The 2007 Power List

The Channel Middle East Power List has established itself as the ultimate who’s who guide to UAE-based IT distributors and this year it is more comprehensive than ever. Now in its third year, the 2007 Power List has been expanded to include even more company information plus an insight into the top UAE-based value added distributors and a rundown of the largest distribution houses in Saudi Arabia!

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By  Andrew Seymour Published  March 16, 2007

|~|powerlistimage1.jpg|~||~|The Channel Middle East Power List has established itself as the ultimate who’s who guide to UAE-based IT distributors and this year it is more comprehensive than ever! Now in its third year, the 2007 Power List has been expanded to include even more company information plus an insight into the top UAE-based value added distributors and a rundown of the largest distribution houses in Saudi Arabia — a market that is vital to all major vendors and distributors in the Middle East. The combined revenues of the 15 distributors in this year’s Power List total a whopping US$3.202 billion, illustrating the influence and reach these companies boast, not just in the UAE, but across the entire Middle East and Africa region. There is little doubt that this terrain continues to represent huge opportunities in terms of expansion. The commercial and strategic investments that many of the distributors in the 2007 Power List intend to make this year are testimony to that. But it is also time to recognise that the Middle East distribution channel is developing into a more competitive and demanding environment with each year that passes. This year’s Power List portrays a market facing up to a broader set of challenges than it has perhaps known before. The days of sky-high sales hikes are still evident, but the reality is that the market is maturing incredibly fast and top line growth is no longer the barometer by which companies measure their success. Naturally, there were some high achievers when it came to revenue growth in 2006. Redington’s strategy of positioning itself as a true IT and telecommunications supply chain specialist with multiple in-country hubs continued to pay dividends, while Comtronix — a company with its finger on the pulse in the Iranian market — clearly benefited from the exit of several Dubai-based rivals from the market in mid-2006. But in truth, 2006 was a year of modest, if not flat, growth for a number of big names. The impact of the Intel credit crisis in Dubai had a detrimental effect on the balance sheet of some companies, while others were forced to sacrifice top line growth for more specific reasons. eSys’ split with Seagate effectively put the skids on its overall business during the final quarter, leaving Middle East sales US$14m short of the previous year. Meanwhile, Almasa resisted the temptation to chase aggressive top line growth in order to restructure its back-office operations and build the foundations for future expansion by adding resources in Egypt and Saudi. 2007 should mark a return to more robust sales growth, according to boss Frank Sheu. ||**||Financial transparency|~|powerlistimage2.jpg|~||~|It is impossible to overlook the fact that financial transparency in the Middle East remains a sensitive issue and that presents a barrier to obtaining a completely lucid picture of the market’s composition. Just five of the 15 distributors profiled in this year’s list belong to a publicly-listed parent, but even that doesn’t guarantee unlimited access to explicit data. Tech Data — a company heavily governed by the exhausting requirements of US corporate compliance — does not officially break its numbers down any further than EMEA level although local management have supplied a Middle East figure. Until the day arrives when every distributor is prepared to submit detailed financial accounts and a comprehensive breakdown of its customer base, there is always the risk of intra-company sales and double-counting compromising any efforts to establish a truly accurate picture of how the market is structured. This year’s Power List again contains a number of companies that combine own-brand hardware manufacturing with classic distribution activities. It is important to acknowledge that this hybrid approach remains a prevalent model in the Middle East and for that reason we have included the full group sales figure for the four distributors that fit into this category. For the first time, however, we have stated the percentage of sales derived from each activity in the profiles of the relevant distributors, giving a true depiction of the split between assembly and wholesale business. Collective hardware assembly revenues from the four hybrid distributors in the Power List totalled US$179m in 2006. In truth, the addition of assembly sales makes little difference to the overall ranking although on a pure comparative distribution basis it would mean that Logicom overtakes Comtronix, while Emitac climbs above FDC. While the positioning of distributors in the Power List continues to be determined by annual sales, it is by no means a way of judging how profitable, innovative or dynamic a company is — nor does it provide any indication of customer satisfaction. It is simply one