Targeting Turkey

Regional spectators may find the challenges facing the local Turkish channel are more than familiar.

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By  Andrew Seymour Published  June 21, 2008

While it might appear a curious choice for a country survey, the expansive Turkish market has always attracted the interest of IT channel proponents plying their trade in the Middle East.

Regional spectators may find that the challenges facing the local Turkish channel are more than a little familiar.

As the self-styled gateway between East and West, it's not always clear which side of the EMEA regional fence Turkey sits on, although it is still common for IT vendors to group their Turkish operations with the Middle East - a reflection not just of geographic proximity, but market culture.

However, one factor sets the Turkish market apart from virtually all of its Middle East counterparts with the exception, perhaps, of Saudi Arabia: it's magnitude.

This is an IT market that is already worth in excess of US$6 billion a year, and one that offers endless consumer and commercial opportunities courtesy of its 75 million population.

Serdar Urcar, a man who understands the fabric of the Turkish market having led HP's Personal Systems Group there for several years before joining the vendor's Middle East operations, likens the sheer scale of the market to Egypt and its all-encompassing nature -from Istanbul to the other large commercial centres - to Saudi.

The Turkish market is a combination of Egypt and Saudi Arabia, and from a development point of view it is closer to the UAE," he noted.

There are still signs that the market has some distance to travel before it reaches maturity, however. "If you look at the breakdown of the market then 70% comes from hardware, and the rest is split between software and services," explained Erol Bilecik, chairman of the board at Index, a US$1 billion a year IT distribution group that includes components specialist Datagate and consumer electronics wholesaler Neotech.

But if there are elements of immaturity then it shouldn't detract from how established the Turkish channel is. All of the major vendors have at least one office in the country and, what's more, the vast majority consider the channel as the only way to reach the market.

"Some vendors have direct sales policies, but you find that most are trying to create channels," said Zeki Berk, general manager at Cisco, Seagate and Trend Micro distributor Logicom Turkey.

Microsoft was actually the first vendor to really develop channels in Turkey; there are now ex-Microsoft people working for Cisco and they are carrying on this philosophy of building the channel."

EMC is another vendor that has scaled up its channel resources. In the past 18 months its headcount has almost doubled to 45 people, as new sales, pre-sales, implementation and customer services staff have been hired.

They have mostly come in on the technical side in terms of support and services, but we have also grown our sales headcount because we believe there is a massive commercial and SME opportunity," explained Cem Findikoglu, country manager at the storage vendor.

To get a feeling for where the Turkish market is going, you have to understand where it has come from. For many local players, it is still impossible to ponder the direction of the market without referencing the financial crisis that had devastating consequences for the IT channel seven years ago.

The scars that companies bore from this period are a painful reminder of the tougher times, although the consensus now is that the market is as healthy as it has ever been, particularly given the rising level of foreign investment in sectors such as banking.

After all the inflation that Turkey faced, the market has been stable during the last five or six years and investments have been made in many different areas," said Cetin Uygun, country manager at software vendor CA Turkey.

Back in the 1990s, the PC market was worth 90,000 units - now it's three million to four million and people are investing strongly in laptops."

Although the small matter of government elections appeared to jostle corporates into holding back their spending decisions last year - growth in the US$160m enterprise server market is believed to have slowed to 4% in 2007 for example - a sustained period of political and economic stability has impacted positively on market conditions.

Between 2002 and 2006, average GDP growth reached 7.2%, and while this dipped to 5% last year, it is expected to climb to 6.1% during 2008.

One concern, especially given the fluctuation of the dollar, is the influence of factors beyond domestic control.

The Turkish economy tends to follow what happens in the US market," pointed out Hulya Erkmen, general manager at Aptec Turkey, which has local distribution agreements with APC, CA, McAfee and Sun Microsystems.

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