Current reports suggest that Dubai has been the victim of its own speedy success and is now paying the price of unsustainable growth. Anna Mitchell looks behind the headlines to see what opportunities the emirate still has to offer the AV industry.
We’ve all read the headlines about Dubai. If they’re to be believed the city must boast a skyline of unfinished skyscrapers while down on the ground hoards of immigrant workers, lured over by high salaries and sunshine, scrabble for work in an ever-decreasing pool. Stories have been told of expensive cars abandoned at the airport with keys left in the ignition as ex-pats flee the emirate and their debts. House prices have tumbled and companies have pulled out of the region, shrunk their operations or just closed down entirely.
But what’s it really like on the ground and what demand remains for AV equipment? Amin El Khalifa is the managing director of Omnix, a technology service provider headquartered in Dubai and he is cautiously positive. “It’s toned down sure, it’s no longer the Wild West – Las Vegas style,” he concedes. “But business is still pretty good.
One of the emirate’s strengths is actually its proximity to UAE capital, Abu Dhabi, where major projects are still going ahead. “Two or three years ago we would have seen these projects in Dubai,” says Khalifa, “but Abu Dhabi is only 45 minutes up the road and we can take advantage of its opportunities.
“We all know it’s going to turn around, it’s a matter of when,” he continues. “But we’re not on our own here, we’re tied to the rest of the region and the rest of the world.
And the region has been in turmoil recently. Unrest that started in Tunisia in December 2010 has spread through North Africa and the Middle East with terrifying speed. Egypt, Libya, Algeria, Yemen, Lebanon, Jordan, Palestine, Iran, Bahrain, Saudi Arabia, Syria and Morocco have all been affected. The protests have been met with different levels of resistance. Some have been triumphant, some have been crushed and some are ongoing. All have contributed to instability in the region.
“You look at it and you think that’s not going to help,” says Khalifa. “But, oil prices have now gone through the roof which means oil producing nations have more money to spend. Dubai from day one has been working towards reducing it’s dependency on oil revenue and, in the last 20 years, has been largely successful. But, with other areas suffering people rely more on this revenue stream.”
Khalifa says Dubai is now focusing on its infrastructure and is in the process of building the Dubai Metro. In terms of AV, projects related to security and education are proving robust at the moment. “What has taken a knock is the hotel industry,” Khalifa says. “So many projects have been shelved.
“There are a lot of projects just bubbling along very slowly. If we’re not careful that can hurt us because we have to be on a project much longer than we anticipated. We have to work differently. One project manager can now handle more than one or two projects at a time.”
The type of work is also changing in Dubai and isn’t just what Khalifa describes as “standard AV fare”. He argues that Cisco’s purchase of Tandberg marked a turning point in the AV industry. “It’s not just AV integrators working on AV projects now. You’ve got IT companies to compete with too.
“You definitely have to have IT expertise in-house. For us this has proved beneficial. We started off as an IT company and with the convergence [of AV and IT] we were in a much better position than most of our competition.
“The sad thing is that most of our competition have disappeared,” Khalifa says. Although on the surface this might look good for Omnix, Khalifa insists it’s not good for the market. “It’s not good for our industry. Although we do fight each other quite strongly we also try to work together. We all swim in the same pool and although the competition can be quite fierce we all care about the industry.”
To do business in Dubai Khalifa says you have to be aware of the importance the region places on service. “It’s a service culture here – you know they bag your groceries and fill up your fuel tank! People are used to that so we aim everything at service. There’s not a massive emphasis placed on equipment. We choose the kit that’s best for the budget and best for the client. Of course it has to be good quality because the better the quality the less money we spend on service.
“For a client to pick up a phone and have somebody there in half an hour is something we understand and something a lot of companies from outside [Dubai] don’t. We’ll keep spare parts here and make sure the client is never down for more than a couple of hours. We understand that to bring something from abroad takes forever. Products that are easily accessible somewhere like the UK simply aren’t here. So we make sure we have the necessary equipment in stock.”
AV companies wanting to work in Dubai must be aware of culture and how the country operates and it doesn’t stop at attention to service offerings. Khalifa says a lot of IPTV and Hotel-TV companies have found that business models that worked in the USA and Europe simply aren’t viable in the Middle East.
“Over there [the USA and Europe] they [IPTV companies] don’t sell equipment. They sell content and lease equipment. But content here is not a sellable commodity.” Khalifa explains that, particularly in the hotel market, the content that makes the most money is adult content, which is not available in Dubai hotels.
“Here, they have to sell the whole product, the hardware. The problem with that is the hotel has to invest – and it’s quite a big investment and the revenue is not that great. So, the IPTV companies have found their margins here are quite tight so they’re now going directly to the client. They set up a group of technical support people and an office and go in directly. That’s actually pushed us into developing our own products so has completely transformed the market.”
Next, Khalifa turns his attention on regional trade shows. “We’ve always supported PALME and it’s a good show. But it’s really a show for the industry. We go there to see what our competition are doing not to look at new products. If we want to see product we go to ISE or InfoComm. I’m really hoping IFMEA [InfoComm’s new show to be held in Dubai in October] will be successful because we could do with a show like this in Dubai”.
It’s undeniable that Dubai’s rapid growth preceded a hard fall but life – and AV projects – must go on. The downturn has claimed its victims but companies that have always conducted sustainable business and acted responsibly have largely survived.
Bad news spreads fast and the fall of the mighty makes great headlines. To a certain extent Dubai has become a poster child of the global financial crisis but as the world emerges from the troubles so too will Dubai. “What happens in Dubai tends to happen in a much shorter timescale than anywhere else,” concludes Khalifa. “Any trends are a lot more obvious.”