HP to tackle consumer market in Middle East

Enterprise IT vendor Hewlett Packard’s (HP) Personal Systems Group (PSG) plans to tackle the Middle East consumer market with a range of devices based on mobility. Aaron Greenwood reports.

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By  Aaron Greenwood Published  June 11, 2006

|~|Alberto-026200.gif|~|Alberto Bozzo, HP VP and GM for Commercial Products, PSG, EMEA.|~|Having established a highly successful enterprise business in the Middle East, US IT major HP’s PSG division has revealed plans to increase its presence in the region’s consumer electronics market with a range of devices including notebooks and handheld ‘smart’ personal digital assistants. While the company currently maintains a presence in the consumer electronics sector with a range of customised commercial products, the announcement marks a significant shift in the company’s strategy for key markets across the Middle East. Alberto Bozzo, vice president and general manager for Commercial Products, PSG, Europe, Middle East and Africa (EMEA), says the impressive rate of growth in the various consumer markets of the Middle East makes it an ideal time for HP to take its business in the region to the next level. “The Middle East is one of the most important regions worldwide in terms of our future growth potential,” he says. “We are investing considerable resources in the Middle East. In late-2005, we opened an assembly plant in Dubai, which is an indication of our increased commitment to the region. “We are also expanding our employee base in the region. The Middle East – and countries such as the UAE in particular – no longer represents an emerging market. The region has matured beyond that, and we are focusing on it to fuel our growth.” Bozzo says HP’s PSG division’s ambitions in the consumer market have hirtherto been limited by the commercial success it has achieved in the enterprise sector. He says that the business model required for the commercial market is vastly different to that required for success in the consumer sector. “The consumer market is very volume orientated – you have to ensure you have the right supply chain model in place to service the major retailers,” he says. “This is the model that we employ in major markets such as the UK or France. “However, given the nature of the Middle East market, we have not been able to implement this strategy in the region. In a bid to service the consumer sector, we’ve been offering a mildly customised range of commercial IT products, such as notebooks, under our Home Edition-branded portfolio. “It is clear that as the Middle East market matures and as the growth becomes sustainable we will introduce our specific consumer products into these markets. We are planning to expand our presence in this sector on the back of products such as those we are launching as a result of our mobility initiative. “I expect that within the next 18 months, we will begin rolling out our pure consumer product range in key countries across the Middle East.”||**||Channel management|~|HP-skins200.gif|~|HP’s Pavillion- and Presario-branded consumer notebooks are available with a range of unique options, including customised skins.|~|Bozzo says HP is acutely aware of ensuring the roll-out of its consumer range does not impact its existing enterprise business in the region. “We have a product roadmap and a priority list in terms of countries in the region,” he says. “One thing that is very important when you have achieved considerable success in one sector of the market is that if you target another sector it does not impact your existing business. Unless the process is managed carefully, you can end up cannibalising your existing market. “You need to be sure that the new products are being rolled out via a different channel and that they complement your existing product portfolio. It is not a matter we are taking lightly. It relies on developing strong channel partner relationships and a diverse product portfolio. But it will happen.” Bozzo concedes that other factors including the high-volume, low-margin nature of the consumer electronics market has made it previously unviable for HP to consider entering the sector in the Middle East. He explains that the company’s strategy for the sector will necessitate the involvement of new channel partners that specifically service the consumer market. Key to HP’s push into the consumer sector is its new mobility strategy, which includes the roll-out of a new range of wireless products. In addition to a raft of wi-fi-enabled business notebooks, HP will also introduce new consumer-focused Compaq Presario and Pavilion models. It is also planning a major push into the handheld PC market. “The growth in demand in the Middle East for mobile data products is outstripping that in Europe at the moment. It is one of the biggest sub-regions for HP worldwide,” says Bozzo. “We are a relatively new player in the wireless sector and we are making a lot of changes to our business in this area. We are talking about a new technology that is immature, with a usage model that is constantly evolving. We don’t want to become a ‘me-too’ company in this area. “When we talk about consumer adoption of this technology, we need to provide a point-of-difference to our product range. We need to identify consumer trends and apply the value of technology to meet future consumer demand. “However, we don’t believe wireless infrastructure will be fully developed to foster consumer demand for these products in the Middle East until around 2008 or 2009. Each of the region’s cellular operators has a huge interest in establishing major product volumes and data services from the outset to ensure long-term commercial success. They are also willing to subsidise new products to ensure the consumer demand for the services is there from the outset.” One would expect HP’s next logical step in the wireless market would come in the development of cellular handsets, but Bozzo dismisses this assertion. “We have no interest in developing standard cellular handsets; we don’t want to take on the Nokias or the Samsungs of the world,” he says. “We are going to introduce a small ‘smart’ handset, but really the key is going to be in developing a new generation of wireless devices with expanded functionality. We are willing to sacrifice our short-term business to make a major commercial leap long-term.”||**||

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