No escaping the channel chill

What happens when sales in the region’s so-called ‘growth markets’ start sliding too?

Tags: EgyptIDC Middle East and Africa
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By  Andrew Seymour Published  October 11, 2009

Research made public by IDC this week reveals just how dramatically sales of printer devices have contracted in Egypt this year.

Second quarter laser volumes down 32%, inkjet and MFP volumes down 41%, overall shipments down 37%. Whichever way you choose to look at it, the situation is dire to say the least.

Even though those figures specifically relate to Q2, and therefore do not indicate how things went during the full quarter that has just passed, it will take a recovery of epic proportions for the market to turn around its troubles before the end of the year.

And while this data only corresponds to one category of the market, it still provides a pretty damning indication of the difficulties encountered by the channel right now. If customers are buying fewer printer devices then they are likely to be cutting back just as dramatically on supplies and consumables too, not to mention other PC equipment.

What is most striking here, though, is that we are talking about the excessive rate of decline in an emerging market that has previously been hailed for the promise it has shown; a market that, when all said and done, is second only to Saudi Arabia in the ‘potential growth' stakes.

Wasn't it markets like these that were supposed to have dodged the economic bullet, protected by their insulated nature and lack of exposure to outside dynamics?

In reality, the disclosure of these latest Egyptian printer numbers merely compounds the tales that have been heard about distributors cutting back stocks and resellers struggling to close projects, exploding the myth that emerging markets were somehow sheltered from the credit crisis.

It is becoming clearer by the day that the emerging markets have come under as much pressure as anywhere else, suggesting the challenges that the regional channel in general is facing are unlikely to abate for a good while yet.

The bigger question it throws up, however, is exactly how detrimental this could all prove to be to the development of the MENA channel.

IT vendors that have watched the more established markets in the region edge closer to saturation point have naturally attempted to compensate for this trend by expanding their focus on emerging territories.

But where do they go now if the very markets that were seen to offer relief now turn out to be just as distressed?

Suppliers are having a tough enough time justifying channel spend as it is, without the emerging markets showing the sort of softness that will merely add to those doubts.

The mantra of ‘doing more with less' has been massively over-used this year, but it does ring true in the IT channel. Vendors are addressing the channel through fewer account managers, consolidating internal functions and withholding investments on any areas where the return isn't immediately visible.

Granted, it is going to be very difficult for vendors to look beyond the disastrous sales numbers they are currently seeing, but that is what they will need to do for the sake of the channel's development.

In this environment, everybody is going to have to work a lot harder for their money and demonstrate an unusually high level of patience - however arduous that might be - if the setbacks that are now being seen right across the MENA channel are to prove temporary.

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