Seagate strife

Events at Seagate this month have sent shockwaves through the hard drive channel. Just as the dust had seemed to settle on its dramatic fallout with eSys over a blocked sales audit last year, the hard drive vendor has now parted company with four senior EMEA management figures.

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By  Andrew Seymour Published  July 22, 2007

Events at Seagate this month have sent shockwaves through the hard drive channel. Just as the dust had seemed to settle on its dramatic fallout with eSys over a blocked sales audit last year, the hard drive vendor has now parted company with four senior EMEA management figures.

While the departure of EMEA sales and marketing chief Hans-Dieter Blaser - a Seagate stalwart who had served the company for 20 years - appears to have caused most upset among partners who have spoken to Channel Middle East, it is the sudden and unforeseen exit of local channel bosses Gulfem Cakmakci and Ziad Abou Rahal that will be most felt in this region.

Seagate now finds itself in the extraordinary position of having just one permanent Middle East channel head on the ground...and he only joined the company two months ago! Quite whether Christian Assaf expected to become the most senior member of the hard drive vendor's Middle East team so quickly is highly doubtful, but clearly Seagate can't be accused of failing to offer new staff career progression opportunities!

How the storage vendor plans to bounce back from these management losses remains to be seen. To part ways with not one, but four, experienced EMEA figures illustrates the extreme seriousness of the situation and the manner in which it has unfolded certainly doesn't look good.

It might seem that Seagate now faces the unenviable task of re-building its depleted Middle East operation, but from where I'm sitting it actually presents the vendor with an ideal opportunity to really assess the structure it has in place for serving the region.

It has always baffled me why such a large, global vendor has such a small team operating inside the region. Compared to many other renowned US technology manufacturers with a Middle East presence - and taking into account the opportunities on offer for components vendors in this part of the world - the size of Seagate's team on the ground in the Middle East could only be described as negligible.

With Cakmakci situated in Turkey and Rahal in Lebanon - and latterly Egypt - Seagate found itself in the bizarre position of having all of its main regional distributors located in Dubai and nobody permanently based alongside them. The fact that several of its nearest competitors boast local representation makes it all the more absurd that Seagate has never moved to significantly strengthen its presence.

As Seagate begins the task of staffing up again in the Middle East it must surely give real consideration to basing people in the emirate. With the bulk of its Middle East shipments going into Dubai-based distributors there is a compelling argument for having staff on the ground to strengthen relationships with customers, track developments at reseller level and police what is happening locally.

Given its proximity to countries where trade embargoes remain in place and its role as a hub for the re-sale of components, Dubai is surely the last place any US-based hard drive vendor would want to risk leaving over-exposed and under-managed. Now that it has a couple of vacancies to fill I'm very curious to see if Seagate re-evaluates its policy for positioning staff in the region.

Meanwhile, the impending arrival of Saudi distributor BDL in the Dubai market carries all the potential to be a significant milestone. Not only does the move defy the order in which wholesalers have traditionally gone about sculpting regional distribution businesses, but it could spark likeminded Saudi compatriots into action.

A quick analysis of companies laying claim to a regional model - that is operations covering multiple countries or the possession of pan-regional franchises - tends to reveal that most candidates have generally made Dubai their beachhead and expanded outwards. Hardly surprising given Jebel Ali's position at the heart of the regional supply chain, but one that still ensures most distributors have the bulk of their operations stationed in the UAE.

A key objective for most distributors orchestrating proceedings out of Dubai has been to establish a stronger foothold in the Kingdom, widely seen as the region's most prosperous market. A few of those, such as Redington, have successfully assembled a solid in-country team and the local invoicing and logistics to boot. Others are still in the stages of scaling up their capabilities and resources as they look to match the ambitions of vendors that desire substantial market coverage in Saudi.

To say BDL's plans threaten to disrupt the conventional wisdom surrounding regional distribution would be an exaggeration, but they undoubtedly buck the trend seen during the last few years. By coming at its expansion from the other direction, BDL will be in a commanding position if its Gulf subsidiary takes off.

Put yourself in the place of a vendor that feels unfulfilled because their ‘regional' needs are served by a Dubai-based distributor who is only really able to scratch the surface of the Saudi market. Wouldn't you look more favourably on a distributor that can legitimately call Saudi its primary market and now offers you access to the surrounding Gulf territories as well? What's more, the distributor can also provide local coverage in Egypt.

BDL's ability to enhance its business by blending its proven Saudi capabilities with operations elsewhere in the GCC is crucial to its success. Regional distribution is not about getting as many flags on the map as possible. It is about forming a model that provides vendors with volume and coverage benefits, and customers with unrivalled pricing, availability and service. To do it properly, distributors must be able to integrate back office functions and systems to exploit group collateral while at the same time retain a local sales and marketing approach that acknowledges the individuality of each market.

I understand BDL is shortly planning to unveil a general manager for its Gulf operation and an executive currently working for a well-known vendor in Dubai is hotly tipped to take the reins. His success at transforming BDL from a Saudi-centric outfit into a rounded regional leader won't just be watched with interest by the Dubai channel, but by other large Saudi distributors that may have contemplated moving beyond the comforts of their local market.

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