Peripheral vision

Although PC sales continue to soar in the region, resellers and retailers are always looking for additional ways to drive margin. For many that means relying on the dependable revenue stream offered by the peripherals market. But as Channel Middle East finds out, it's a sector undergoing major transition.

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By  Dawinderpal Sahota Published  September 11, 2007

The peripherals market has seen strong growth in tandem with the region's spend on PC systems and electronics products, providing a breath of fresh air to IT resellers suffering from squeezed margins on commodity hardware products. In fact, it wouldn't be an exaggeration to say that peripherals have acted as a lifejacket for resellers struggling to meet ambitious targets set by systems vendors, often providing the same, if not greater, dollar returns in terms of profit per unit.

Flash disk vendor SanDisk claims it has been impressed by the growth seen in the market over the past few years and has correspondingly set high expectations for the future. According to Tareq Husseini, sales manager for the Middle East and Africa, the vendor is working to set up distribution agreements to reach its ambitious target of "doubling" its growth on an annual basis for the next five years.

To sell to corporate accounts really is a completely different ball game — you have to be in touch with corporate resellers, they have the expertise to cover the specific markets. These products are not the same as the retail products we offer.

SanDisk is not alone in its high hopes of what the peripherals market can offer, with IT giant Microsoft also gearing up for prosperous times ahead. Armagan Demir, head of Microsoft's entertainment and devices division in the Middle East, is hoping the vendor's wide range of peripheral products will play a considerable part in driving the growth of the market over the coming year. "The Middle East market is growing at a strong rate, with growth expected to be between 30% and 40% over the next 12 months," he said.

While resellers in the region often lament the margins they make from a PC sale, they have no such complaints when it comes to the accessories they sell alongside them. According to Andre van Rensburg, country manager for the Middle East and Africa at Belkin, the accessories vendor can offer a retailer up to 60% in profit margin on its products. "On a notebook bag, they may only be able to make single-digit margins," he admitted. "But maybe on our unique products, those can reach 20%, and on cables - because we have good quality cables - that figure can go even higher. Margins can range from 5% or 10% to as high as 50% or 60%," he claimed.

Logitech's regional general manager Heinz Ettinger concurs that, on average, retailers in the region are looking at healthy double-digit margins from the vendor's peripherals portfolio. "Across the Middle East these days, the power retailers are currently looking for a margin of 20% to 22%," he affirmed.

With the retail segment experiencing a boom across the region, the corporate sector has until now, taken second priority in the eyes of many vendors. However, some are beginning to identify an opportunity they're missing out on and are taking steps to put a channel in place to cater to this market. Van Rensburg admitted Belkin is keeping a keen eye open for appropriate resellers in the region to help it crack this segment, and Logitech has similar intentions.

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