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As always, the New Year has brought with it fresh hopes and aspirations for a Middle East IT channel that continues to develop in both size and structure. With market experts predicting that 2008 will offer solid double-digit growth, increased commercial spending and opportunities in emerging technology areas, the prospects for the reseller channel look good.

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By  Andrew Seymour Published  January 9, 2008

As always, the New Year has brought with it fresh hopes and aspirations for a Middle East IT channel that continues to develop in both size and structure. With market experts predicting that 2008 will offer solid double-digit growth, increased commercial spending and opportunities in emerging technology areas, the prospects for the reseller channel look good.

But the next 12 months are also likely to be fraught with challenges, not least because of the rising costs associated with doing business in the Middle East. Profitability is undoubtedly poised to be one of the main areas of concern for the channel this year. Shailendra Rughwani, CEO at Experts Computer, and president of the Dubai Computer Traders Group (main picture), urges resellers to stick to their principles, maintain their margins and increase their breadth of services.

I suggest resellers keep the margin up and stick to their terms because no big business is created on low margin. At the moment everybody is just undercutting each other

"As the markets are growing, so is the level of competition and this is putting pressure on margins," he said. "I suggest resellers keep the margin up and stick to their terms and conditions because no big business is created on low margin. It's a real problem at the moment because everybody is undercutting each other, which isn't going to help anybody.

The ability to spot new market opportunities and develop additional competencies will clearly provide some relief for resellers desperate to strengthen their bottom line. But where exactly should they invest their money?

For enterprise resellers, at least, business continuity solutions and virtualisation technologies are two areas that research house IDC believes will explode, while the "second wave" of investment from the SMB sector will drive demand for business applications. "Lastly, I think we are going to see some consolidation in the IT services market - there are too many players in the region so you are going to see a lot more M&A activity," said Jyoti Lalchandani, VP and managing director at the MEA office of IDC.

"Market needs are changing and companies are going to be required to specialise rather than putting on various hats," added. "They will need to identify what areas of the market they want to play in and build the required skill sets to capitalise on the opportunity.

Resellers will also need to adopt a services-over-price attitude if they are committed to building a sustainable business model. Rughwani at Experts Computer agrees: "We as IT businessmen and entrepreneurs need to take this as a challenge because we need to get better in terms of services and knowledge of new products otherwise the specialist IT store concept is going to slowly fade away.

Rughwani isn't the only member of the Middle East channel with a view on the major developments that are set to shape the market during the next 12 months. Channel Middle East also contacted an extensive list of regional IT executives and asked them three questions about market trends, challenges and reseller profitability. Read on over the next six pages to find out what they have to say about the channel's destiny in 2008.

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