DSL equipment markets in the GCC set for strong year, says IDC

According to three new IDC studies, the first of their kind analyzing and forecasting the markets for DSL equipment, shipments of DSL ports will more than double by the end of 2006 while shipments of customer premises equipment (CPE) will shoot up by over 72%. Having reached $31.8 million in 2005, total market revenue is expected to expand more than 88% in 2006.

'This region has an advantage over other parts of the world in that operators did not spend large amounts of money in the early days on cable and DSL networks,' says Mark Rotter, IDC MEA Program Manager, elecommunications. 'Operators are leapfrogging to more advanced technologies, such as ADSL 2+, that most European operators have just started moving to now. In addition, operators are able to take advantage of economies of scale and focus their broadband rollout only on DSL since there is only a very small installed base of cable - this ability to focus almost exclusively on DSL technologies makes rollout far more cost effective than in other parts the world.'

The UAE was the largest single country market for DSL equipment in 2005 and has the largest installed base. In terms of vendor share, according to IDC, Siemens led in the CPE market, having landed a substantial contract to provide DSL/WLAN routers for the broadband Internet Al Shamil promotion. Their position is not guaranteed, as both second-ranked D-Link and third-ranked USRobotics have solid channel and retail strategies. In terms of DSL network ports, Zhone had the largest vendor share in the Emirates.

Going forward, Saudi Arabia will become the largest market in terms of equipment sales this year according to IDC, as it has both the population and economic environment to support a large number of broadband users. In contrast to the UAE, Thomson had the largest vendor share for CPE shipments in Saudi Arabia (and in the Rest of the GCC) last year, with Linksys taking second and USRobotics third. Meanwhile Alcatel took the top spot for network port shipments.

'While the markets were hot the last couple of years, things are going to start slowing down in 2007 and maintaining market share is by no means guaranteed,' says Rotter. 'For CPE manufacturers, success will depend on winning big deals with operators to bundle CPE with DSL service subscriptions. Vendors need to build and maintain relationships with strong buyers such as Etisalat, as personal relationships are key to winning projects. That being said, vendors must also be firm in ensuring contracts are feasible, and be willing to walk away from deals that would be unprofitable.'