measurement of size, scale and muscle — and that’s why we have sought to expand the level of detail in this year’s Power List. ||**||Customer reach|~|powerlistimage3.jpg|~||~|For the first time ever, we have divulged how many staff each company employs, giving an unprecedented insight into the internal size and structure of each distributor. As you would expect, a clear correlation can be drawn between sales volume and headcount in most cases. It would be fascinating to see what the results would be if it was possible to measure headcount against profit. Furthermore, we have also introduced a field that breaks out the number of “active” accounts each distributor serves. While each wholesaler typically has access to a database of more than 2,000 or 3,000 customers, the term “active accounts” specifically refers to the number of resellers it has traded with during the past three months. So what does this show? For a start it is an additional reference point to gauge the customer reach of each distributor as well as providing an intriguing glimpse into the breadth of accounts that each company is regularly trading with to hit its respective turnover level. While some distributors rely on a small and loyal band of clients, others are touching an extremely high number of accounts where the average order value of each reseller is naturally lower. eSys, for example, pursues a model based on low operating costs and therefore possesses an intimate base of sub-distribution customers that it counts on, illustrating the fact that product will often pass through three or four tiers before reaching the end-user. In contrast, distributors such as Redington and Tech Data run a model that touches more resellers, but is invariably more cost intensive. The prognosis for the wider Middle East distribution channel in 2007 looks encouraging. Distributors are making significant investments in their back-end processes to increase customer retention, as well as funding new premises and warehouse facilities to drive efficiency. Quite simply, the name of the game is reseller engagement and satisfaction. Those who can play it profitably and with sustainable business in mind will emerge as the real channel champions. ||**||15. Online Distribution Ltd|~|onlinepl200.jpg|~||~|2006 sales: $45m At the helm: Keith Rich Employees: 55 Active Accounts: 400 Geographic remit: Middle East & North Africa Website: Profile: In addition to securing Middle East rights for Juniper, networking specialist Online — a subsidiary of South African IT group Datatec — has strengthened its security and auto-ID business in the past year. A recent deal with Aramex has also extended its logistics capabilities across the region. 2007 objectives: Online plans to establish an autonomous value add services unit this year to consolidate its offering and will step up investment in markets such as KSA and India.||**||14. Sky Electronics FZCO|~|skypl200.jpg|~||~|2006 sales: $72m At the helm: Manoj Thacker Employees: 45 Active Accounts: 350 Geographic remit: Middle East & North Africa Website: Profile: Sky is an authorised AMD and Asus distributor that earns 30% of sales — around US$22m in 2006 — from PC assembly. 80% of its business comes from the GCC. 2007 objectives: Sky now has a demo centre at its Jebel Ali office and will endeavour to make PC assembly a larger portion of its business this year. That goal will accompany efforts to push deeper into the power retail and professional user segments.||**||13. Asbis Middle East FZE|~|asbispl200.jpg|~||~|2006 sales: $75m At the helm: Hesham Tantawi Employees: 35 Active Accounts: 320 Geographic remit: Middle East & North Africa Website: Profile: Components distributor Asbis has had a strong year in the Middle East and North Africa, adding an extra US$20m in revenues and bagging distribution rights for Pioneer, Toshiba notebooks and AMD in the UAE along the way. The company — a leading Seagate and Hitachi partner — is part of the Cyprus-based Asbis Group, which recently listed on the London Alternative Investments Market. 2007 objectives: Asbis claims it is keen to flesh out all areas of its product portfolio in 2007 and will focus on enhancing the online services and systems it has been investing in during the last couple of years.||**||12. Golden Systems Electronics LLC|~|golden-systemspl200.jpg|~||~|2006 sales: $80m At the helm: Ehsan Hashemi Employees: 83 Active Accounts: 400 Geographic remit: Middle East & North Africa Website: Profile: Golden Systems celebrated its 10th anniversary last year by growing sales to more than US$80m and emphasising its reputation as a company with extensive reach into challenging territories such as Iran. Gigabyte Technology, Leadtek, Teac and Kingmax head the list of vendors it carries in its varied components and peripherals portfolio. 2007 objectives: Golden Systems believes 2007 will herald another year of top line growth and forecasts sales of US$89m. The company is also working its way towards opening a giant 78,000sqm HQ in Jebel Ali, complete with service centre, logistics facility, production line and warehouse. That move is likely to be made midway through 2008.