Big deals brewing

With Gitex Saudi Arabia looming large on the channel calendar, there are some big deals brewing as vendors look to strengthen their routes-to-market and capitalise on soaring demand in the Kingdom. The retail sector is also poised for significant changes as several large players finalise their Saudi Arabia entry strategies.

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By  Stuart Wilson Published  April 5, 2006

With Gitex Saudi Arabia looming large on the channel calendar, there are some big deals brewing as vendors look to strengthen their routes-to-market and capitalise on soaring demand in the Kingdom. The retail sector is also poised for significant changes as several large players finalise their Saudi Arabia entry strategies.

Reliable channel sources indicate that Acer looks poised to formally announce another major distributor on the ground in the Kingdom in the next couple of weeks. This major in-country partner will provide a strong channel for Acer’s commercial products and also provide a route-to-market for the kit being built at its joint venture manufacturing facility in Saudi Arabia.

Over in the networking space, do not be surprised to see Cisco name another in-country distribution partner in Saudi Arabia to complement its existing relationship in the Kingdom with Al-Jammaz. Cisco is dedicating substantial resources to developing its position in the Saudi market and knows that there is a tremendous opportunity for enhanced sales growth. Its recent research on public sector IT investment showed just how much more spending is waiting to happen.

If Cisco does take the plunge and name another distributor in the Kingdom, it will serve as a wake-up call for Tech Data and Logicom. Both distributors hold Saudi distribution rights for Cisco but have been unwilling (or unable) to establish a significant presence on the ground in the Kingdom.

They have done an adequate job, but you get the feeling that Cisco is now looking for more than that from its distributors in Saudi Arabia. That could mean stocking points and staff on the ground in the Kingdom; an intimate knowledge of the genuine reseller channel, an ability to provide credit and the availability of pre- and post-sales service and support where required.

We are sometimes seeing strange channel situations in the Middle East — and especially in Saudi — where the vendors have actually taken the plunge and set up in-country offices and are being held back in terms of market development by the propensity of their distributors to make a similar investment. Many of these distributors are legacy appointments made at a time when the channel dynamics of the region was very different to the landscape that we see today.

Let me explain that a little bit more. In the past, many international vendors had an extremely limited number of staff in the Middle East and they wanted to appoint a distributor that they ‘believed’ could serve the whole region. The vendor sat in Dubai (or even Europe or the US) and put all its faith in one distributor that it assumed could serve the whole region from one central location.

That sort of situation is no more. The vendors have a rudimentary understanding of the in-country channel landscape and know the distributors that can really deliver the quality of service and local touch that they want and need.

Any vendor that enters the Middle East and does not have a basic understanding of the major distribution players in each country (and the scope and quality of their services and infrastructure) deserves to fail. With more and more vendors looking at in-country distribution partnerships, those players operating a highly centralised regional model need to adapt. Note that Emitac’s recent change of CEO means that its proposed joint venture with a Saudi distributor has been put on the backburner once again.

The buoyant Saudi retail sector is also braced for significant changes in 2006. Now part of the NTG group, expect to see CompuMe embark on a significant expansion plan during the year ahead. One power retailer in the UAE is also gearing up to partner with a local retailer in the Kingdom to extend its geographic presence still further. Looking further afield, we’re even getting reports of power retailers from the US hoping to strike alliances with hypermarket chains operating in the Kingdom in order to gain entry into the buzzing IT retail space

It’s going to be an exciting time at this year’s Gitex Saudi. If you have any announcements planned for Gitex Saudi, any channel news or wish to meet up with one of the Channel Middle East team during the event, please feel free to e-mail stuart.wilson@itp.com

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