ABM optimistic about distribution fortunes

IT sales in Saudi Arabia are reported to be worth more than US$5 billion a year these days, offering the local channel a host of opportunities. Toshiba ace ABM hopes its latest strategic moves give it a bigger cut of the cake.

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By  Andrew Seymour Published  February 1, 2009

IT sales in Saudi Arabia are reported to be worth more than US$5 billion a year these days, offering the local channel a host of opportunities. Toshiba ace ABM hopes its latest strategic moves give it a bigger cut of the cake.

Regardless of how the Saudi market pans out over the next 12 months, 2009 is poised to be a landmark year for Arabian Business Machines Company (ABM) - at least for its distribution and service aspirations anyway.

The company, a wholly-owned operating division of conglomerate The Olayan Group, has traditionally been known as Toshiba's primary partner in KSA.

And while that is still largely the case, the dynamics shifted somewhat last year when the vendor elected to ditch its ‘exclusive' distribution model and bring Asbis and Redington on board to open more of the SMB notebook sector.

Riyadh-based ABM admits this has inevitably resulted in the loss of some potential business - simply because the market now contains two more distribution players - but at the same time it has also acted as a catalyst for it to expand its own portfolio.

"When Toshiba opened up the market we opened up the distribution arm," explained Wael Fleihan, general manager at ABM. "We have signed new brands and we are going to get others," he promised.

One of the most significant signings has been Acer in a deal that was struck last September. ABM now serves as one of the vendor's in-country executive partners, a title that allows it to promote Acer products across all sectors of the Saudi market.

ABM's distribution business now functions as an independent entity within the company, operating as a separate profit and loss centre. "We already have a division manager and we will see how things evolve," explained Fleihan.

"ABM is known as an office automation products distributor that is very active in copiers, projectors and audio visual, and these days we supply the IT part - notebooks and desktops - so we can offer full IT corporate office automation."

Aside from Toshiba and Acer, ABM also represents some smaller niche brands that have come to occupy an important place in its portfolio. This includes business management software provider SETS, physical access control systems company Identix and LCD and DLP projector vendor Boxlight.

Fleihan believes the Saudi market offers plenty of opportunities for IT distributors to make a name for themselves, although he acknowledges that it remains a challenging arena.

"What is effecting the whole market today is credit and collecting cash - that and inventory," he observed. "Distribution is basically about those three elements so you can see why companies are maybe building up less inventory or acting cautiously over giving credit. You just cannot predict what is going to happen."

ABM is confident, however, that the Saudi market will be able to ride out the global financial storm, particularly if certain sectors remain buoyant. "The key players are the government and the banks, as well as Aramco," said Fleihan.

"The banks are very important when it comes to office automation. If the banks and the government have the same budgets then I think the impact will be minimal this year. But the impact cannot be measured yet because for the first half of this year - up until maybe June - you will see the trend of people being cautious. Whether that then continues depends on the outcome of the first two quarters," said Fleihan.

As well as driving distribution sales, the company is pledging to further ramp up its services offering. It is in the process of unveiling an enhanced service centre specialising in warranty repair, software updates and technical support for Toshiba products and other brands.

Fleihan believes ABM is well-placed for growth even if IT buyers do act conservatively in the current climate. "I don't think revenue on consumables, supplies and service will slow down. It will increase because people may not renew their old equipment so they will therefore need to service it more," he said.

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