Intel shakes up channel strategy

Intel has indicated that it will persist with a policy of using just three authorised regional distributors in the GCC market after scrutinising its strategy following Tech Data's exit from the Middle East earlier this year.

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By  Andrew Seymour Published  June 26, 2007

Intel has indicated that it will persist with a policy of using just three authorised regional distributors in the GCC market after scrutinising its strategy following Tech Data's exit from the Middle East earlier this year.

The chip giant's pan-regional distribution requirements have been served by three distributors since the US-based broadliner took the decision to close its UAE office in March. Intel believes the trio - Mindware, Logicom and Empa - provides the company with enough reach to compensate for the loss of Tech Data.

Intel had been tipped to award a contract to TDME - which took over the Tech Data business - but after completing an assessment of its distribution strategy that has not proved to be case. "Following a thorough business review of our overall distribution coverage needs for the GCC we concluded that no further changes were needed presently," revealed Nassir Nauthoa, GCC channel reseller manager at Intel.

Although the presence of three regional distributors, as opposed to four, reduces the number of buying points from which resellers can source Intel products, Nauthoa insists the move has given Intel "focus" as well as "the ability to address the business opportunity stemming from our evolving exciting roadmap."

The decision is also having positive implications for other distributors as they rush to fill the vacuum left by Tech Data. Distributor Empa claims it has seen "tremendous growth" during the past few months and admits its targets have been raised by Intel since its last quarterly review with the vendor.

Loay Qaddoura, VP at Empa, welcomed Intel's current strategy of limiting GCC distribution rights to just three partners. "With three distributors it is easier to understand your competitors and you get time to execute the plans and strategies you put in place," he said. "In terms of covering the spread of product and channel, three can do the job of four in this market. If you put a fourth [distributor] in place now it will just come and eat from the same share."

Nauthoa refused to be drawn on the possibility of a fourth partner being appointed, but confirmed that Intel is keeping a close eye on the level of coverage it enjoys in the region. "We undertake regular assessments of our coverage model to ensure that we are meeting customer demand. The appointment of any other distributor will be contingent on our overall assessment of our distribution coverage and we will make the necessary changes as needed at the required time."

He added: "An optimal distribution coverage model is a critical part of the supply chain to meet customer demand for our products. We will continue to invest in enabling our distributors to meet the business opportunities for Intel products in the GCC market."

Essam Baghdady, interim managing director of TDME and group VP at Aptec, declined to comment on whether he expected TDME to eventually be awarded a contract from Intel, but conceded it wouldn't be materialising this quarter. "My priority now is to build up a strong, solid team, which is happening," he said.

One company keen to ensure it is part of Intel's thinking if the CPU maker does return to its former policy of using four regional distribution partners is Redington Gulf. The distributor is currently in the process of ramping up its components portfolio and admits it would relish the prospect of joining Intel's current Middle East line-up.

Mathew Thomas, vertical head for IT distribution at Redington, reveals the company has made its intentions clear to Intel and continues to await developments. "We have presented ourselves and our capabilities," he said. "We are waiting for them to come to us and tell us when there is an opportune time for the relationship. We have got an Intel relationship for Africa so at every meeting [with Intel] we present our case as far as the Middle East goes."

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