AV Magazine
The Emirates are stereotyped as a market where cost is no
barrier. For all its bling, this is
a misconception.
a misconception.
“There are projects where cost is not a concern, but many of
the normal projects that our customers compete on are tight on budget,” says
Andy Lee, sales and account manager, Datapath. “When they say ‘tight on
budget’, I agree that the price is higher than in other markets, but they are
competitive in this market. One of the reasons we’ve seen this now is because
of lower (global) oil prices.”
Melinda Von Horvath, Peerless-AV’s vice-president of sales
and marketing for EMEA, reckons clients have a good knowledge and understanding
of how and where best to spend money. “Price points can be a challenge and, in
some cases, there’s a real need for entry-level products,” she says. “The key
criteria are application, closely followed by design and brand perception.
Needless to say, price does play a huge role in decision making in UAE
considering competition from the Chinese market.”
Ahmed Sousa, solutions architect, MEA and Turkey, Polycom
says it’s also important that there is no off-the-shelf solution to many
company’s IT needs. “They require specially designed packages of services,
software, hardware and installations. This relies on the interoperability of
vendor solutions.”
Crestron’s UAE regional manager, Armin Mehrain, goes as far
to suggest the main challenge always has and will be cost. “Unlike western
countries, this market is very price driven and quality is secondary when
making choices,” he says. “Usually projects get specified with cutting edge
solutions, but as the project proceeds it will change to low cost solutions due
to budget issues.”
Although the UAE serves nearby countries with technical
expertise and solutions, the market needs education about new technologies, he
feels: “It’s not easy to convince this region with new technologies. They will
ask if you have references in the region before they accept your solution.
“This is a very emotional market,” Mehrain adds. “Getting
close to decision-making staff can win or lose you a project. Corruption is
lower compared to before but it’s still there.”
Despite having a record year for sales in the Middle East,
gaining a foothold in the UAE market remains a challenge for Peerless-AV. Von
Horvath points to the importance of strong distribution partners, as well as a
local office and resident salesforce with excellent knowledge of regional trends
and trading practices.
“Many large projects are funded by government or
semi-governmental bodies, hence a lot of projects are in the control of the
state,” adds Lee. “There is private funding, mostly in residential construction
and hospitality. In either case a regional partner is essential.”
Respondents stress that businesses will struggle to gain a
foothold in the UAE market if they don’t spend enough time building trust with
potential customers.
“Mutual trust is at the core of any successful business deal
in the UAE and there are a number of factors that can help build it,” says
Eleuterio Fernandes, MENA sales director, Exterity. “In the UAE, users want
lots of on-the-ground support which a call centre cannot provide.”
Overall though, AV culture in the UAE is cutting-edge.
According to InfoComm Asia, the country’s AV market is predicted to be worth
$707 million by 2018, up from $656.2 million in 2016, much of it from
transportation and hospitality (parks and hotel resorts) sectors, with a great
opportunity for outdoor display and video communications.
“There are tremendous opportunities for consultants and
architects from work specified in the UK and US, as well as ongoing building
development in the education, transportation, government and hospitality sectors,”
says Von Horvath. “Certain countries haven’t yet reached their highest
potential but this is changing rapidly. The market is also increasingly price
competitive as more and more AV companies open offices there.”
There’s an interesting contrast between the technology being
deployed in the UAE and its users. “The UAE is a hub of technological
innovation, but users can be quite conservative and completing business deals
can take time,” explains Fernandes. “Many users will only consider investing in
a technology if an industry peer has recommended it to them, so any business
that wants to grow its footprint in the UAE needs to build a strong network
alongside offering the latest technology.”
Expo 2020 – Dubai
The Expo 2020 will focus more attention on the region.
Opening on 20 October 2020 in southern Dubai, the event is projected to attract
25 million visitors, 70 per cent from outside the UAE. More than 200 countries,
companies, charities and educational institutions will participate.
‘District 2020’, the area which the expo occupies, will
undergo extensive redevelopment after the six month event. It’s planned to have
one of the world’s first 5G mobile networks and function as a Free Trade Zone,
allowing businesses to operate tax-exempt and entirely foreign-owned. Siemens
has agreed to build a new logistics hub there. Planners hope District 2020 will
more than double in size to become a city in its own right.
“Customers are always looking for the latest in the market
and in the industry,” says Lee. “One glance at October’s Gitex Technology Week
in Dubai shows local customers and government pushing forward for new
technologies.”
These include Flying Taxis – autonomous two-seater craft
developed by German drone firm Volocopter – and which are proposed to launch in
the emirate in five years.
“The (UAE) governments are driving to develop AI and
robotics, smart city projects and hi-tech start-ups,” notes Lee.
Green credentials are part of the smart city formula. “No
longer a concept of the future, custom electric charging stations are a reality
in the US and will no doubt inspire similar projects in the UEA,” says Von
Horvath.
