Targeting Turkey

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

  • E-Mail
By  Andrew Seymour Published  June 21, 2008

It claims the lure of an IT security market that is estimated to be growing 25% a year and a telecoms sector worth US$17.6 billion was too difficult to ignore.

While the Turkish market promises strong returns for those with the right business model, the intensity of the competition creates a harsh pricing environment.

Some experts believe it is unsustainable. "There is very strong margin pressure in the market and people sell at cost," said Erkmen at Aptec.

We are very much against this because it is a case of shooting yourself in the foot. If people are giving away margins then you've got to question how long they will survive."

In the PC sector, the international brands are as conspicuous as they are in other markets, particularly when it concerns the consumer channel. HP leads the market, but Toshiba and Acer continue to make strong gains - the latter profiting from its aggressive tactics at the low end of the notebook sector, which already accounts for 40% of the overall PC market.

Dell, meanwhile, operates a Middle East-style indirect model, working through distributors Asbis and Kont, and local corporate resellers such as Datacore, Koc Sistem and Meteksan.

However, the ubiquity of the multinationals should not take anything away from the existence of local assemblers, which, although lacking punch in the notebook sector, remain an enduring feature of the desktop landscape.

Casper and Exper represent two of the most formidable names, along with Escort, Vestel and Beko.

"In Turkey the indigenous brands are very strong - people still believe in the local brand and they make up half the market," commented CA's Uygun.

Perhaps one explanation for the whitebox vibrancy is the emergence of a thriving retail sector that continues to see skyrocketing LCD growth and a mobile phone penetration rate among the highest in the world, largely because of Turkey's youthful population.

These trends also reveal why the Turkish IT and consumer electronics retail sector is becoming increasingly cosmopolitan, with European heavyweights taking their place alongside local retail outfits such as Teknosa, Vatan, Bimeks and Gold.

German giant Media Markt opened a two-floor, 4,000 square metre store in Istanbul at the end of last year, while Dixons Group-owned Electro World launched its maiden outlet in Bursa.

Even Touchmate, a brand well known in the UAE, recently burst onto the retail scene by opening a huge showroom in Ankara and outlining plans to develop further stores in the country. Word in the Turkish channel is that US retailer Best Buy is also plotting a move on the market before the end of the year.

E-retail companies are springing up too, with some sources estimating that the largest ones are achieving upwards of US$50m sales a year. Estore and Hepsiburada remain two of the most prominent e-commerce specialists.

"Retail is now a very aggressive market and in two or three years it could be that we start to see some consolidation," pondered Bilecik at Index. "But it is in a strong position, and when you look at the total market it is worth 30%."

Although economic and political conditions are likely to influence the direction of the Turkish market, solid double-digit growth during the next two years - at least - looks assured. With that in mind, it's little wonder the market continues to attract admirers from both the Middle East and further afield.

Steady but unspectacular

Although expanding at a steady rate, the US$660m IT services sector has yet to blossom into the sort of lucrative market consistent with other European countries similar in size to Turkey.

IT services providers are very much aware that their domain is still evolving, illustrated by the fact that almost 34% of services spending is attributable to hardware support and installation.

"In addition, many organisations have only limited financial resources, and cannot therefore invest in expensive third-party services," said Nevin Cizmeciogullari, country manager at IDC Turkey. "A large number of companies also have difficulties aligning business and IT processes to ensure that technology becomes a real driver of business."

An increased flow of investment from the public purse - the second largest spender on IT services behind the financial sector - should ensure Turkish integrators have enough to keep them busy in the coming years. That will come as welcome news to Meteksan, IBM and Koc Sistem, which collectively account for a third of the IT services market.

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