||**||11. Empa Middle East FZCO|~|empapl200.jpg|~||~|2006 sales: $83m At the helm: Rahb Hamidaddin Employees: 65 Active Accounts: 500 Geographic remit: Middle East & North Africa Website: Profile: Empa counts a number of large brands in its offering including Acer, Asus, Kingston and Philips. The firm experienced a conservative year during 2006 and like a number of distributors was impacted by last summer's case of runaway resellers. It has recovered in style to announce a new fully-fledged HQ and warehouse in Jebel Ali, however. 2007 objectives: The retail sector holds the key to Empa's fortunes in 2007. Talks are continuing with vendors that boast a consumer focus as it looks to strengthen its arsenal and serve the needs of power retailers across the region. It's recent joint venture with MTC — resulting in the launch of e-retail — is evidence of its appetite.||**||10. eSys Technologies FZE|~|esyspl200.jpg|~||~|2006 sales: $129m At the helm: Pavan Gupta Employees: 30 Active Accounts: 175 Geographic remit: Middle East & Africa Website: Profile: eSys will always remember 2006 as the year when its lucrative hard drive contract with Seagate was terminated following a dispute over a global sales audit. That hit the company’s business hard during the final two months of the year as all its efforts went into reassuring investors, partners and customers about its health. Note that 25% of eSys’ sales come from own-brand hardware assembly. 2007 objectives: eSys is gradually emerging from its woes and should have recovered fully from its troubles by the summer. Expect more additions to its ‘finished goods’ portfolio, which already contains BenQ LCD screens, Xerox printers and multi-branded external hard drives. ||**||9. Logicom Dubai LLC|~|logicompl200.jpg|~||~|2006 sales: $150m At the helm: Nicholas Argyrides Employees: 100 Active Accounts: 1,000 Geographic remit: Middle East Website: Profile: Cyprus-based Logicom continues to demonstrate its steely resolve following a year which saw it chasing debts of US$6m from a handful of runaway resellers and facing up to the arrival of a new Cisco distributor in the Middle East. The components and networking-focused outfit also added Trend Micro to its catalogue of vendors in 2006. 2007 objectives: Saudi Arabia and Pakistan remain two key focus countries and areas of investment for Logicom this year. It will also attempt to reinforce the standing it enjoys in the GCC and Levant regions by keeping sight of the three major factors it believes breed success: in-country presence, local availability and value-add services.||**||8. Comtronix LLC|~|comtronixpower200.jpg|~||~|2006 sales: $193m At the helm: Mahmoud Ebrahimi Employees: 125 Active Accounts: 240 Geographic remit: Middle East & CIS Website: Profile: Comtronix is another member of the Power List's 'hybrid' crew courtesy of a business model that incorporates a hefty chunk of own-brand assembly alongside its core components distribution activities. Hardware manufacturing contributed almost US$50m of its total sales figure last year. Headquartered in Iran under the name “Tose’e Va Tejarat Rayaneh Company”, Comtronix was one of the major beneficiaries of last summer's credit crisis when several competing sub-distributors and resellers exited the market. 2007 objectives: Comtronix will be looking to maintain the strong double digit unit growth it registered in products such as CPUs, disk drives and memory last year. The company is eager to strengthen the breadth of its portfolio further and regards the arrival of Windows Vista as a foil for the sale of more higher-margin products.||**||7. Mindware FZ LLC|~|mindwarepl200.jpg|~||~|2006 sales: $195m At the helm: Jacques Chammas Employees: 110 Active Accounts: 1,000 Geographic remit: Middle East & North Africa Website: Profile: Mindware continues to build up a more powerful business with each year that passes and appears to have unlocked the secret of balancing a volume and value portfolio. Intel and Seagate provide it with a healthy run-rate business at the low-end while Business Objects, CA, NetApp and Novell give it a distinctly enterprise flavour at the corporate level. With offices in Egypt and Saudi established over the past few years, Mindware has built up a strong presence throughout the region. 2007 objectives: Further partnerships in the security and networking space still remain a priority as Mindware forges ahead with 2007 plans to align its product portfolio, sales force and back-office operations in preparation for the aggressive growth targets it has set over the next three years. The transfer of the company's warehouse facilities from Dubai Airport Cargo Village to Jebel Ali fits neatly into those growth plans.||**||6. Emitac Distribution LLC|~|emitacpl200.jpg|~||~|2006 sales: $235m At the helm: Amer Khreino Employees: 110 Active Accounts: 600 Geographic remit: Middle East Website: Profile: Emitac’s distribution business — which also encompasses subsidiaries in Qatar and Jordan — achieved top line growth of 16% last year following strong demand across all units of its HP portfolio. Acer continues to become an increasingly important aspect of its portfolio while the company bagged regional distribution rights for Netgear in August last year. Half of its 110-strong distribution team look after sales while the rest hold authorised support and services functions. 