Oct, 2017     

Smart Solutions Market: Focus Qatar


In today’s fast-changing world, smart solutions such as self-sufficient energy homes, efficient utility services, self-driving cars, smart healthcare based on wearables, etc. which were just a pipe dream a decade ago are now a reality. Rapid advancement in areas of IoT (Internet of things), big data, machine learning and communication technologies have allowed these solutions to become economically feasible and to enter the mainstream.

Rapid urbanization is also mandating the need for smart city solutions. Experts’ worldwide point out that smart cities will be the future enablers in accelerating economic growth and improving the quality of citizens’ lifestyle. World over, individuals, cities, as well as countries are looking at avenues to embrace these smart solutions and are making them parts of their civic planning agendas.

While not as mature as Europe and the Americas, the MENA region is no newbie when it comes to smart solutions, with large projects already underway in the GCC countries. In this paper, we explore the state of the smart solutions market in Qatar, analyse the various segments, future growth trends and look at challenges that need to be overcome to grow the segment successfully.

What are smart solutions and what makes them smart?

Technically, “Smart solutions are integrated socio-technical systems that link clean technologies through data and that integrate users and individual behaviour in the form of a wider service and business model.” In simpler words, any technological innovation/ solution which can help us conserve energy and time and can be automated with minimal human intervention is a smart solution. Smart solutions can be broadly classified into the following segments based upon the area of application (as shown in figure 1):

Any city which has a full-fledged infrastructure for at least five out of the eight elements is typically called a “Smart city” (as shown in figure 2):

Global Smart Solutions Market

We estimate the global market for Smart solutions to be ~USD 425 Bn currently. Asia Pacific & North America are the top 2 markets while Smart Governance & Education and Smart Energy are the top 2 segments globally (as shown in figure 3).

This market is expected to reach ~USD 1200 Bn by 2022, growing at an annual CAGR of ~23% (as shown in figure 4).

Global smart solutions market is primarily driven by:

  • Increase in demand for energy-efficient systems owing to stringent energy saving laws across the globe
  • Accelerated push for smart cities and infrastructure growth in emerging countries such as India, China, UAE, Qatar etc.
  • Technological advances such as advancement of IoT and evolution of cloud based solutions for automation systems

Smart Solutions Market in Qatar

We estimate that opportunity for smart solutions in Qatar currently stands at ~$800 Mn while the cumulative opportunity over next 5 years stands at ~$4.7 Bn with Smart Buildings and Smart Transportation being the top 2 segments (figure 5):

This huge opportunity in Qatar over next 5 years is driven by the mega projects in the run-up to the upcoming World Cup as well as Qatar’s National Vision 2030 leading to an investment of more than $ 200 Bn in Qatar. For example, Qatar is building seven new stadiums for hosting the upcoming FIFA World Cup 2022 & has multiple upcoming projects in the transportation segment as well with the key projects being Qatar Metro, Expressways, and Doha Port which provide a good opportunity for smart solutions. Construction and transportation form 80% of the megaproject spend in Qatar (figure 6):

There are two business lines in the smart solutions market; namely Product and Value-Add (includes design & Installation of smart solutions) and Service and Maintenance (includes after sales service & replacement for smart solutions). In Qatar, Product & Value-Add currently have ~84% market share which is expected to reduce to ~72% by 2022 owing to the increasing revenues from Service & Maintenance and hence, it would be a highly lucrative offering type for the smart solutions market over the next few years.

Conclusion

The outlook for smart solutions in Qatar seems very positive owing to the abundance of opportunities present for smart solution providers especially in Smart Building & Smart Transportation segments as they offer a combined opportunity worth ~$ 2.7 Bn over next 5 years. Players in the market should develop capabilities in both “Product & Value-add” as well as “Service & Maintenance” offerings as it would enable them to capitalise on the additional (including replacement) opportunities.

However, our analysis has also shown that Qatar is expected to face challenges during the adoption of smart solutions such as high cost of implementation, technical difficulties due to lack of skilled experts and lack of end-user awareness. Hence, Smart Solutions companies present in this region and others that want to enter this geography, need to build on their technical skills either through in-house or third-party programs, need to leverage their partners or even consider joint ventures with companies that can provide it better technical know-how.


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