Wireless wonders

Vendors are flocking into the wireless networking space with plenty of gusto and skilled channel partners are in demand. With resellers and retailers spoilt for choice, only the vendors with the best channel programme, the right cocktail of rebates and incentives can stand out from the crowd

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By  Alex Malouf Published  December 27, 2004

Mass acceptance|~|FakharanyWaelFront.jpg|~|Wael Fakharany, 3Com Middle East’s regional manager|~|Wireless has undergone a rapid transformation. Seen as a flawed luxury a few years back, the technology is now firmly part of the mainstream IT channel. Emphasis on ease of use and solid security features has led many customers to take a second look at wireless. Vendors are luring the channel in with tasty incentive and education programmes, but is it time to go the whole hog and commit fully to wireless? With some consumers still put off by usability issues and networking vendors facing competition from integrated solutions such as Intel Centrino technology, it may not be all plain sailing for channels committed to wireless Who would have thought that working without wires would prove so popular? The wireless business is booming, with one industry name claiming a four-fold increase in wireless sales over the last year, and according to networking vendors 2005 will be no exception. “The growth is currently so high that I am not able to measure it,” admits Yusuf Syed, Middle East regional manager at US Robotics. “Whatever plans we put in place have proved to be an underestimation, as growth has outstripped supply. With demand rising from the region’s IT markets I only see sales increasing at an even faster rate.” The Middle East is catching up fast on Europe and the US, where wireless has become a common feature in homes and offices. “We are starting to see some very interesting developments in the region,” explains Wael Fakharany, 3Com Middle East’s regional manager. “Public areas with hotspot coverage and wireless campuses are mushrooming. Service providers are very interested in offering value-added services to home consumers through wireless broadband schemes, and at the same time offering wireless products in public areas to complement their value offerings for GSM and small corporate customers.” More good news for the channel is that demand is not limited to any one market sector. “Although retail is the sexy side of the business, most of the demand that we are seeing today is from the small to medium business segment,” claims Robert Auci, Europe Middle East and Africa sales director at Linksys. Syed reckons the split is 60% consumer and 40% corporate. Whatever the facts, sales opportunities abound. So why the change? On the vendor side, developments in wireless technology have given rise to consumer confidence. “The difference now is ease of use and security,” adds Syed. “People were naïve about the security aspect of wireless initially. But now wireless products are more secure. With the technology becoming more simple to install more people are opting to go for convenience and get rid of their wired products.” Fakharany agrees: “People were questioning two issues; ease of use and security. This is a very security conscious region, but now that wireless has matured the business has taken off. At 3Com we have a long list of features to ensure the integrity of the network, from triple desk security to remote control of the access point. Once end-users see these security devices then they will implement wireless in their homes. Once you are comfortable with it at home then you start to use it all over — your workplace, your public areas, your coffee shops and so on.” ||**||Channels-to-market|~|RobertAuciLinksys.jpg|~|Robert Auci, Europe Middle East and Africa sales director at Linksys|~|Telecommunication providers have also played their part by rolling out broadband networks over the last two years. “Mass demand for wireless is inevitable when broadband is in place,” explains Fateen Fateen, D-Link Middle East’s chairman. “Based on conservative estimates there are half a million to a million subscribers across the Middle East and North Africa. When a consumer signs onto broadband they then begin to look more at wireless solutions where they can make full use of their service.” With wireless having won mass-market acceptance, the fight is now on among vendors to stand out from the crowd. Many of the major names are pursuing a variety of means to distinguish themselves both in the channel’s eyes and also to consumers. Resellers should be licking their lips with the comprehensive incentive programmes on offer. D-Link gave partners the perfect Christmas present for 2004 — its ‘Dollars’ incentive scheme. With prizes including cars on offer, D-Link has seen sales go through the roof. “Promotions like D-Link Dollars pass on tremendous savings and value to resellers along with creating high brand loyalty,” adds Fateen. “But we also have long term programmes in place, such as D-Link’s ‘retail champion’, where we reward retail sales staff for target based achievements. The end goal is to create a high level of channel loyalty and motivation, with benefits including tech support, stock priority, marketing funds and also exciting prizes.” US Robotics has also invested heavily along the lines of D-Link, offering one incentive programme for resellers focused on corporate sales and another for retailers. Linksys is not far behind and intends to follow suit. “Through our value added reseller (VAR) scheme we are working towards getting partners educated and creating a product that can maintain margins,” explains Mohammad Hoda, regional manager at Linksys Middle East and Africa. “When they sign up for the programme they get a 5% instant rebate on products through the distributor. Today we have close to 350 dedicated VARs working with Linksys in the SMB space. And we are looking to replicate this success in the retail space by launching a similar programme for retail