Disties axed in wake of USR Middle East office closure

US Robotics has split with two of its Middle East distributors in a radical channel overhaul just weeks after closing its Dubai office.

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By  Andrew Seymour Published  July 28, 2008

US Robotics has split with two of its Middle East distributors in a radical channel overhaul just weeks after closing its Dubai office.

Existing partners Almasa and Active Distribution have both been sidelined to make way for a revised strategy that will see BDL act as the company's sole distributor in the region.

Confirmation of the move to employ only one authorised distributor brings an end to speculation over how USR plans to manage Middle East sales after shutting its regional operation towards the end of last month, making four staff redundant. The company's Turkish branch was also axed.

The closure of the UAE office, which comes at a time when many of the networking vendor's rivals are increasing their investment in the Middle East, has led to confusion among channel partners, some of which say they have received no clarification of the situation since the former regional management left.

"When a vendor closes their operation it definitely does affect the confidence of the channel," said one US Robotics partner. "Vendors do sometimes decide to pull out from a region, but they could have handled it better because we only came to know at the last moment and we still haven't heard anything official about it."

Responsibility for the Middle East now falls on the shoulders of senior product manager Tony Field, who is based in the UK but is well known to local partners from his visits to the region during the past six years.

He says the decision to pull the Middle East operation was taken on economic grounds. "Each region has to achieve a set of targets and we were not achieving those targets," explained Field. "Those targets are fairly hard and high because we are owned by a private equity company called Platinum Equity and they are fairly hard on the finance side. It is right for the long term, because if you are not generating enough profit you need to change things," said Field.

Field also revealed that the company's profitability concerns had been compounded by high logistics costs. "One of the things about the Middle East is transport in and our hub is in Europe, which means we normally have to fly the product over and that is more expensive. That is a bit of a challenge and it hurts the P&L, which means the bottom line is not as big as it should be. So you have to look at the costs and decide what you can change. Unfortunately it meant changing people on this occasion."

Asked whether USR's EMEA management team had debated an alternative action to avoid closing the office, such as bringing in new personnel, he responded: "There were various discussions and they were internal as to what we should do, but the end result is that I will be supporting the Middle East through BDL."

Serving the region through a single distributor marks a massive shift from the model employed by USR at the start of the year when it had four UAE-based wholesalers. BDL is now the only survivor from a quartet that also included Aptec until its departure from the line-up back in February.

"What we decided to do is focus ourselves through one partner," said Field. "That is a better business decision for both parties and that is what we are going to do. BDL will provide product and support, and the main communication out to the channel."

USR is also maintaining its relationship with UAE-based Quality Computers, which will continue to function as its local support partner for end-users that face product issues. The vendor says customers should not expect any change in support, while warranty terms also remain the same.

Field hasn't given up hope of the vendor re-establishing a local presence at some point in time. "I think each company and product set goes through cycles," he said. "We would hope that with some changes we have put in place that we would again be able to provide better local support in the future, and so we are not withdrawing from the Middle East - far from it. We would hope and expect to be able to improve our local visibility in the future."

Meanwhile, Sumit Kumar, USR's long-serving Middle East chief, has joined HP's Personal Systems Group in a channel-facing role.

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