Quality control

The Middle East’s biggest IT show of the year is upon us and that means a relentless five days of relationship building for the thousands of vendors, distributors and resellers in attendance. But with the Middle East IT channel getting more mature as each month passes, what matters these days is the vitality of those relationships.

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By  Andrew Seymour Published  November 15, 2006

The Middle East’s biggest IT show of the year is upon us and that means a relentless five days of relationship building for the thousands of vendors, distributors and resellers in attendance. But with the Middle East IT channel getting more mature as each month passes, what matters these days is the vitality of those relationships.

Gitex retains a certain uniqueness compared to other IT trade shows in the sense that the enduring appeal of the Middle East market means companies from around the world use it as a vehicle to either get their foot on the regional ladder, or climb a few more rungs upwards.

In my opinion there is no other technology exhibition around the globe that retains such a strong reputation for acting as a market launchpad. Other b-to-b trade shows have either become too consumer-driven or turned into nothing more than a stage on which to showcase products.

I’m not denying Gitex doesn’t possess both of those elements, but its principal asset is its ability to catapult the concept of partnering to the fore. With the Middle East channel continuing to develop so strongly — and markets such as Egypt and Saudi Arabia finally receiving increased recognition — the crux of partner development has got to be about quality. There is still a high proportion of vendors that come into the market with the presumption that you simply just need to obtain coverage in the market to prosper. The recruitment mentality of “appoint a distributor and then get out” is all too prevalent for my liking.

However, once a market matures beyond a certain level, that model is no longer as effective as it perhaps was previously. To make any sort of impact, you’ve got to partner with the right people, take the time to explore all options available and accept that the time-old adage of 'quality over quantity' now holds considerable sway.

Just look at the channel programmes implemented by vendors such as Microsoft and Cisco during the past two years. They have reshaped their incentive schemes and go-to-market strategies so that the emphasis is on harnessing quality and rewarding tangible channel development. This evolution might have been driven by trends on a broader global level, but it is now applicable to the Middle East.

I firmly believe that if the vast swathes of companies currently igniting business in the Middle East are to survive, then they will need to take a more methodical approach to who they partner with than some of their counterparts before them may have done. The same attention on quality and value also applies to resellers and distributors who are weighing up the benefits of working with new technology partners. Relationships count, but the quality of those relationships counts for far more.

Cheap and tearful?

Will eSys be left crying tears of regret the same way that AMD has this week? Okay, let me explain. One of the many new product launches taking place at Gitex over the next few days is eSys’ inaugural notebook PC range, aimed at a reseller market currently snapping up laptops by the truckload.

Now, anybody daring to set foot in a Middle East notebook sector where nine out of every 10 laptops has the name of an A-brand vendor attached to the side of it has got to be pretty crazy as far as I’m concerned. As IDC data testifies quarter after quarter, the market is already controlled by just a handful of players, all of whom make adequate margin because they ship such huge volumes each month and have the marketing budgets to promote their investment.

To be fair, eSys has stated a valid case for its decision to crash the party, most notably the fact that it boasts a loyal base of resellers willing to source complete systems in addition to their usual quota of components. What’s more, the distributor claims it is ideally positioned to exploit its global purchasing power and build machines for a more competitive price than a local PC assembler might be able to.

That last point is critical because at the end of the day a reseller is unlikely to buy an unproven whitebox model if they can get an HP or a Toshiba for the same price. Whichever way you look at it, cost — or more precisely the lack of it — remains a major factor in whether eSys’ gamble pays off.

So what has AMD got to do with all this? Well, cast your mind back two years ago to when the CPU vendor rolled out its Personal Internet Communicator (PIC) — a PC designed specifically for developing markets such as China and India.

Amidst a blaze of fanfare, mostly of its own creation, and with a price tag of just US$249 including monitor, AMD boasted that it would give 50% of the world access to PC capabilities by 2015. Clearly, somebody in the marketing department was getting a little carried away although even the most cynical observer wouldn’t have envisaged the dramatic collapse of the scheme just two years later.

AMD’s revelation last week that it has finally scrapped the low-cost PC production activity serves as a stark reminder that even the most elaborate low-cost business models aren’t necessarily a surefire path to success. The cost of halting production and taking back returned PIC goods during the first nine months of the year has already burned a US$16m hole in AMD’s pocket.

I accept that eSys’ plans and line of thinking are not a direct match with AMD’s venture, but it does illustrate that low cost production and apparent market potential mean absolutely nothing if the concept simply isn’t compelling enough for people to buy into.

On a separate note, we are also intrigued to see which hard drive brand eSys has decided to use in its new notebook models. Presumably after recent well-documented events it has opted for ABS – Anyone But Seagate!

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