HP to target Saudi small to medium enterprises

HP has said it is to tackle the small-to-medium enterprise market in Saudi Arabia with the creation of its new Saudi assembly plant.

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By  Paul Barthram Published  June 26, 2003

HP has said it is to tackle the small-to-medium enterprise market in Saudi Arabia with the creation of its new Saudi assembly plant. With its new partners in place, HP has said it is making plans to target large tenders and the SMB market in the Kingdom over the next two years.

Christoph Schell, general manager, HP Personal Systems Group in the Middle East said though there was no specific competitive strategy involved in the opening of the plant, the company had selected its target market.

“I want a share of the white-box market. This is a product, which is going into small and medium businesses, and this is a growing area. Our competition here is the white box manufacturers, but everyone is our competitor,” said Schell.

The new partners include Aptec as distribution partner for the Middle East, Nahil Distribution for targeting the SMB market and Jeraisy Computer Communications Services for contracts in the education sector. SNAS will manage the new plant, with the first ‘Made in Saudi’ stickered PCs expected in the local market by November.

“Since our announcement six months ago that HP intended to set up this facility in the Kingdom, we have been busy finalising all of the details relating to this highly significant venture in the Middle East," said Christoph Schell, general manager, HP Personal Systems Group in the Middle East. "Our announcement means that we are well positioned to move forward quickly in establishing the plant, and growing the PC market in the Kingdom.”

Newly-appointed general manager for the Saudi division Abdullah Al-Mohaisen agreed saying that as a local assembler it ‘should help us win more local business, particularly with government contracts.”

SNAS—owned by HRH Prince Saud Bin Naif Bin Abdul Aziz Al Saud—which will manage the new plant, is an interesting choice of partner for HP, as the company doesn’t have a technical background.

“They are not traditionally experienced in the computer market, but we are,” Schell said. “SNAS has an excellent track record working with international companies in the Kingdom. We believe that this experience, together with their excellent logistics facilities and their financial strength, makes them an ideal fit for HP on this particular venture.”

The plant is expected to produce around 80,000 PCs per annum to be sold in the Kingdom of Saudi Arabia and across the Middle East region. HP says the new plant will support the local Saudi economy, give better service to the region and faster turnaround times for boxes made to order—from 30 days down to 15.

“We initially forecast 80,000 PCs in the first year, that’s with a staff of around 30 working one shift. But the capacity could reach 250,000 if we decide to take on other people for extra shifts,” said Schell.

HP said initially the Saudi factory would produce the D300 desktop series, an SME PC that is pitched at the mid-market in the US and Europe. The D300 is a ‘tool-less’ design so components can be swapped out quite easily, to make upgrading and assembling systems quicker and easier.

The effect of such mass producing at cost effective levels will make a sizeable impact on the smaller resellers that rely upon sales of white box production to small and medium sized businesses—currently 30% of the Saudi PC market.

So does HP’s partners think the local Saudi assemblers are worried about HP?

“I see is it as the market just getting a bit more organised,” said Thierry Chamayou, general manager of Aptec KSA. “The very little guys that are in the market here, assembling like ten to fifteen PCs a month, but they will disappear. Other local assemblers won’t have a problem, because whatever HP are putting onto the market as locally assembled PCs, they can still purchase cheaper parts from Taiwan anyway. So you are still going to get the people who can’t afford to pay much for a locally assembled HP PC, fitting into this niche. These are real sectors, where local assemblers will still have an edge,” said Chamayou.

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