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.

  • E-Mail
By  Julian Pletts Published  May 20, 2008

Ezzo also complains that local competition has become more fierce in recent years, which is having a major impact on market dynamics.

As already mentioned by Metra's Galal, Egypt is a price sensitive market reflected in the low GDP of US$5,400 per person. However, it's possible that the price focus and low spending power are offset by the country's population size, especially in the consumer segment.

"That is one of the aspects where I have a different point of view," asserted Galal.

Last year price points remained a focus for resellers in Egypt, but this year it is not a dominant factor. The trading approach is going out and more of the long-term elements are taking its place.

"I feel that there is potential in the size of the population, but I also see that there is a big deterrent in the distribution of PCs to all of the population for the very simple reason that we have reached a stage where something drastic has to be done price-wise to be able to penetrate and increase the scope. I estimate that only 3% of the population is able to buy a PC. For the lower incomes of the community to be able to, it would require a drastic change in the pricing structure, which somehow I do not see possible."

ETE believes that in a market with such a vibrant local whitebox contingent it is not as simple as just claiming that the market is highly price sensitive.

"It is a price sensitive market, yes, but if you concentrate on price you are definitely looking at the low-end," asserted ETE's Nasr.

"In the high-end there is a chance for everybody to make money. There is an opportunity to make good margins on the high-end products. For instance we are securing good margins on the Quad Core and the 45nm CPUs. Now the Egyptian market is shifting this way, from the low-end to middle and high-end products."

If Nasr is to be believed then this may well be one of the first undeniable indications that the Egyptian IT market is in fact reaching a level of maturity that has not been witnessed before.

Geographically, the Egyptian IT market is focused around the country's capital Cairo, especially with the creation of new Free Zones.

Apart from Alexandria, the rest of the market could be considered, on the whole, as dispersed and rural.

This presents a challenge for vendors looking to maximise their reach in Egypt. But more importantly it presents an extra obstacle for the distribution channel.

"That is one challenge that we face with our distributors now. A couple of big cities - Cairo, Alexandria, Luxor - all get attention, but there are resellers and small retailers in other parts of the country which we need to reach out to," commented Sharma at Acer.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code