2007 objectives: A focus on establishing more aggressive sales engines and focused marketing activities are at the top of Emitac’s list this year as it seeks to reinforce its position in an increasingly challenging HP market. Like many of its competitors, the power retail sector remains firmly on its radar while plans are in place to open an 8,000 square foot facility in Sharjah that will act as a service centre for resellers in the northern Emirates and provide storage space for spare parts.||**||5. FDC International FZE |~|fdcpl200.jpg|~||~|2006 sales: $305m At the helm: Marissa Safe Employees: 180 Active Accounts: 400 Geographic remit: Middle East, CIS Website: Profile: Last year, the FDC Group earned 75% of its sales — around US$229m — from distribution activities with the rest originating from its assembly business. 50 of its staff currently work on the manufacturing side, emphasising how importantly FDC regards this business to its future prospects. A PC contract with UAE telecom operator Du provided a further endorsement of its qualities while on the distribution side FDC became the only new distributor to be awarded Seagate legacy brand rights last year following the vendor's revamp of its distribution strategy. 2007 objectives: FDC’s primary objectives in 2007 are to increase the size of its systems business, drive its XPC brand in the Middle East market and enhance its service centre capabilities in Saudi Arabia. The company is also looking for ways to strengthen its vendor portfolio and is close to agreeing the regional extension of a notebook distribution contract with Lenovo that currently covers the Levant and Iraq.||**||3. (joint) Aptec Distribution FZ LLC|~|aptecpl200.jpg|~||~|2006 sales: $320m At the helm: Ali Baghdadi Employees: 225 Active Accounts: 2,000 Geographic remit: Middle East & North Africa Website: Profile: Aptec turned in another solid performance during 2006, reaffirming its status as one of the top A-brand hardware and software suppliers in the entire Middle East region. In addition to bagging regional distribution rights for Sun software, Aptec established a joint venture with mobile distributor Brightstar. The company also got its ATS services arm and AKS kiosk distribution business up and running, while new general managers were hired in Saudi and Egypt. If that wasn’t enough to keep it busy, Aptec capped the year by moving to a newly-built HQ in Dubai Internet City. 2007 objectives: Strengthening its enterprise solutions portfolio remains a priority and that means Aptec will be taking a close look at vendors in the networking, security and storage space. The ongoing automation of sales processes is likely to win further plaudits in the reseller channel while plans to form additional dedicated business units should give its offering extra edge.||**||3. (joint) Almasa IT Distribution FZCO|~|almasapl200.jpg|~||~|2006 sales: $320m At the helm: Frank Sheu Employees: 200 Geographic remit: Middle East & North Africa Active Accounts: 1,000 Website: Profile: Joint third in this year's Power List, Almasa continues to be one of the most dominant broadline distributors in the region. It has stepped up its assault on the MENA theatre in the past few months by laying down the foundations for new offices in Egypt and Saudi. As well as geographic expansion, boss Frank Sheu's first full year in charge has seen relationships cemented with AMD, D-Link and Proview. 2007 objectives: Almasa will turn its attention to revenue growth this year after using 2006 to restructure its business and redefine its internal IT platform. The company is now poised to launch an automated order tracking and RMA booking system as it seeks to strengthen its reseller customer base. Its new branch offices in Saudi and Egypt have already begun invoicing locally and building resources in those countries remains a top priority for 2007. Expect Almasa to expand its notebook, display and LCD TV portfolio too.||**||2. Company: Tech Data FZ-LLC|~|tech-datapl200.jpg|~||~|2006 sales: $360m At the helm: Hanspeter Eiselt Employees: 120 Geographic remit: Middle East Active Accounts: 2,200 Website: Profile: Once again the only US-owned distributor in the Power List, Tech Data claims it is firmly committed to the Middle East market. It has not been an easy year, however, with the company parting ways with several vendors and concerns over staff attrition coming to a head. A change of guard midway through 2006 saw Hanspeter Eiselt replace Adnan Al Falah and he has attempted to steady the ship by overseeing a campaign to re-engage with neglected reseller accounts and reshaping Tech Data's internal sales organisation. 2007 objectives: Tech Data will attempt to strengthen its vendor portfolio with security and enterprise software remaining particular areas of focus. That business is now being handled by Christian Weinelt, recently-appointed boss of the firm's Azlan enterprise unit. Eiselt insists Tech Data will also broach the mammoth task of finally establishing some form of internal set-up in Saudi Arabia. ||**||1. Redington Gulf FZE|~|redingtonpl200.jpg|~||~|2006 sales: $640m At the helm: Raj Shankar Employees: 240 Geographic remit: Middle East & Africa Active Accounts: 2,200 Website: Profile: Redington Gulf takes the Power List title for the second year running following a highly successful performance that illustrates the scale of its influence across the Middle East and Africa. Strong organic growth, particularly with existing vendors such as HP and Acer, remains one reason why its top-line figure has climbed so steeply in the past 12 months. The Middle East accounts for 80% of total Gulf sales — approximately $512m — while the rest stems from Africa.Redington now boasts strong coverage of the East African region and even has full logistics, sales and service capabilities in Nigeria where it distributes a number of brands including Cisco. 