Doha Dealers

Channel Middle East jets off to Qatar to meet the local dealers and distributors making their mark in this fast-growing GCC economy.

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By  Andy Tillett Published  February 28, 2006

Infrastructure boom |~|shabeer200.gif|~|A.M. Shabeer, head of projects at Computek|~|As Qatar's infrastructure goes through its fastest period of growth in modern history, its IT sector is experiencing a parallel dramatic development. Everyone from the smallest computer street resellers to enterprise solutions providers are having to wake up and take stock of their position. The most aggressive and flexible businesses will capitalise on the opportunities that appear as the market grows, while those stuck in old modes of trade will fall by the wayside. There's no time for serious IT players to sit around as the Qatar IT sector enters make or break territory in 2006. As the morning sun ascends over Doha in Qatar the computer shops of the Montazah district are already buzzing with both workers and customers. Unlike the computer streets of Dubai, where the weary eyed resellers roll into their shops and unlock their doors at around 5PM, Doha’s IT trade starts early and goes on late into the night. Though the overall feel of the city is more subdued than the constant hustle and bustle of traffic and people seen in Dubai, the region’s trading hub, its attitude towards development is no less aggressive. In the older part of Doha the tactic seems to be to simply flatten old buildings and re-build over the space. The brand new and the old computer shops in Montazah exist side-by-side, but most appear to be involved in some sort of renovation. One such company is Qatar Computer Technology (aka Computek), a local distributor dealing with a number of A-brand vendors and carrying its own brand of Imax PCs, which is presently expanding its office to accommodate its new networking department. “We are working to capture the corporate sales while the market grows at the present rate. We have established a networking arm that will concentrate on high-end markets. This project-focused business joins our distribution operation and our retail showroom as we move from small to medium (SMB) businesses to corporate targets,” says A.M. Shabeer, head of projects at Computek. This is a typical move for the IT companies of Doha; most businesses report an explosion in IT growth over the last two years, enabling them to double their revenues year-on-year from 2004 onwards. As this market expands, companies that have had interests in multiple IT sectors are now concentrating on one or two specific areas of business. “We started in Qatar in 1988 as a computer training institute then we moved into software development. From there we went into hardware sales and support. We have more recently started to concentrate on consumer markets with our hardware sales,” says Joe Cyriac, general manager at Family Computers. ||**||Quality or quantity? |~|family200.gif|~|Joe Cyriac, general manager at Family Computers.|~|Qatar has few exclusively appointed in-country distributors, with the majority of product still bought from Jebel Ali, Dubai, by local distributors and then sold on. Estimates on the number of resellers plying their trade in Qatar range from 100 to 150. Most of the IT outfits in the country are also assembling their own brands, with Family computers carrying its Micron PCs, of which it claims to sell around 250 to 300 units a month. Computek says it is moving 80 to 120 of its Imax PCs a month, but is starting to phase them out as it concentrates on selling named brands. “First the market was quality driven, then the market became price driven and now it’s going back to being quality driven again. A-brand prices are coming down to match those of assembled brands — someone looking for a quality assembled system can get the same specification in an A-brand for almost the same price,” says Shabeer at Computek. As local distributors such as Computek move their operations away from local assembly, the country’s fledgling retailers are looking to capitalise. Local Qatari company Computer Home set up its retail operation in 1991 now operates three showrooms. It has used these as a platform for its Gate PC brand and sells over 50 Gate PCs a month. Computer Home has big plans for the future of this brand. “The retail market brings in a healthy profit on Gate PCs. We have an office in Jebel Ali and also buy components from Taiwan directly. We assemble all the computers in Qatar,” says Ahmed H. Al Saiari, Montazah branch manager at Computer Home. “The government is helping us to set up a bigger assembly facility locally. They are helping us find land and also with bank loans. The government is buying the Gate brand, and we are working towards getting Gate PCs into internet cafes. We assemble all our computers with high-end components, such as Western Digital hard drives, Intel motherboards and CPUs and Kingston memory,” adds Saiari. Although the government is investing in IT at the channel level, some companies feel they are not getting the support they need. Manpower is a big issue, and some businesses in Qatar are having trouble with recruitment, as the number of visas allowed for expatriate staff is restricted. There is also some concern regarding the government’s stimulation of retail. There are hypermarkets such as Carrefour and Lu-Lu dealing with IT products, and Jarir Bookstore has one branch in Doha, but the main square for dealing in IT products remains Doha’s Sofitel plaza, referred to by one distributor affectionately as ‘our free zone’. “Retail needs to be boosted, there is no real computer mall. It is not professional business down at