MTC finds its niche in own-brand products

Memory Technology Middle East (MTC) has revamped its strategy to put more emphasis on its in-house GENX and Xtreme brands. General manager Shabu Sultan explains how it is addressing the market and reveals the line-up it has developed to make in-roads into the regional retail sector

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MTC finds its niche in own-brand products
By  Andrew Seymour Published  July 31, 2009 Channel Middle East Logo

MTC has a history of distributing third party products, but recently you've taken the decision to focus on your in-house brands - Xtreme and GENX. What is the thinking behind that?
As a distribution company we have the logistics and a well-defined operational structure so the idea is that MTC - being the parent company - can be more focused on the distribution of our own products. MTC essentially plays the role of distributor for its own line of products. We have a team that is taking care of the development of products for both the brands and carrying out market analysis. That gives us more reach into the markets that we cover than if we depended on a third party distributor.

You have ramped up your infrastructure in the UAE and Saudi Arabia, but what about markets such as North Africa?
This year we decided that we needed to have more focus in North Africa. We have been in that market for quite some time, but as a distributor of various products. We are now putting more focus in terms of developing our own brands.

Presumably you still have to work with third party distributors in markets where you don't have such a strong in-country presence?
Yes, because in certain countries - for example Iraq due to the political situation - it is not possible for us to go and reach the whole market so we have appointed sub-distributors. We are currently working with a couple of partners, but in 2009 we believe the Iraq market will be larger than they can offer coverage for so we are expanding the number of partners. In Algeria we have appointed partners - companies with local strengths in distribution - and we have also partnered with somebody in Nigeria that is financially strong and has the operational infrastructure for that market.

What is the difference between the GENX and Xtreme brands?
GENX is a digital lifestyle accessories brand and Xtreme is a bluetooth mobile accessories brand. MTC has a sales team taking care of the distribution of GENX and Xtreme products. But both brands have their own product management and development teams.

It is quite unusual for distributors to only market their own brands. Do you therefore face a different set of challenges to those that distribute third party products?
The operation is simplified. We are a distribution company and we have integrated two brands along with that so there are not the challenges that are usually faced by a vendor and distributor, such as stock protection or price drops. It is our own product so if there is a price drop it is our call.

The market is tough for everybody at the moment. Which products are moving?
If we talk about GENX first then the flagship product has always been the USB flash drives, which is 33% of our business. The second leading category is digital video cameras and still cameras, which make up about 30%. In that 30%, about 60% consists of video cameras and 40% consists of still cameras. The third largest product is the MP3 and MP4 players. MP3s are still showing big numbers and we have introduced seven more new models in those categories this year.

What about Xtreme?
60% of the business comes from memory cards, but it caters to a different segment - mobile phones, digital cameras and all those things. We have many other products, such as Bluetooth dongles for laptops, headsets for mobile phones, car kits, GPS navigators and FM modulators. We are a small player in FM modulators, but we sell something like 20,000 to 25,000 modulators across the region, which is surprising. It is all about design. The product costs something like US$10 so anybody can afford to buy one, but people are very passionate about the colour and design.

How volatile has pricing in the memory market been this year?
We have seen a huge challenge from the multinational brands like Kingston and SanDisk. There have been price fluctuations and the flash manufacturers are limited in number. At the beginning of the year, the prices were rocketing as the top manufacturers cut down on production due to the recession, creating short supply and high demand. But then the prices went down and we are now on a downwards trend. The other areas of the business are not as volatile. It is very competitive but we have a niche. We are not very cheap or not very expensive, we play in between.

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