Products to watch 2006

Channel Middle East delves deep into vendors' roadmaps to reveal the hottest products to be hitting the shelves next year.

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By  Andy Tillett Published  November 27, 2005

Playing your cards right |~|crystalball200.gif|~|Which will be the products to invest in over 2006?|~|It looks set to be another hot year for new products in 2006, with a host of devices, technologies and updates appearing on the market. All vendors are as coy and vague as possible when asked about roadmaps, but Channel Middle East has dug deep to squeeze out some closely guarded details of the forthcoming products that vendors are planning to release in 2006. Vendors must have a carefully planned roadmap. There are three considerations that they have when plotting this map: whether their new products are ready for the market, how ready to receive these technologies the market is, and the likely moves of their competitors. Companies have to be pre-emptive with their roadmaps and keep their cards close to their chest. Zsolt Menesi, multimedia business director at telephony giant Nokia Middle East and Africa (MEA) is privy to one of the most high-pressure roadmaps in the industry. “We launch commercial products where we know the market is there and will have immediate customer acceptance. In other specific areas, the market is not there, the infrastructure is not there yet, but we will introduce a device so that consumers can get familiar with the concept and it will be there when the market is ready,” says Menesi. In a market where choice of brands and products sometimes appears infinite, price pressures are high and margins on most items are being reduced to next to nothing. The products faring best are those with the magic of being perceived as ‘unique’ by the consumer, and are therefore able to command a premium. In today’s society, this product fetishism is clear the world over and certainly extends to IT, making celebrity endorsements and the plundering of unique selling points a necessity. In the IT sphere, the most successful example of this is undoubtedly the iPod. The most recent version, the iPod Video, in 30GB format, is much sought after and in short supply. As a result, some resellers in Dubai are currently making up to 40% margin on each unit sold. “Worldwide, Apple cannot meet the demand for iPods. It buys up every LCD screen and all of the hard disks that it can, but it is not enough to meet demand. Competitors to the iPod have very good product offerings, but the largest competitor to the iPod isn’t even the other manufacturers, it is the grey product flow,” says Ghassan Bendali, deputy general manager at Arabian Business Machines (ABM), the regional business development arm of Apple Computers.||**||Boosting phone functionality |~|nokiaphone2002.gif|~|One of the latest N-91 Nokia phones, with mp3 functionality|~|With more and more mobile phone vendors looking to add mp3 functionality to their devices, there is a very real challenge on the horizon for Apple. Nokia will be aggressively pushing its phones with integrated mp3 players and cameras next year. The phone vendor even has plans to extend its product range to offer mobile television. “There are two key drivers at the high-end next year. One is internet protocol (IP) and the other is DIVX — mobile TV. If you look into it, we have cameras, we have music, so the next step is television. Music and imaging are pretty mature already, IP and television are the next step. When Skype has developed its series 60 VoIP application for our phones it will make very big headlines,” says Menesi at Nokia. As phones increase in quality and functionality they require more memory space, and developing hard drives that are physically smaller, but with more storage capacity is a primary aim for hard drive manufacturers in 2006. This doesn’t just apply to phones, items such as cameras, mp3 players and DVD recorders will continue to add more memory space through the year. Flash disks and memory cards associated with these devices will become more commonplace and more products will incorporate card readers able to read from all the different types of memory card available in the market. The production of 2.5” hard drives for laptops will increase, from all the main hard drive vendors: Seagate, Western Digital, Toshiba and Hitachi. A greater emphasis on Serial ATA (SATA) drives for laptops is expected. So far SATA has seen a low take-up, partly due to the high price of drives, which is expected to start reducing in 2006, while performance will improve. Another rapidly rising area in storage is the externally attached disk drive market. 