iran-based Elmosanat manufactures some 100 biometric access systems per month according to research and development manager Kamal Rezael, who said the firm sells its fingerprint-recognition systems to government-owned firms for around $1,000 - 30 percent less than leading European competitors.

H-logic, the Alexandria-based software and hardware manufacturer, also says it beats the international competition with its biometric and fire alarm systems. It counts U.S.-based Bechtel and the Egyptian telecommunications and youth ministries as its clients, according to general manager Hisham Yahia.

And even under military occupation - perhaps the most challenging of operating environments - the Palestinian IT sector is also thriving, according to West-bank based Arab Technology Systems, an Oracle partner.

ATS president Hassan Kassem says the business applications developer is growing annually and recorded a turnover of $5 million last year.

And the big multinationals are taking notice. Global IT giant IBM is touting two of its regional collaborations at Gitex. In Egypt, local IBM engineers have developed "Eternal Egypt," a virtual tour of the country's ancient heritage sites, while in the U.A.E., IBM is showcasing "smart box," a device that interacts with drivers and monitors traffic, developed in collaboration with U.A.E. University.

If all goes according to plan, Dubai's latest mega-project could do much more to put the Arab world on the global IT map. Based on the California model, Dubai Silicon Oasis addresses the region's dismal share of global research and development funds. The gargantuan, multi-billion dollar project aims to build world-class chip-manufacturing facilities that will attract IT manufacturing to the region for the first time through an array heavily subsidizes packages, according to Salem Abuzeid, chief marketing officer of Dubai Silicon Oasis.

Abuzeid said the project - "the first of its kind in the region outside Israel" - should reach completion by early 2006, and has already lured four "well-known" U.S. companies to move in by December. He says a leading recruitment agency will be hired to capitalize on an abundance of regional wireless specialists hailing mainly from former military programs in Iran and Russia.

"We have too long been a consumer instead of an active participant in the technological revolution," he said.

Beirut 18-10-2004
Habib Battah
The Daily Star

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