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Summary

Both Amazon and Microsoft have recently unveiled plans to expand their cloud-computing and data-center offerings in the Middle East, in moves that these global players say come in response to rising demand in the region.

Global players' Middle East moves should benefit regional digital economy

Amazon Web Services (AWS), the cloud-computing subsidiary of Amazon, is stepping up its presence in the Middle East in response to growing demand for its services, said Zubin Chagpar, AWS's head of public-sector services in the Middle East and Africa, in a briefing at the first AWS Summit in Dubai, held earlier this month.

AWS Summits are designed to promote AWS's services to existing and new customers, and the Dubai event attracted about 1,500 attendees, according to the company.

The growing interest in AWS's services in the Middle East has been stimulated by government initiatives to develop and diversify economies in the region, particularly in the GCC, said Chagpar. Start-ups, the financial-services sector, and public-sector organizations seeking to improve efficiency and cuts costs, are among the market segments where AWS is experiencing growth.

Last year, AWS said it would set up data centers in Bahrain, which are due to go live in early 2019 and will represent AWS's first regional infrastructure in the Middle East, and its 22nd worldwide. AWS is also setting up an edge network location, or content delivery network, in Dubai.

AWS customers in the Middle East include flydubai, a low-cost airline; Anghami, a music-streaming service; and MBC, the biggest broadcaster in the region.

On-demand capacity from AWS allows MBC to cater for the seasonal increase in demand for services such as MBC's OTT video service, Shahid, during the Islamic month of Ramadan, at lower cost than if MBC had to expand its own infrastructure to handle the temporary rise, said Adriaan Bloem, senior manager for online platforms at MBC, in a presentation at the AWS Summit.

AWS also sees increasing potential in Africa, and although AWS does not yet have data centers on the continent, it does have offices in South Africa, including an R&D unit in Cape Town, which could become the foundation of an expanded presence.

But AWS is not alone among global cloud-computing players in its expansion plans in the Middle East or Africa. Microsoft also recently unveiled plans to set up data centers in Dubai and Abu Dhabi, which will be Microsoft's first such facilities in the Middle East. Microsoft had earlier said that it would build data centers in Cape Town and Johannesburg.

This push by global players such as AWS and Microsoft into the region should improve the range and quality of infrastructure and services that are available and help to stimulate further growth in the digital economy.

Appendix

Further reading

Middle East Market Outlook, 1Q18, GLB002-000009 (December 2017)

Author

Matthew Reed, Practice Leader, Middle East and Africa

matthew.reed@ovum.com

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