Market Trends of Middle-East Data Center Cooling Industry
The Information Technology Industry is Expected to Experience the Highest Growth
- To facilitate the transition to knowledge-based economies, the governments of the United Arab Emirates and Saudi Arabia are prioritizing digital initiatives such as 5G. With national consumer initiatives such as digital payments, smartphones are leading the transition to a digital lifestyle. The main drivers of this expansion were larger markets such as Iraq and Egypt, which continued to grow despite their huge current user bases. With the proliferation of smartphones and the use of 5G devices, the amount of raw data is expected to grow. More smartphone users can lead to increased data consumption and increased internet usage. The need for more data centers has increased the demand for cooling equipment in the region.
- The introduction of various OTT platforms and increased speeds will increase the demand for rack space, increasing the number of data centers, which will likely increase the demand for cooling equipment in the Middle East.
- Many large cloud providers have entered the region to take advantage of this greenfield market. This also increases the need for data center cooling. Additionally, local weather makes cooling solutions a priority for data centers.
- The dual impact of COVID-19 and plummeting oil prices had multiple economic implications across the Gulf region. Despite the economic slowdown, sectors of the economy, internet service providers (ISPs), information technology (IT), infrastructure providers, and data centers, are seeing increased demand, mainly due to the shift to telecommuting and remote work. This marks the growing demand for the data center cooling market in the region.
- The data center industry is starting to gain momentum with investments from cloud service providers such as Google and Oracle. In Saudi Vision 2030, Oracle partners with NEOM Tech & Digital Hold Co. to become the first tenant of NEOM's hyperscale data center. Oracle Cloud Infrastructure (OCI) is intended to provide a high-performance, resilient platform for cloud services housed in data centers and driving demand for cooling equipment.
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Saudi Arabia to Hold the Highest Market Share
- Saudi Arabia has emerged as one of the technology hubs in the Middle East and Africa. As big IT and healthcare companies gain access to the market, demand for data centers in the region is soaring so that companies can store their data within borders.
- Additionally, Saudi Arabia's Vision 2030 goals have seen tech giants such as Google, Microsoft, and IBM build data centers and plan to expand their facilities.
- 4G usage is increasing due to social media and smartphone penetration. 4G service in the country is driven by high mobile video consumption. For example, 43% of smartphone users aged 16-29 watch on-demand video every week. About 62% of people watch videos using a smartphone or tablet. With almost 660 million 5G subscribers projected by the end of 2023, 5G is set to become the fastest mobile generation to date.
- Saudi Arabia's FTTH (fiber-to-the-home) broadband subscriber numbers have doubled due to the availability of high-speed internet plans, increased internet usage, expanded options, and quality services tailored to healthcare, business, and education. The growth in data storage has accompanied the expansion of data centers, increasing the need for data center cooling in this region.
- Customers in Saudi Arabia are spending more time and money online, increasing demand for e-commerce in the region. This increase is due to digital payment methods. As a result, 26% of Saudi consumers now use digital wallets for their transactions. In Saudi Arabia, 69-85% of online orders are cash on delivery, and e-wallets such as PayPal, Amazon Payments, and Google Wallet account for 24% of total turnover. The country's data centers will benefit from the digitization of the e-commerce sector as more data is processed and stored. Such incidents in the country are expected to boost demand for data center cooling manufacturers in the coming years.
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