Market Trends of United Arab Emirates Data Center Networking Industry
Ethernet Switches is Anticipated to be the Largest Segment
- An Ethernet switch is a crucial type of networking hardware that forms the foundation of networks and the Internet. Ethernet switches connect wired devices—such as computers, Wi-Fi access points, PoE lighting, IoT devices, and servers—onto an Ethernet LAN, enabling communication among themselves and with the Internet.
- Ethernet switches find wide applications in industrial infrastructure, including smart grid development, security and surveillance systems, intelligent rail and transportation networks, and other utilities, driving growth in the industrial Ethernet switch market. Within smart grids, Ethernet switches play a pivotal role in substation automation by simplifying the cabling complexity between numerous power transmission and distribution substation devices through integration into Ethernet-based networks.
- The surge in mobile data traffic since 2022 has been made possible by the expansion of 5G coverage. In Saudi Arabia, 5G services expanded in Q4 2020, reaching an additional seven cities and provinces. By 2021, 51 different provinces and cities in Saudi Arabia had 5G connections, constituting about 23% of the overall volume, inclusive of 5G hardware like handsets. To cope with the escalating data traffic, newer models such as Gigabit Ethernet switches offer significantly high data transfer rates (1 Gbps), surpassing wireless bandwidth capabilities.
- Moreover, smart Ethernet switches featuring Power-over-Ethernet (PoE) technology are extensively used for security and monitoring purposes. PoE networks transmit power through local network cables to connected devices, proving beneficial for Internet protocol-based monitoring systems. They facilitate accessible browser-based communication and user interface.
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IT & Telecommunication is Anticipated to be Fastest Growing Segment
- The UAE government's proactive initiatives aim to cultivate a competitive knowledge economy and establish a dynamic, internationally integrated business environment, thereby lessening reliance on oil revenues and fostering private sector expansion. Various measures have been instituted to bolster the growth of this knowledge-driven economy.
- Dubai operates under federal ICT legislation and is an integral part of a unified national ICT infrastructure. Etisalat and DU, two prominent companies, serve the telecommunications market in Dubai and across the UAE. These carriers have been and will remain pivotal in driving the adoption of big data, AI, and blockchain applications within the country.
- In November 2022, G42 Cloud—a division of the Abu Dhabi-based artificial intelligence company G42—and the German software giant SAP forged an agreement aimed at expediting businesses' digital transformation through cloud technology. Presenting itself as a global innovation center, the UAE has consistently emphasized the critical role of digital transformation in its economic and cultural landscape.
- The UAE's AI Strategy 2031 targets enhancing productivity across various sectors—transport, health, space, renewable energy, water, technology, education, environment, and transport—aligning with the government's aspirations for the UAE's centenary in 2071. Emirates has already commenced integrating AI in education, healthcare, space, transport, and aviation sectors, reflecting the government's ambitious plans to diversify and build a knowledge-centric economy, with AI being a fundamental element.
- Forecasts anticipate significant growth in other end-user and telecom segments. The rapid increase in 4G penetration and the imminent arrival of 5G technology are compelling telecom vendors to invest in the UAE data center market. As per the Telecommunications Regulatory Authority (UAE), there were over 18.7 million active mobile phone subscribers in March 2022. Such advancements in the ICT sector are expected to fuel the growth of data center facilities in the country.
