War affecting confidence in IT sector

Middle East papers have been reporting on a price downturn of key IT components in the channel, brought about in part by the war in Iraq, but its not all gloom.

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By  Paul Barthram Published  March 27, 2003

Key IT components have seen a price downturn in the last ten days, brought about in part by the war in Iraq, with some components dropping as much as a 10%. Reports suggest further price attrition is likely over the coming days.

Dhruv Srivastava, business unit manager of PC components at Tech Data said it was not all directly related to the war.

“The prices have definitely come down but it’s a regular thing. It’s a quarter end for all of the vendors, and they’re just trying to liquidate their quantities, as are the OEMs.”

Srivastava did say though that it would be impossible to deny the war would have an affect in some areas.

“I was in Saudi Arabia about ten days ago and I can tell you Jeddah was not very much affected but in Riyadh they were not very sure if they should buy or not, so the market has gone slow.”

Khattar Scaaf Managing Director of CCS earlier this week, revealed how the slow down in business had cast doubt over its attendance at the Saudi Gitex Exhibition this coming April:

“I wish it was a good feeling. There is a deterioration we are seeing in the market, and the focus is shifting, with customers not in the mood for buying. We are seriously considering not going [to Gitex], but we are optimistic. It will need weighting.”

Though he hoped the mood might change, Scaf felt further erosion in the market could signal a catastrophe for the IT sector in the Middle East.

The slump in prices has led to reports in the Middle East press that Intel in particular might face an uphill battle with stocks of the Pentium 4 piling up, and sales of the new Centrino facing little interest in the market. Intel has strenuously denied this.

A spokesperson for the company said, “We deal with the channel and have every confidence in our product. Intel is well aware of the instability in the region and we hope it comes to a conclusion very soon.”

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