Middle East must cooperate over communications

Lou Gerstner's future strategy for IBM relies almost entirely on high speed communications. It that's the future for the world of IT and business, where does that leave the Middle East?

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By  Rob Corder Published  December 19, 2000

Lou Gerstner's future strategy for IBM relies almost entirely on high speed communications. It that's the future for the world of IT and business, where does that leave the Middle East?

IBM may no longer be able to claim that the Good Ship IT Industry is entirely steered by its hand. But it is certainly still true to say that IT managers ignore the $95 billion corporation’s future vision at their peril.

That’s a worrying situation for aspiring tech-driven countries in the Middle East because IBM’s vision for the next 10 years takes inexhaustible bandwidth for granted.

Even assuming the region dramatically improves its communications infrastructure over the next decade, its development will have to move faster than the US and Europe or a chasm will open up between opportunities for businesses here, and opportunities for businesses in the West.

What chance for the Middle East when even the most developed countries in the world may not be ready for the extent to which bandwidth will drive business development.

“Inside IBM, we talk about 10 times more connected people, 100 times more network speed, 1000 times more devices and a million times more data,” said IBM chairman and CEO Lou Gerstner in a speech at the eBusiness Conference and Expo in New York. “The infrastructure technology that exists today isn’t ready. It can’t handle what’s coming.”

Bandwidth will be so important, says IBM, because computer power, access to applications and storage capacity will become utilities that people tap into in the same way they get power and water.

The company will spend $4 billion during the next three years to open 50 data centres around the world capable of providing companies with a broad range of services — from merely providing space for a customer’s servers to application hosing and management — all under a banner of IBM e-Sourcing services.

IBM is not alone in this vision. It closely mirrors a view of the world shared by HP, Sun Microsystems and Compaq. “I agree with the overall strategy, but we’ve been talking about this for years,” said Pat Adamiak, HP’s line of business manager for Internet operations and utility computing.

If you agree that businesses tapping into this kind of outsourced infrastructure will gain a competitive edge over those that don’t, you have to fear for companies in the Middle East.

The chances of IBM, for example, locating one of its 50 data centres in the Middle East are slim if you simply run the arithmetic.

The Middle East as a whole represents under 1% of IBM’s global turnover so we’d be entitled to half a data centre, at best. Even this would be a stretch, since if you locate a data centre in the UAE, for example, there is absolutely no compelling reason for a company in Saudi Arabia to use it. There is no direct Internet connection between the UAE and Saudi Arabia and, in fact, traffic between Saudi Arabia and Europe is more efficient because it passes through fewer routers.

Then there is the state of most countries’ communications infrastrucuture. If Gerstner talks about the need for 100 times more network speed, you can safely assume he means 1000 times more network speed in the context of Saudi Arabia.

If multinationals don’t see the business reasons to create data centres in the Middle East, local companies look like they may take up the challenge themselves. ASP Gulf and Dubai Internet City both have ambitious data centres planned. If intra-regional communication can be improved by Internet in the sky satellite projects like Astrolink take shape, these data centres will have regional reach.

The nub of the issue is that regional governments must react to these issues. Creating a single trading block within the Middle East has been a long-sought goal, creating a single communications block will be just as important.

Individual countries like Bahrain and the UAE are forcing dramatic improvements in infrastructure, but if other countries don’t follow suit and then create an integrated pan-Middle East network, the likes of IBM would have every right to ignore the region.

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