Digging the data

With the major A-brand vendors poring over the first quarter PC shipment data for the Middle East region and hunting out that one specific statistic that paints them in the best light, what better time to dig a little deeper into the sea of numbers emanating from the numbercrunchers at IDC and come out with a few first quarter highlights of our own?

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By  Stuart Wilson Published  June 1, 2005

With the major A-brand vendors poring over the first quarter PC shipment data for the Middle East region and hunting out that one specific statistic that paints them in the best light, what better time to dig a little deeper into the sea of numbers from the numbercrunchers at IDC and come out with a few first quarter highlights of our own?

No apologies for starting with the UAE market, which continues to boast impressive unit volumes, courtesy of its position as a re-export hub and the ability of the local channel to reach countries that some vendors are still not really supposed to sell their product into because of the unworkable and frankly pointless embargoes and trade restrictions that still exist.

During the first quarter of 2005, desktop shipments in the UAE hit 61,907, a grand total of 56,752 notebooks were sold into the market and 4,529 x86 servers were pumped through the local channel. How much was all this IT kit worth? A cool US$144m according to the calculator-toting statisticians over at IDC.

Saudi Arabia also put in an equally impressive performance with 76,767 desktops, 60,863 notebooks and 3,261 x86 servers contributing to a grand total of 140,891 units in the first quarter and a market value of just under US$157m according to the IDC numbers.

Combined, these two markets alone witnessed first quarter shipment value in excess of US$300m. Seasonality remains an issue in the Middle East but several major vendors reckon that the first quarter does bring in approximately 25% of annual sales with the second, third and fourth quarters accounting for 20%, 15% and 40% respectively. Bearing this in mind the market for desktops, notebooks and x86 servers could be worth in excess of US$1.2bn in full year 2005 in the UAE and Saudi alone.

So, what will the vendors tell the market about their performance in the first quarter, and more importantly what will they leave out of their first quarter analysis?

HP will be keen to announce that it maintained top spot across all three form factors in the UAE, beating off strong challenges from Acer and Toshiba in the notebook sector. It will also probably point out its 44% share of the Saudi desktop market — a glowing endorsement for its decision to locate a PC configuration facility in the Kingdom. HP is also king of the servers in Saudi with more than two-thirds market share according to IDC.

In fact the only black mark on HP’s copybook in the UAE and Saudi Arabia markets is its position in the notebook rankings in the Kingdom. Currently languishing in third place with 16.5% market share, both Toshiba and Acer shipped more notebooks into the Kingdom in the first quarter of 2005. Expect some action from HP soon as it attempts to shake up the current pecking order.

That moves us nicely onto Acer, which maintained its top spot in the Saudi Arabia notebook market, picking up a tasty 33.8% share of all units shipped. This will undoubtedly be a position that Acer will promote heavily and it is certainly an impressive feat given the number of vendors targeting the Kingdom’s burgeoning notebook market.

Acer’s weak spot continues to be its server sales in the region. In fairness, the vendor has recognised this fact and is committed to specific channel drives and distribution appointments (think Emitac) that can turn it into a genuine force in the Middle East x86 server segment. Acer shipped just 169 x86 servers in the UAE and Saudi Arabia during the first quarter according to IDC. In the same period HP sold a massive 5,939 x86 servers and remains the market leader by a country mile.

Acer did pick up number two spot in the UAE notebook rankings behind HP, but this remains a market where average selling prices (ASPs) need to be looked at carefully. According to IDC, HP picked up 23% of the notebook market in terms of units shipped and 22.2% in value terms. In comparison Acer picked up 22.6% of the units and 18.9% of the value, while Toshiba came in with 18% of the units and 21.6% of the value.

What does it all mean? It means there is a significant difference in the ASP of each vendor and this in turn impacts the margins that each vendor can expect to make. Put simply, there is a wide value range for notebooks ranging from basic entry level models up to super-deluxe high-end dream machines. And high-end machines typically mean higher margins for the vendors that sell them.

Expect Toshiba to talk not just about the volume of notebooks it shipped in the region in the first quarter, but also the ASP. Do the maths and it is a pretty interesting picture for the top three vendors. Acer’s ASP for a notebook in the UAE was US$1,103 with HP achieving US$1,273 and Toshiba coming in at US$1,588. That is a considerable variation and undoubtedly has an impact on the margin situation for each vendor.

The overall market size numbers for the UAE and Saudi are certainly impressive and it will be interesting to see the spin that each vendor puts on its first quarter performance. Statistics can be manipulated and it is something that some companies are very adept at in this region. The company that reports a 1000% year-on-year increase in sales into Kuwait may have in fact sold 10 PCs this year as opposed to just 1 the year before. Describing this as a 1000% sales hike sounds much more impressive than ‘we sold nine more PCs’.

Top line statistics only tell a partial story and you sometimes have to dig through the data to get to the bottom line realities. Watch this space for the analysis and reaction from regional vendor executives about their first quarter performance and their prospects for the rest of the year as we start digging.

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