Built to order

Imagine clicking on a website and entering the precise specification for your perfect PC. Want a massive monitor and a humungous hard drive from a particular vendor? No problem.

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By  Stuart Wilson Published  September 13, 2005

Imagine clicking on a website and entering the precise specification for your perfect PC. Want a massive monitor and a humungous hard drive from a particular vendor? No problem.

Just click on the relevant tick boxes, enter your credit card details, sit back and wait for your individually configured dream machine to turn up. Even Dell is not yet ready to offer built to order (BTO) desktops and notebooks in the Middle East. Ambitious assemblers are gearing up to step in first and make the market their own.

The local assembly sector in the Middle East remains fragmented, with the actual market landscape varying massively from country-to-country. In markets such as Egypt a top tier of local assemblers has emerged, producing decent volumes and coming up with the low price points that appeal to the country’s consumers. Elsewhere, in markets such as Yemen and even Iraq, the local assembly picture is still dominated by small independent dealers doing a little bit of custom assembly on the side for customers, and typically producing PCs in small volumes.

Where does built to order fit into this landscape? Well, it really is a case of everyone involved in local PC assembly in the Middle East understanding the benefits that come from economies of scale — not just in terms of purchasing power but also in terms of introducing greater efficiency into the whole assembly process and cost structure.

If you pay a visit to Jebel Ali, you don’t have to look too hard to find a number of PC assembly lines that have been set up by vendors and distributors. For these operations to survive and prosper, they need to start building genuine scale fast. Forget the idea of every single local PC brand having its own assembly line. That is just not practical. What the market requires are some large volume PC assembly specialists with the ability to also produce PCs for third party customers as part of a subcontracting agreement.

For this to happen, we need local assemblers to understand the benefits of outsourcing production and the advantages this provides in terms of freeing them up to concentrate solely on building brand equity and customer awareness around the region.

We’re starting to see some innovation in local assembly in the Middle East and there are a few players that now understand that scale equates to survival if you want to be involved in the PC assembly process. There remain significant tax advantages for locally assembled PCs made in the GCC, and the local market needs to take full advantage of this situation.

The idea of built to order PCs will eventually catch on and the companies that offer this service first could see tremendous benefits if they market the concept well and reach critical mass quickly.

To make an individually configured machine for each customer requires a total change in mindset for a PC assembler, yet it really is not that revolutionary. In the auto industry, the list of options and extras that a consumer has to select from when purchasing a new car can frequently run to pages and pages. It is all about offering choice and producing a unique product that the customer is actually prepared to pay a premium for.

As a distribution hub with an ample supply of just-in-time partners ready to deliver components, Jebel Ali looks well positioned to eventually become a centre for built to order PCs. If local assemblers start doing this — and doing it well — it will also crank up the pressure on vendors such as Dell to introduce similar services in the market.

At last year’s Gitex, there was a great deal of talk about local assembly in the Middle East. There has been a noticeable shift during the last twelve months and it is becoming a lot easier to separate the genuine local assemblers from the wannabes who merely pretend to assemble as a front for their sub-distribution activities.

This process will accelerate even further during the year ahead. E-commerce will start to play a significant role in the IT channel and genuine built to order PCs will become a familiar sight in the market. It is going to happen, and anyone involved in PC assembly needs to understand their existing position in the market and come up with a long-term gameplan that makes sense.

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