partners.” New channels-to-market and their sales potential are driving vendors into a tizzy. “We do 80% of our business through our VAR partners but now our focus is on the retail segment and are working towards signing agreements with retail giants here,” explains Hoda. “We have 55% market share in the US retail space — a huge chunk of our business. Linksys is after replicating the same thing here. When a customer walks into the shop they should be able to see our products displayed, learn about wireless and what they need for their home network.” The other emerging channel is internet service providers (ISPs). Back in Europe and the US, ISPs are used as sales outlets by vendors and provide a simple but effective way of generating revenue. The logic is simple; consumers get the whole broadband package of hardware and connection rather than buying each one separate. “We have an ongoing promotion with QualityNet in Kuwait and are in the process of talking to other major ISPs in the region to see how our products can round off their service to benefit to the consumer,” explains Syed. But according to Syed, ISPs are proving a hard sell and have yet to realise the potential of service-hardware deals. “Most of the ISPs will come back and tell you, ‘we don’t want to sell a hardware solution’. There is margin in there for them but they want to leave it up to consumers to buy hardware. ISPs don’t want to take up the burden of service costs for hardware installations, and that is one of the reasons why they are shying away from that and preferring to stick to service margins.” ||**||Commodity product?|~|YusufSyedUSR.jpg|~|Yusuf Syed, Middle East regional manager at US Robotics|~|With so many routes to market and vendors pushing to get their boxes on shelves, resellers may wonder if wireless is becoming commoditised. “We do have our products in Carrefour so people can pick up and buy, but I think what is important to ask if those same customers are able to use our products without any fuss,” says Syed. “Plug and play is an easy word to say but at the end of the day using a wireless solution is not so simple. I myself get baffled sometimes. End-users may believe that you take the wireless router, plug it in and hey presto. But it doesn’t work like that. I think a little bit of education is needed on the part of the customer. The channel still needs to hand-hold end-users through the buying process.” The whole ease of use issue is still the Achilles heel for vendors. While much has been done to improve ease of use, the industry still has to do more to simplify matters for consumers. “The owner of a small mom and pop shop wants normal access to the internet,” notes Fakharany. “He wants something shrink-wrapped, a true plug and play system. We don’t make it complicated for him to open the box, read a few instructions, plug it in and get it working. He shouldn’t need an IT manager.” Vendors who overlook ease of use will find their numbers taking a hit and resellers defecting to other brands. “There still are a very high percentage of products that are returned because people gave up on installation due to frustration,” adds Auci. “What vendors deal with may be the norm for the channel but end-users see it differently. We place emphasis on taking the blinders off the technology. Resellers do say that the reason why they work with us is that the return rates are so low.” Channel players would do well to look at services in order to maximise revenue streams and cater to the growing number of end-users who want wireless but without the hassle of implementation and maintenance. “Channels can benefit enormously from the value-add and offering design, consultations, and deployment to customers,” argues Fakharany. “You don’t normally sell wireless on the phone. Customers want to come, see what it can do and receive reseller help. Wireless is a new concept and there is a lot of room for innovation in this arena.” With a glut of new housing developments on the horizon in Dubai and the wider Gulf region, Jamshed Mehdi, SMC Networks managing director for the Middle East, argues that resellers should look at more than just shifting boxes. “People have money and they want to deploy networks at home. But many cannot or don’t want to do it themselves for various reasons. There are thousands of villas and building projects coming up. Channel partners should grab these opportunities to offer the complete solution. With the product you can make a few points but with this you can make a different margin.” ||**||Adding service|~|MohammadHodaLinksys.jpg|~|Mohammad Hoda, regional manager at Linksys Middle East and Africa|~|Resellers and system integrators looking to make the service grade will find that vendors are keen to get them on board and signed up. “Our partners are offered sales training, hands-on education and even free project consultancy,” says Fateen. “We are reaching out to them and placing special emphasis on adding to their skills sets, and so benefit both of us. Channel education creates a marked increase in sales and resellers recognise this.” Still, despite vendors’ attempts to get the channel on song with tasty incentives and free education, some resellers are up to old tricks and acting less than scrupulously. Syed explains: “One of our promotions is a router and wireless card bundle. Some dealers have been making margin by taking the card out of the bundle and selling it separately. In the process they undercut the price of companies that do sell the wireless card product. There is no reason to sell as they can make the margin on the bundle but they want the quick buck. I think the channel could do better to make the most of the proper business on offer.” There is no doubt that wireless is diversifying and becoming an ever present in the IT business, but now mainstream hardware giants are moving in and eyeing this emerging market. Intel has been pushing its Centrino technology for some time now, which offers users the ability to hook up to the internet without the