O2 steps up regional assault

Asia Pacific smartphone vendor to expand operations in Gulf region, launches new handset range.

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By  Aaron Greenwood Published  December 10, 2006

Smartphone handset vendor O2 Asia Pacific has revealed plans to establish new Middle East headquarters in Dubai, after a successful first six months in the region. The company, which is headquartered in Singapore and is a subsidiary of global communications giant O2, launched its first handset, the Xda Atom, to much fanfare in the UAE and Saudi Arabia in May. Since then it has successfully expanded its operations into Kuwait and Bahrain, in conjunction with Square Distribution and Unitec respectively. The latter company also ranks as O2’s distributor in the UAE, while Riyadh-based Samir manages the company’s business in KSA. O2 Asia Pacific CEO Mark Billington said the establishment of new regional headquarters and the appointment of a regional manager would enable the company to increase its penetration in the region. “We’ve got around 85% retail penetration in our key markets, which is a major achievement given we’ve only been active in the Middle East since May, he said. “To take the business to the next level, we are appointing local staff who appreciate the nuances of the regional consumer markets, and who can work to further establish the O2 brand as a leading smartphone vendor. Billington said while O2 had not ruled out establishing its own warehousing and distribution facilities in Dubai in the future, for the meantime the company’s strategy of employing country-based distributors was serving its interests in the region. “We have followed the commercial strategy that has served us well in the Asia Pacific region of working with well-known distribution partners that have strong local market knowledge,” he said. “We’re not about to throw that out the window”. O2 previewed its latest range of 3G smartphones at last month’s GITEX 2006 exhibition, which comprises the Xda Zinc, O2 Graphite and Xda Flame models. The company will also launch its Xda Stealth model in Dubai this month. Meanwhile, O2’s VP of sales for North Asia and the Middle East, Chia Eng Keat, revealed at GITEX that the company was poised to announce new deals with local telecommunications providers and planned to expand its Middle East operations into Oman and Qatar. “Before the end of the year we will have deals in place with providers in KSA, Kuwait, the UAE and Bahrain,” he said. “We will also start to expand the O2 retail footprint [in the region] next month, starting with Oman and Qatar.” Once these markets are up-and-running, O2 will look to the Levant, Jordan and Turkey for further regional penetration, he added. “The first seven months [in this market] has been about brand awareness and equity and establishing our retail channels. Phase two of our Middle East strategy is about network deals, and phase three (next year) will be about making sure the brand connects with the pan-Arab community.” Keat claimed that O2 took a unique approach to distribution compared to its competitors, “including {Dubai-based] i-mate. “By choosing distributors with local expertise and that understand wholesale, retail and branding, we have managed to get close to the market,” he said. He revealed that O2 planned to launch a new marketing campaign targeted at Arab nationals in the first quarter of next year that would “make the O2 brand meaningful to this market”. Keat claimed that O2 was also holding its own in terms of retail penetration and market share in the Middle East. “Although we can’t compare our company to i-mate easily because to date, they have had more products in this market, we stack up well against them in terms of individual products,” he said. As evidence, Keat cited sales figures in Saudi Arabia in June and July, in which sales of O2’s XDA Atom handset were double that of the i-mate Jamin.

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