Sofitel, there is no connection between the customer and the companies there. Every day the shop names change, or they have been sold to somebody else. There are some shops outside, like our showrooms, but there’s nothing together in one area,” says Ahmed Z. Al Batarni, general manager at Al Masa Computer Technology, a local retailer and distributor, which is planning to open a 250 square metre hypermarket style retail outlet in Doha. ||**||Direct investment|~|comphome200.gif|~|Ahmed H. Al Saiari, Montazah branch manager at Computer Home|~|Neglect is an accusation also frequently aimed at vendors. Direct investment in Qatar is low. Microsoft has just opened an office in Doha, Cisco is in the latter stages of establishing an office and Avaya and HP have resident staff in country, but most vendors serve the country from Dubai or other areas of the region, and maintain a ‘laissez faire’ attitude towards product flow. “Toshiba Middle East’s policy is not supportive enough, they are working with only one company in Qatar and they give us no support so we get our products direct from the US or from the resellers in Dubai. Dell also has very bad support in the Qatar. We deal with it but very little because of the support. HP gives us the best support,” says Mohamed Abdul Ghani, managing director at First Choice Computer, an IT and security systems group. For channel partners, it’s not even vendor’s direct investment, but their lack of support for promotion and advertising that irritates. “Everybody is asking for business in Qatar, but they don’t want to spend money like they spend in Dubai. Not even 10% of the money that is spent there is allocated to Qatar. No vendors do any branding, campaigns, or promote their brands. They won’t support us, they just ask where the business is and push product,” explains Batarni at Al Masa. The channel is crying out for more attention, but for vendors serving the country remotely it can be difficult to assess the speed of development, level of growth and resources accordingly. Even the country’s government seems to have trouble keeping pace with the recent developments on the ground. “Over here we cannot do everything overnight. It has to be done in steps, from infrastructure up. The government has not spent on IT at all in the past, so there are many tenders in the market that are still for infrastructure. Other countries in the region completed basic jobs like cabling, PCs, printers and servers a long time ago,” comments Ma’moun Al Beshtawi, sales and marketing manager at Omnix Qatar, the biggest local solutions provider in the country. ||**||The solutions sector |~|ominx200.gif|~|Ma’moun Al Beshtawi, sales and marketing manager at Omnix Qatar|~|At the high-end of the market, the current situation is, again, of high growth, but for a company like Omnix that has a very close relationship with the government and has a technically advanced position and intimate knowledge of the local market, revenues can be impressive. “Whoever is specialised in infrastructure is cashing in. In Qatar there are only five big companies to compete for tenders. We will start next year to increase on our applications side and decrease emphasis on infrastructure, to reflect the development of the market,” adds Beshtawi. Ominx is a 45-strong organisation. It splits Qatar into five main verticals, accounting for 15% to 20% of business each, though it lists its strongest as telecos, utilities and governments. The solutions provider says that the IT market it addresses is worth US$137m annually and expanding. The oil and gas sector is what is providing most of the money for the country’s development and multinationals such as Shell and BP are increasing their investment in Qatar. The government has recently signed 25-year contracts with Italy, France and Spain to supply their gas. Vertical spending on IT has increased dramatically, but some smaller solutions providers feel they are kept out of the market by the government favoured outfits. “The bigger companies in Qatar get government tenders because of their relationships with the government departments, rather than the price issue. Good relations with the government leads to good business,” claims Ghani at First Choice Computer. Qatari companies also have to look at competition from further afield. While there are not many regional or international companies operating in their country at present, many are eyeing the opportunity and preparing to move in. Our own quickpoll on itp.net revealed that 63% of respondents named Qatar as the hottest spot for investment and growth in the Gulf in 2006. More market entrants will make for tougher competition, tighter margins and a closer eye on the market from vendors. “If we compare the Qatar market with the Dubai market, Qatar is still on the safe side, still making margin, but in Dubai there are no margins, so we have to guard the market here. We are learning from the Dubai market, we are learning how to make advertising and business plans, and we are attracting more tourists here so we have to prepare for them,” says Saiari at Computer Home. With the Asian games being held in Doha this year, the tourism factor is another area that will receive a great deal of attention. Traditionally a market evolves from the enterprise sector down, but in Qatar the IT market is accelerating across the board. The enterprise channel is riding high, while the distribution channel is realigning and finding its feet, investing in the areas of the market it wants to concentrate on. One clear point is that if Doha is seen as Dubai’s little brother, the local channel is aspiring to punch above its weight pretty soon. ||**||

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