need for a wireless card. Motherboard vendors such as Asus are also integrating wireless features into their wares, and Samsung recently launched a printer that connects to the network via in-built wireless. Could networking vendors be facing a challenge to their dominance of wireless? “With everybody promoting the technology, there is more brand awareness,” argues Fateen. “Market opportunities will multiply as end-users adopt wireless at a much faster rate. As long as we focus and build on our strengths and services we will keep on selling healthy numbers in line with, or above, market growth.” Syed also points to the inherent advantages of using dedicated wireless products. “You will see more and more wireless products entering the market, for desktops and laptops. But still customers opt for our products as they are faster. To give you an example, Centrino operates at 54 megabits per second, while ours is double that, at 125. If you want a performance based notebook you have no choice. It costs more but end-users get value out of it.” Some vendors are getting in on the digital convergence act and teaming up with hardware giants to provide products such as wireless stereo systems and DVD players. “We foresee a trend whereby wireless will become a household technology,” says SMC’s Mehdi. “There will soon be no gaps between consumer electronics and wireless technology and that is where our joint venture with Philips fits in. They combine their electronics know-how with SMC’s wireless designs to come out with innovative and exciting products.” ||**||Balancing act|~|FateenDLink.jpg|~|Fateen Fateen, D-Link Middle East’s chairman|~|Whatever the future of the wireless market, with internet usage soaring across the Middle East and people switching to speedy broadband connections wireless seems a safe bet for resellers. “We have seen consumers go online in droves,” notes Fateen. “Percentages are very high and with broadband making its mark there will soon be an even more compelling case to purchase an internet connection. We reckon that around 10% to 15% of analogue users switch to broadband on a yearly basis. In five year up to 70% of the region’s internet users will be broadband connected. That will have a huge impact on our sales out numbers.” As the region’s markets mature and grow vendors will look to expand their channel reach into new geographies and look outside of the GCC, where most IT growth is concentrated. “We are pushing into developing territories such as Iran and Pakistan,” explains Fateen. “Plans include establishing in-country offices to allow for on-the-ground development.” Linksys is eyeing African markets in the belief that these will prove to be the wireless wonders of the region. “North and Sub-Saharan Africa are driving forces in the network sector,” argues Hoda. “We have achieved good market share in the Gulf area and now it is time to push out and achieve the same kind of success in other areas of the MEA region.” For vendors who have firmly established themselves in the market, the task is now to refine the channel, work with partners who are committed to the brand and grow the business together. “Our focus is to keep on defining our channel,” states Fakharany. “We would like our gold partner to really be our gold partner; to have the best engineers, the biggest revenue, the most access to our largest accounts together with our direct touch people. We would like our silver to have the right infrastructure and so on. There is always going to be conflict but we are raising the minimum revenue commitment in the Middle East region to be able to be certified.” “We will have a look at our current channel and see how we can generate more revenue out of fewer numbers. Ideally we would like to have a minimum number of channel, multi-channel 100%, but a multi-channel that creates enough business for us both at the same hunger and momentum. We have to align our expansion aims together. If you are my best channel and you want to grow by 10% and I want to grow by 40%, then we have a serious problem.” The trick lies in keeping one eye fixed on the future of the industry while not shifting attention from what still sells. “Focus on wireless and wired,” says Syed. “We have grown on analogue and we would be the last company to shy away from the analogue market. But wireless is the way to go and US Robotics will be adding more products to our portfolio that cater to ease of use, and are secure as well. Without continually moving forward and innovating through new designs none of us in this industry will be able to grow.” ||**||New players|~|ChristmasLinksys.jpg|~|A familiar sight this season? Could wireless be the answer to being tied-up in knots?|~|A host of vendors will be joining the wireless frey this year. Components giant Asus is set to introduce its own range of wireless products in early to mid 2005. Senao, a major player in the corporate wireless market is also planning to enter the consumer space with its best-of-breed technology depending on capacity issues. A new player in the market will be ViewSonic. The vendor, well known for its monitor offerings, is hoping that it can replicate its success in the display industry with wireless offerings. Japanese manufacturer Buffalo has been mulling the pros and cons of establishing a presence in the Middle East for some time now and will soon take the plunge in only a few months time when it moves to appoint regional distributors. Wireless colossus Netgear is already active in Africa and could soon switch its attention east to the Middle East after being impressed by sales numbers from its African distributors. And finally Belkin. The well-known vendor is already established in several Middle East territories but was the only vendor that was unable to comment on its regional expansion. The year ahead promises to be an exciting one for the channel and consumers as vendors battle it out for a slice of the region’s lucrative wireless pie. ||**||

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