Work in progress

Think of Egypt and the chances are that images of colossal monuments to long-dead Pharaohs or lonely feluccas sailing down the Nile will spring to mind. But when it comes to the IT industry the channel has a different vision - one of untapped potential, regional importance and a chance to make a mark on a fertile landscape.

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By  Julian Pletts Published  May 20, 2008

He summarises: "Egypt is a very big market and it is much cheaper than Dubai. We have all of the facilities, accommodation is affordable and transportation available. That is what attracts the multinationals to come here. The economy here is getting better as time goes on. Egypt is going to boom."

Grey days

Egypt might be regarded as the rising star of the MENA IT sector, but it's also a market where many vendors and IT companies admit they face issues in terms of grey marketing.

This is naturally disruptive for authorised channels operating in the country and can also have a huge impact on local pricing dynamics.

Hatem Ezzo, director of operations at systems integrator Promise Service, insists that aside from global purchasing agreements, which afford international competitors better prices than he is given locally, grey marketing remains the "biggest issue" impacting his business.

Shashank Sharma, country manager for Acer Egypt, concedes that vendors must accept responsibility for product flow.

"One of the reasons why grey marketeering is happening is because the engagement from the vendors is less than it is with the partners in-country," he said.

"I think that is because the in-country presence has not always been there and information about official sources for procuring products is not really highlighted, meaning people look elsewhere to fulfill the product need. Grey marketeering is indeed a problem, but I feel it is now becoming marginalised in Egypt," he concluded.

Microprocessor vendor Intel, on the other hand, dismisses the notion that the grey market is a challenge befalling the channel across Egypt.

Ozerk Ege Ertem, sales manager at Intel for Turkey and Africa, prefers the term 'open market' to describe the grey market.

"Open markets are a result of free trade at a worldwide level and all countries' governments are supporting free trade," insisted Ertem.

"As free trade is there, it means there will always be an open market and this is not a bad situation."

Intel's channel partner ETE, however, claims that although the grey market is affecting some players in the channel, it has been able to sidestep the problem.

"Maybe the guy who is getting CPUs from the grey market can sell it at a cheaper price than mine, but that is not a problem as I can cover it with my edge on the motherboard or some other part," insisted CEO Khaled Nasr.

"I am selling a whole solution and for my PC and notebooks I am not affected. If you talk about HP, Dell or Apple, however, perhaps these guys are suffering and the local distributor is suffering from the price that is coming from the grey market," he said.

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