Going mobile

The method in which the world’s leading notebook PC producers deploy their go-to-market strategies has all the potential to become one of the most fascinating spectacles in the Middle East IT channel during the next 12 months.

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By  Andrew Seymour Published  October 4, 2006

The method in which the world’s leading notebook PC producers deploy their go-to-market strategies has all the potential to become one of the most fascinating spectacles in the Middle East IT channel during the next 12 months.

Around the world, there is a clear trend towards mobility as customers snap up powerful and durable machines at attractive price points. Visit any computer store and the rows of laptop models take centre stage, while desktops – once the prime exhibit – are buried away in the corner like an old antique that lost its star quality years ago.

Notebook growth, and particularly the rapid pace of it, is no secret, nor is it a new phenomenon. But what makes the Middle East different is that it is moving closer and closer towards tipping point. Notebook sales have recently begun to catch up with PC sales in some of the region’s larger markets and now that pattern is threatening to emerge at an alarming pace elsewhere.

Whereas more mature markets, such as Western Europe, have undergone a measured migration from desktops to portables, the Middle East’s PC penetration rate, which is low in comparison, means the conditions are in place for a much faster migration process to occur.

This emphasis on notebooks is set to spark some intriguing battles between the seven or eight vendors that effectively control more than 70% of the Middle East market already. And as notebooks become the dominant form factor, their channel strategies will fall under close scrutiny. Only this week, Fujitsu Siemens signed MTC in the UAE in an attempt to extend the coverage of its notebook range, among other products.

Commoditisation always forces down prices and with every single manufacturer facing intense pressure to at least match overall notebook market growth, the price versus brand argument is poised to be hotly contested in the coming months.

Although the market remains segmented by price points, the real challenge for vendors is to estimate how much the entry level price band accounts for the overall market. There is a strong case for arguing that brand strength is more important than price when it comes to achieving long term sustainability in the notebook sector, but that is only true if vendors make a compelling sales proposition for the first and second tier channel.

Pure price-driven strategies often compromise margins and with that comes the danger that the channel will lose interest if the returns keep shrinking. Vendors must decide if they are working with partners to sell products that have a profitable commercial benefit or ones that deteriorate in price every week. With price points already below the US$550 mark, the latter option clearly remains a popular strategy and will undoubtedly help any vendor reach the volumes they need to grow market share. But there is some doubt as to whether that approach will still curry favour with resellers later down the line, when the notebook battle will have been raging for some time.

In the November issue of Channel Middle East we will examine the state of the regional notebook market and the channel strategies of the major vendors. Please let me know your thoughts on the way the regional notebook market is shaping up by e-mailing andrew.seymour@itp.com or calling +9714 391 0889

Baghdad troubles

The reaction of members close to Baghdad’s Sina’a Street society following this week’s dreadful chain of events – when a number of employees working for IT resellers were kidnapped from their stores – does not bode well for the market.

Sina’a Street after all, is the very heartbeat of the Iraqi capital’s IT community and a bustling trading environment for technology equipment. While the market is no stranger to adversity, several local sources have suggested that it could be weeks before regular trading hours are resumed and businesses recover from what has happened.

Unfortunately this all comes at a time when some companies have already confirmed their intention to reduce exposure to the Baghdad market. Heightened security threats coupled with reports that volumes have recently declined has convinced them that the risk of doing business is just becoming too great.

The speed with which life on Sina’a Street returns to some form of normality could be more critical to the shape of the market than many are, quite understandably, able to comprehend during this difficult time.

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