Egypt‟s booming tech
sector: Is it a bubble?
Mohammed Al-Ayouti
@ayouti
12 September 2012
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There are 3 billion Internet users around the
world. There are 5 billion mobile subscribers.
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Mobile apps approached 8 billion downloads
globally in 2010, 30 billion in 2011, and are
expected to reach 200 billion by 2016!
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MEA smartphone market will
witness 39% CAGR until 2014.
For tablets, we’re at the tip of the
iceberg!
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There’s clearly a
rising opportunity for
local entrepreneurs!
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But is it a bubble?
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First, what is a bubble?
• An unsustainable market rise, attributed to increased
speculation in stocks.
• It is highlighted by high valuations and rapid share price
growth.
• New metrics are used to justify these stock prices, and
fundamentals as a whole tend to take a backseat to rosy
forecasts and blind speculation.
• A bubble may end with a crash, or may simply deflate as
investors slowly lose interest and sales pressure pushes
stock valuations back to normalized levels.
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Impact of a bubble
• When a bubble bursts:
–Value is shredded
–Companies go bankrupt, and jobs are lost
–Investments and people‟s savings are wiped out
–Confidence in a sector (or the whole economy) is lost
• On a positive note, a bubble that introduces new commercial & consumer
infrastructure has some lasting advantages:
– New business models
– New standards
– Infrastructure investments
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Do we have a bubble?
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“You don’t know it’s a
bubble until the
bubble ends”
– Eric Schmidt
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The mobile internet market continues to grow,
driven by:
•Rising internet penetration
–Accelerated by a post-revolution Egypt
•Smartphones growth
–Driven primarily by low-cost Androids
•Falling data costs
–Cheap monthly plans & ubiquitous WiFi
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The mobile industry continues to evolve
Content &
Voice Messaging Data
Services
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The ecosystem has seen a lot of activity over the
last two years
• Startups are springing up
• Funds are growing and are becoming more
visible/accessible
• Incubators seek to bridge the gap between
startups and funds
• Competitions are regularly taking place to
discover new talent
… and there’s a lot of surrounding hype
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But don‟t worry about the hype (yet)
Hype Cycle:
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Worry if startups start to cross the “Valley of Death”
without actually overcoming it
Startup financing cycle:
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Worry if demand for startups to invest in is higher
than the supply of startups
Egypt
Demand
Supply
USA
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Don‟t worry when startups start shutting down
•There will always be a stream of
businesses that fail. That‟s a fact of
entrepreneurship:
–30-40% of startups liquidate
–70-80% fail to see the projected ROI
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Thank you
Questions?
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DISCLAIMER: This material is published by, and solely reflects the personal views of, the author in his individual capacity, and it
does not necessarily represent the views, positions, strategies or opinions of his employer. The author will not be held responsible
for any misfacts.
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References
Worldwide and U.S. Mobile Applications Download and Revenue 2012–2016 Forecast: The Appification of Everything Goes Global
http://www.marketresearch.com/IDC-v2477/Worldwide-Mobile-Applications-Download-Revenue-6964597/
Definition of „Tech Bubble‟
http://www.investopedia.com/terms/t/tech_bubble.asp
The positive side of „Dot com bubble‟…
http://www.techpluto.com/the-positive-side-of-dot-com-bubble/
The Benefits of a Bubble, Even When Burst
http://www.freakonomics.com/2007/06/26/the-benefits-of-a-bubble-even-when-burst/
Eric Schmidt: You Don‟t Know It‟s A Bubble Until The Bubble Ends
http://techcrunch.com/2011/07/09/eric-schmidt-you-don%E2%80%99t-know-it%E2%80%99s-a-bubble-until-the-bubble-ends/
Hype cycle
http://en.wikipedia.org/wiki/Hype_cycle
Startup company
http://en.wikipedia.org/wiki/Startup_company
Missing: references for slides 4, 17
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