Taking inspiration from Dubai’s model for relatively
autonomous economic development, neighbouring Saudi Arabia has a $500 billion
smart city project in the northwest of the country on the go. ‘NEOM’ is
envisaged as an area free from “anything traditional,” according to Crown
Prince Mohammed bin Salman at its launch, most notably the country’s existing bureaucratic
and cultural obstacles.
The city-state would be powered entirely by wind and solar
energy. Entertainment and biotechnology industries would be encouraged. The
project is also intended to serve as a model for how robotics, drones and
automation could perform a wide range of civic duties.
“Most smart city projects are driven by IT and the pro AV
market does not have much to offer – unless pro AV products are integrated with
IT,” says Lee.
Qatar World Cup 2022
Adjacent to UAE, but currently subject of a trade block from
the Emirates and Saudi is Qatar, controversial host of the soccer World Cup
2022.
$200 billion is pouring into infrastructure, including a new
rail network, hotels and roads ahead of the tournament. The Norman
Foster-designed 86,250-seat Lusail stadium is one of nine new stadia under
construction.
Mehrain reports that the authorities have put the AV part on
hold, concerned that if they put the equipment in now it will be obsolete by
2022. “They will wait and decide on the AV later. Any project in Qatar must be
executed by a local company or in joined venture.”
The region has not handled any global event of this scale
previously. “The infrastructure is not yet good enough for a World Cup,” says
Lee. “There’s lots of construction and hence a lot of requirement for stadium
technology, hospitality and broadcast.
“As most of the talent is based in the UAE, the barrier is
starting to impact the business,” he reports. The pro AV work is not in full
swing so the impact is not so much now. Once the AV has to go in it’s going to
be difficult if the regional trade barrier still exists. Shipping may not be a
real issue as you can directly move the shipment to Qatar. But moving manpower
based in the region will be a challenge.”
Turkey – state keeps AV alive
An unstable economy, a South Eastern border with Syria,
terrorist attacks in its bigger cities and “variable politics” are affecting
the overall performance of the AV market, preventing investment according to
Crestron’s local distributor SF SES VE ISIK Sistemleri A.S.
The hospitality vertical has been directly impacted due to
the fall in tourist numbers. “For example, we have three major hotel
investments delayed this year due to the problems,” says the firm. “The tour
sound and lighting vertical market is dead as well. Rental companies are not
investing in any product these days.
“Regardless, we are still trying to create business
opportunities and continue to maintain our position in the Turkish market.”
The corporate vertical has kept Turkish AV alive, according
to the distributor, “thanks to many renovations and new management premises by
banks moving to Istanbul which have boosted meeting room and huddle space
investments.”
Datapath’s Lee suggests that the macro political situation
hasn’t affected pro AV very much; “It may even give a boost as the government
invests in more military and control room applications.”
He agrees that economic problems are creating daily
difficulties. “As pro AV continues to grow, more investors and IT integrators
are trying to get into the game,” he reports. “The aggressive stance and price
policies are creating a decrease in margins.”
The government plays a key role here. “Interactive screens
in education, digital signage for municipalities, new stadiums… all these are government
supported, which is a guarantee to pro AV market sustainability,” says Murat
Aydin, MD at Astel (distributor for Absen, Panasonic, Christie and Philips).
“The biggest airport in Europe will be a huge opportunity for many pro AV
brands and products.”
New airport opening
Istanbul New Airport opens next year on the outskirts of
Turkey’s largest city. It will replace Ataturk airport as Turkey’s major
gateway hub with an annual capacity for 90 million travellers.
Operator iGA’s plans includes in-store digital solutions for
retailers, 3D hologram systems, smart shopping carts with a charging function,
mobile cash-registers and customer profiling through data. A ‘Magic
Mirror’ application will allow customers to see virtually how watches, clothes
or make-up products will look on them without physically trying them on.
“On top of that, pro AV products and solutions awareness is
increasing, digital screens are now starting to replace traditional billboards
and signs,” says Aydin. “When you consider all these aspects, the Turkish
market has interesting potential.”
The sales channel, though, is primitive. “Often big
distributors do system integration at the same time which creates problems for
normal SIs as they give direct prices and even direct sales to the end customer
when they find out about the project,” says Lee.
Distributor Astel reponds that “only a couple of companies
in Turkey are capable of doing high level AV installations and integrations.
Therefore, we cannot say that Turkey has a mature AV sales channels and
integration market. Due to the small market and low education level, you can’t
form a professional dealer network to represent your brands.
There are only a handful of dealers in Turkey that can
complete a full AV system project. This is why a distributor company has to
play the role of being a consultant first. We are trying to give as much
training as possible in our premises to educate our staff and our dealer’s
staff to improve the AV integration market in Turkey.”
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