2007 objectives: With US$34m raised from its recent IPO and strong organic growth continuing to fuel its momentum, Redington is well-placed to push ahead with the ambitious plans it has for the Middle East and Africa. Top of its agenda is the construction of a state-of-the-art Automated Distribution Centre in Jebel Ali, which will consolidate all of its supply chain and warehouse needs. The company also intends to expand the number of authorised service centres it operates in the Middle East. It currently has 60 centres in the region — 12 of which it owns and the rest it franchises.||**||The 2007 Power List...EXTRA |~||~||~|For the first time ever, the 2007 Power List also brings you a full rundown of the leading UAE-based value added distributors —a synopsis of the players that lack the sales volumes to make the Top 15 but deserve to be credited for their service and expertise. And if that wasn't enough, we also give you an overview of the top in-country distributors operating in the Saudi market. As the Kingdom’s IT market grows in stature it will be interesting to observe if the heavyweights of Saudi IT distribution can transform themselves into true regional outfits capable of challenging the UAE-based players.||**||Value added victors|~|magiruspl200.jpg|~|Patrick Eichstaedt, Magirus|~|A rundown of the top UAE-based value added distributors... 5. Comstor Middle East Ltd At the helm: Steve Lockie (as of 01.05.07) Geographic remit: Middle East Area of focus: Cisco Website: Profile: The Cisco-focused distributor — owned by South African IT firm Datatec — is new to the region, but is already making an impression with its solutions-based strategy and proven reseller programmes. 4. Secureway FZ LLC At the helm: Zafar Shabdiz Geographic remit: Middle East Area of focus: Nokia, F5, Fortinet Website: Profile: Formed in 2005, Secureway is a distributor for Nokia operating out of Dubai Internet City. The company, which has French parentage, also has a security string to its bow and employs 10 staff. 3. Fusion Distribution At the helm: Tim Martins Geographic remit: Middle East Area of focus: RSA, SurfControl, Kaspersky Website: Profile: Fusion has gone from strength to strength in the Middle East by maintaining a clear and focused approach on the security sector. Currently in the process of building a direct presence in Saudi Arabia. 2. Tech Access FZ LLC At the helm: Shomail Ghalib Geographic remit: Middle East & North Africa Area of focus: Sun, Symantec, NetApp Website: Profile: Tech Access, which is best known as the regional channel development partner for Sun, boasts four offices around the region employing 70 people. The company sells to a core base of 50 resellers. 1. Magirus FZ LLC At the helm: Patrick Eichstaedt Geographic remit: : Middle East Area of focus: HP, IBM EMC enterprise products Website: Profile: Magirus made Middle East sales of US$25m last year and intends to strengthen its portfolio in 2007 with additions around virtualisation and consolidation. Plans are afoot to open a Saudi office.||**||Saudi stars|~|aimpl200.jpg|~|Bassam Abu Baker, AIM|~|A guide to the leading IT distribution houses in Saudi Arabia... 5. Al Jammaz Telecom 2006 sales: $50m At the helm: Asim S. Al Jammaz Head office: Riyadh Area of focus: Cisco, Linksys, Kingston, Acer Website: Profile: Al-Jammaz boasts some big name vendors in its ranks and retains a broad focus on the ICT market. The firm is keen to increase its software offering. 4. Advanced Integrated Media (AIM) 2006 sales: $58m At the helm: Bassam Abu Baker Head office: Riyadh Area of focus: HP PSG and IPG, Toshiba, USRobotics Website: Profile: With the PSG product line in its bag already, AIM is keen to further strengthen its ties with HP. More than 350 resellers have credit lines with AIM in Saudi. 3. ICC Distribution 2006 sales: $61m At the helm: Akram Elyas Head office: Jeddah Area of focus: Asus notebooks, Microsoft, Seagate Website: Profile: Distribution sales remained flat last year for ICC — part of the 300-strong ICC Group. The firm is rumoured to be working on a JV with a regional outfit. 2. Jamal Al-Jassim Electronics Est. 2006 sales: $120m At the helm: Sherif Nasr Khattab Head office: Al-Khobar Area of focus: LG, TrippLite, D--Link Website: Profile: Al-Jassim scored an impressive 30% rise in sales last year as it added Foxconn and other vendors to the complete line of LG products it carries. 1. BDL Distribution 2006 sales: $133m At the helm: Tamer Ismail Head office: Riyadh Area of focus: Acer, FSC, Asus, Intel Website: Profile: Fast-growing BDL launched an Egyptian arm during the course of the last year and has now fixed its sights on topping the US$200m sales mark in 2007.||**||

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