2005 has already seen capacities go through the roof, with Maxtor announcing its mammoth OneTouch Three storage device, offering a whopping one terabyte of storage space. Expanding the storage capacity available in its devices is also one of the focal issues for digital device vendor Creative. After adding to its popular CreativeZen mp3 player range with higher capacity offerings and colour screens in 2005, the vendor plans to introduce its second generation of the smaller Zen neeon mp3 player in 512MB and 1GB flash memory capacity. Creative will also work towards incorporating video into the CreativeZen range to capitalise on its growing market share in the region. “We are gaining more market share in the digital portable audio segment all the time. Retail audit research company GfK puts our market share in the UAE as growing from 26% to 32% between June and August this year,” says Leonard Yap, senior marketing specialist at Creative Middle East.||**||Keeping consumers guessing |~|ipod2002.gif|~|The newly released iPod video|~|Having already introduced video functionality to the iPod, Apple is still leading the mp3 player market in the Middle East, despite not having its counterpart to the device, the iTunes website — where users can download songs directly from Apple — up and running in the Middle East. The vendor is leaving the market in the dark, to speculate which technology it will include in the iPod next. “Apple wants to use technology to not only make things better but make new things. Only very few people know exactly what Apple is developing, but I know that they are working on providing the best consumer experience you can imagine. I can see the iPod adding build in Bluetooth functionality, so you don’t have to connect your headphones directly to it,” says Bendali at ABM. While mp3 has become the most popular and unanimously accepted form of portable sound media, other digital media formats are facing a standards battle. Two new high capacity, high definition DVD formats, Blu-Ray and HD-DVD are both set for general release in 2006. HD-DVD is more of an extension to the existing technologies on the market, whereas Blu-Ray is more of an overhaul. Both formats have their respective market backers, with Sony championing Blu-Ray, supported by Panasonic, Samsung, Dell, HP and Philips, to name but a few. In the opposing corner with HD-DVD stands Toshiba, backed by Sanyo and NEC. The battle will really hot up when Sony releases its Playstation3 gaming device in early 2006, which is expected to be able to read Blu-Ray DVDs. Of the two technologies the Blu-Ray DVDs can also hold more capacity, but the Toshiba format is cheaper and easier to produce. Toshiba claims it can make HD-DVDs for only 10% more cost than current DVDs, and easily convert, rather than replace, existing production facilities. Overall it is a difficult call to say who will win, but the weight of the Playstation brand and the backing that Blu-Ray carries gives it an early edge. Sony and Blu-Ray technology may not keep that edge for too long though, especially as software giant Microsoft has pledged to design its latest incarnation of the Windows operating system to support the HD-DVD format. The new version of Windows, titled Vista, is set for the shelves in early 2006. The operating system boasts an enhanced file structure, increased security options, including greater control over administrator privileges, connectivity in terms of devices and peripherals, and usability. Sneak previews seen by our colleagues on sister publication Windows Middle East reveal more 3-D graphics and an overall smoother look to the new programme, although nothing has been finalised yet. It is expected that Vista will come bundled with a new version of Microsoft Internet Explorer, version seven.||**||PDA power|~|imate2002.gif|~|i-mate's winmob CRSBK PDA |~|Microsoft is also hoping to make more of an impact in the Middle East PDA market in 2006, with the latest version of its Windows Mobile operating system. Dubai based PDA pioneer i-mate is very excited about some of the software functionality and chances for interoperability that this will make available. “The Windows operating system we use is very close to other Microsoft programmes, and this will deliver in 2006. There will be widespread deployment of full push e-mail. We will offer a free software upgrades to any customer running a Microsoft exchange server,” says John Williamson, vice president of technology at i-mate. Push e-mail is set to become a driving factor for PDA sales in 2006. To make these services affordable and encourage widespread adoption, telecom deregulation is called for in countries which currently only have one service provider. “Deregulation will encourage a diversity of services. We see this in a number of countries that have deregulated. Different networks can take on different technologies, such as 3G and Edge networks,” adds Williamson. Infrastructure and de-regulation are two issues that could prevent technology adoption from realising its full potential in the Middle East. As 2006 dawns we will see a lot more products, an increased range, new technologies and more converged products. All of this equals new opportunities for the channel and opens new niches for resellers and distributors to operate in. The smartest will see this and realise that the margin potential now lies in services and value-add. This understanding, alongside the right combination of push and pull marketing from vendors, will ensure that the channel stars of 2006 burn brightly.||**||

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