Numbers game

Overall demand in the region may be sluggish compared with the steep growth rates that the market is accustomed to, but that hasn't stopped HP from expanding its distribution network in recent weeks

Tags: HP Middle EastLogicom PublicMetra Computer GroupSaudi ArabiaUnited Arab Emirates
  • E-Mail
Numbers game (Jovana Obradovic/ITP Images)
By  Andrew Seymour Published  August 4, 2009 Channel Middle East Logo

Overall demand in the region may be sluggish compared with the steep growth rates that the market is accustomed to, but that hasn't stopped HP from expanding its distribution network in recent weeks. KV Narayanan, distribution manager at HP Middle East, explains the thinking behind the vendor's latest tactical moves.

HP recently added Metra as a distributor for a number of additional markets beyond Egypt - how much overlap will this create with your existing distributors?

An overlap will happen for sure, but Metra has been in the region for some decades now so it has its own unique set of channels. That will only enlarge the HP channel portfolio so we will see a combination of that too. You can't avoid overlap because HP has strong channel coverage today, but we also expect to see some value-add coming in through the long distribution experience of Metra in the region.

Prior to the Metra deal, you appointed Logicom as a distributor for several Middle East markets. Does the fact that you signed two new partners in quick succession indicate that there was a hole in your distribution coverage?
Logicom has done exceedingly well in the other MEMA sub-regions that we operate in, such as Greece and Cyprus. Having shown strong results for us in those markets and with the investment they have carried out in the Middle East region - which actually happened much earlier than HP could give them an exhibit - it was a logical extension. We work with partners that are willing to show the investment and continue to deliver results. Was there any hole in distribution? No. HP takes pride in having a best-in-class distribution structure across the region. There are two things to consider: one is rewarding your partners for good performances and the other is that it is only wise to strengthen your distribution portfolio of partners given the current situation, and that is what HP is doing today.

Have Metra and Logicom replaced any existing partners? There has been speculation that your relationship with Almasa is not as strong as it used to be, for example.
We are only strengthening our distribution structure, there has not been any replacing. We continue to have a very strong relationship with Almasa and with every partner in the region today. A certain realignment has happened in terms of both Almasa and HP, but our relationship remains solid and it represents a portion of HP in some very strategic business areas in the region.

It seems a strange time to be awarding disties more coverage given market growth is slower than last year. Is this HP's way of trying to stimulate end-user demand?
The motive should be to address the end-user, the end-consumer and the end-corporate. Bringing specialisation to distribution will only strengthen that, even in the current situation. We seem to have hit the ground about six months back and things are now starting to take an upward trend. So it is only a good thing that you prepare for your future and a time when we return to a high growth phase in the Middle East.

How are you ensuring you strike a balance between adequate distribution coverage and avoiding over-distribution?
There are a couple of approaches that we take, such as specialising partners in their core strength areas on the different route-to-market segments that we internally have today. If you have seen some of the IDC reports then our region has been consistently showing growth, not to the same extent that we had last year but it does continue to grow. Therefore we still have more opportunities being created in this region. Being a channel organisation, you can rest assured that we would not be the ones to encourage over-distribution in our region.

How much of the Metra and Logicom deals is motivated by the need to have additional sources of credit available to resellers in the market?
We only look at how strong an organisation is and its willingness to invest in our markets. HP would not drive what credit a distributor should give to the channel because it is beyond our scope of working ethics. Yes, it will bring additional credit to our channel, but at the end of the day HP would not determine what credit a partner should give to the channel because we are not privy to that.

Are you concerned that existing partners might find it less attractive to work with HP because they fear the latest changes create an over-distributed landscape?
It is not right to say that because in the same way that we offer a logical expansion to our partners from other regions that come here, we also offer an opportunity to partners that might be interested in going beyond the Middle East region. We will discuss business opportunities across regions where they have an infrastructure and operational excellence, so it works two ways. We have best-in-class distribution, our relationships continue to be strong and I can only see our existing distribution enthusiasm going up. We operate in a competitive environment and it has been well-taken by the rest of our partners, which are quite okay with the kind of landscape and specialisation that they are bringing in.

It has been said that the HP distribution business can be complex. Are you doing anything to drive greater simplicity?
When we recently started the second fiscal half of our current year, we started making simplifications to the products and programmes that we offer to the channel. So we are driving more simplicity to the market and making our products and programmes more consumer-friendly.

How much longer do you expect the Middle East IT market to suffer the effects of the economic downturn?
What we have seen over the last three or four months is more predictability to the business. More stability is coming in, the demand is starting to go up, the consumer purchases are coming again and for a strong organisation this is a good period to invest and prepare for addressing the growth that they foresee. Possibly once we are through the summer we should get back on track.

Metra merits extended contract

HP claims that the recent extension of broadline distributor Metra's contract to additional Middle East markets is largely due to the long-term strategy of the company and its development of the HP brand in Egypt.

As reported in the March issue of Channel Middle East, Metra recently retrieved the Imaging and Printing Group (IPG) contract it lost two years ago in Saudi Arabia. Alongside that, the company has also been awarded IPG and Personal Systems Group (PSG) rights in the UAE, Bahrain, Oman, Yemen and Iraq.

"Metra has a very successful operation for HP in Egypt and in the last few months we have seen some professional management coming in. They are using the current situation to enlarge and grow so it is only a logical expansion that we have done with them," said KV Narayanan, distribution manager at HP Middle East. "As a policy at HP, we always reward partners that have been successful in their own country and are then interested to invest and grow, so the Metra situation is the logical expansion of a successful partner that is willing to invest in the current situation."

One of the key figures behind Metra's resurgence is NY Prasad, who was hired from Ingram Micro India earlier this year to lead the distributor's Dubai-based operation. He says the extended HP tie-up boost Metra's hardware line-up. "The addition of HP's IPG and PSG products to our portfolio enables us to make a more comprehensive offering to our partners," stated Prasad. "We are committed to continue delivering high levels of value to our vendor and reseller partners and will continue to serve as the most trusted and cost-effective link between them."

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