The Middle East – Tokens to Products

Things are moving again.

• AI Everything Abu Dhabi is still a small show, but the floor was busy with many visitors from overseas, demonstrating that the altercation going on 70 miles away is not being allowed to disrupt progress any further.
• For the last couple of years, most Middle East technology trade shows have been dominated by models of data centres under construction and the promise of an endless supply of tokens at a great price.
• This strategy is still very much on track and will serve as the best opportunity for the region to diversify away from petrochemicals, but the region is now also looking further up the stack and developing AI-driven products and services to be sold in the region.
• Government agencies and owned companies featured very heavily and made up at least 60% of the stands on show, but this is to be expected.
• The UAE Federal Government is already highly digitised, as evidenced by the fact that I can apply for permanent residency, renew my driving licence, vehicle registration, register a birth or death and many other things without going near a government building.
• Furthermore, this is all available in one app (TAMM), which works surprisingly well.  
• This gives the region a major advantage, as there is no offline legacy to be dealt with.
• Hence, adding AI to these services to improve them and make them more intuitive can be done immediately, without the tedious and painful digitisation process that has caused many other governments to fail.
• There is still a long way to go when it comes to adding AI, as all of these apps have AI assistants, but unfortunately, they are worse than useless and have a deleterious effect on the user experience.
• The floor and the sessions were all about the addition of AI to existing digitised services, as well as dreaming up an array of ways to make businesses more productive.
• Here, there were a fairly large number of start-ups both from the region as well as overseas, but most of the ones from overseas were here mostly to raise their next round.
• What surprised me the most was the strong showing from the European AI ecosystem as well as the very sparse attendance by anyone from China.
• Mistral and ElevenLabs both had large stands, and Black Forest Labs was present but did not have a physical stand.
• All of these companies now have a UAE presence and are making it larger in what looks like a move to make the most of the very open regulatory environment as opposed to what they labour under at home.
• This is yet another example of the Middle East maximising the opportunity that it has to steal Europe’s momentum while it continues to shoot itself in the foot.
• The only Chinese presence of any note was Alibaba Cloud and this is because it has had a physical presence in the region for over 10 years.
• Almost all of this capacity is regular compute, but where it does have AI compute it is using exclusively Western-designed silicon, which does not come as a big surprise.
• The weak showing from China is a further indication of the region’s pivot away from China and towards the West that began with Microsoft’s investment in G42 a few years ago.
• The Middle East does not have much choice here as its data centre strategy is dependent on importing 11GW of chips over the next few years, all of which need export licences from the US Department of Commerce.
• The net result is that the region has resumed its development after a short hiatus and remains determined that events across the water will no longer delay its progress.
• Hence, after a brief wobble, I remain pretty positive on the outlook for this new industry in the Middle East and expect that it will become a significant provider of compute (and potentially services), in the same way that it is a significant provider of energy today.