Wireless is priceless

Middle East notebook computer sales have again outstripped desktop PCs in 2006, with local consumers seeking products that combine mobility and functionality.

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By  Ronan Shields Published  November 14, 2006

|~|QosmioF200.gif|~|Toshiba's flagship Qosmio notebook is equipped with an HD DVD drive.|~|Consumer notebook sales are increasing exponentially in the Middle East, with Hewlett Packard proving the most popular brand with a 21.5% share of the market in Q2 2006, according to IDC data. The recent launch of its entry-level Compaq notebook range and the continuing popularity of its HP Pavilion portfolio has enabled HP to achieve an annual growth rate of 29.6%, according to the company’s category manager for notebooks and handhelds, Vishnu Taimni. “We aim to cover the whole spectrum of the market while taking different consumer needs into account,” he says. “We have a broad notebook portfolio that caters to every sector, from entry level to high-end corporate. “We have witnessed consistent growth in entry-level and high-end notebook sales. The entry-level sector is growing as a result of increased consumer demand for cheaper wireless technology.” Key industry figures note that improving sales of lower cost notebooks has coincided with the increased availability of entry-level products in generic hypermarket-style retail outlets. “When people switch from desktops to notebooks they tend to go for the entry-level products but we also do well in our high-end products,” notes Taimni. “We may look to secure deals with new retailers and distributors keen to service the entry-level market in the future. “Certain products have proven more popular in specific markets – the Presario has achieved strong sales in hypermarket retail outlets while products like the Pavilion series have performed better in more specialised retail stores.” Taimni claims that price is “not the sole consideration of consumers looking to purchase a notebook”. “The Pavilion series is a premium notebook range that has very strong brand-equity in the marketplace. We find that consumers are willing to pay more of a premium because of the look, feel and capabilities of these products,” he says. Ashish Panjabi, chief operating officer of UAE-based Jacky’s Electronics, confirms that HP and Acer consistently rank as the retailer’s top performing notebook brands. “This can be attributed to a number of factors,” he says. “Both companies have been investing quite heavily in terms of marketing, and their promotional strategy in the UAE is second to none.” Panjabi also believes both companies’ customer care programmes play a crucial role in defining their commercial success. “Comprehensive after-sales service facilities has helped to position both Acer and HP as leaders in the marketplace,” he says. “The products have always been good but it’s the marketing and service backup that sets both brands apart from their competitors.” David Drummond, business unit manager of mobile products at Acer, cites technological developments as fuelling this trend. “Notebook technology has been evolving rapidly, mainly because of improvements in processing power, which has encouraged many consumers to upgrade,” he says. “Notable developments include the introduction of Intel Dual Core Processors and the Celeron 4.10 and 4.30 chips, which all combine low-power, low-heat technology to provide improved performance. “Acer’s business strategy has been polarised because it was the first company in the Middle East and Africa to release models with such technology.”||**||Market disparaties|~|HP-Pavilion200.gif|~|HP's Pavilion dv2000 notebook.|~|Reflecting on Q2, 2006 – a period in which Acer expanded its market presence by more than 75% in the notebook market – Drummond says the company plans to maintain an aggressive pricing strategy to consolidate its position in the sector. “Our performance in the first half of the year was supported by the sales of our high-end products. However, sales of our entry-level products have also enjoyed tremendous success in recent months. We plan to continue to pursue an aggressive pricing policy to ensure this success continues,” he says. Vendors also report that the emerging economies of the Middle East and Africa pose a diverse range of challenges and require more detailed analysis. Ahmed Khalil, the general manager for Toshiba in the Middle East and Africa, notes a disparity in the performance of various products in these markets. “If you look at the Middle East, notebook sales in the oil-based economies of the GCC have generally exceeded those of desktop PCs,” he explains. “However, in other countries in the region, such as Egypt and the countries of the Levant, there continues to be a trend towards increased sales of notebooks, despite these products accounting for a smaller number of total PC sales in these markets.” Khalil says these findings forced the company to review its commercial strategy for the region. “Previously, we employed a universal strategy for the region, but then we decided to adopt a country-specific approach and a market segment-focused approach,” he explains. “We have established our sales and marketing strategies based on these factors. We have clearly identified a marked segmentation in the market, especially on the notebook side.” With a divide clearly evident in the market, retailers are stocking products to target specific client groups. “We [Jacky’s] have seen an increasing trend towards sales of more medium-to-high end products this year. Entry level products appeal to hypermarket customers who we don’t necessarily cater to,” says Panjabi. “In the Middle East, consumers who bought laptops three or four years ago in most cases were either buying a computer for the first time or as a replacement for their desktop computer. In most cases, their priority was to purchase the cheapest notebook available. “Now, many customers are seeking higher-specified products because they realise the limitations of the entry-level products. “Consumers are seeking performance and value. Sometimes it’s worth spending an extra US$50 to ensure a better performing product." Notebook vendors have responded to market saturation by offering increased value for money and performance in their products. The performance of notebook sales in 2006 indicates the success of this strategy, as desktop users embrace Wi-Fi-enabled solutions existing notebook users demand better performance. This increased competition has provided distributors and retailers the opportunity to increase their profit margins, while vendors aim to increase market share, resulting in the sector experiencing a period of unparalleled growth. ||**||

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