The 2010 Power List

Make sure you are sitting comfortably because we are about to bring you a comprehensive rundown of the largest IT distribution companies operating in the Middle East today. Ladies and gentlemen, after extensive research and countless interviews, here is The 2010 Power List…

Tags: Channel Middle East Power List 2010United Arab Emirates
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The 2010 Power List
By  Andrew Seymour Published  April 12, 2010 Channel Middle East Logo

There is no denying it, the foundations of the Middle East distribution sector were rocked last year.

Demand for IT products slowed considerably — particularly in the commercial sector — nervous credit insurers pulled cover left, right and centre, and banks reduced their exposure to the IT channel more dramatically than ever before.

To top it all off, many vendors in the region panicked, leaving the distribution sector firmly in the middle with nowhere to run and nowhere to hide. Yet, for all the adversity that the distribution channel faced last year, we shouldn’t overlook the fact that matters the most: all of the major IT distributors are still standing in the market today. And while they may feel a little bruised, they are all a lot wiser from their encounters of the past year.

For some distribution companies it is going to take time to return to the sort of scale they enjoyed when the market peaked in 2008 — should that even remain an objective for them of course — because 2009 was a year when most players either failed to grow their top line altogether or grew at a much slower rate than they were previously accustomed to.

Indeed, the 15 Dubai-based distributors featured over the coming pages collectively made sales of US$4.877 billion last year, an increase of 2.7% on the previous year. That is a remarkable achievement given the challenges facing the market, but when you compare it with growth of 24.3% during the 2007-2008 period it is patently clear how heavily the downturn affected the market.

So why have some distributors seen sales decrease and others posted apparently strong growth when the trend up to now had been for distributors to expand at roughly the same rate? Well, there are numerous reasons.

Some distributors were more heavily exposed to markets or product lines more impacted by the downturn. Others deliberately sacrificed risky business to ensure bottom line growth instead. Changes in the vendor landscape played a part too.

For instance, HP hired two additional distributors in the Middle East, which carved the market into more slices. Some existing HP distributors compensated for that by bringing new brands on board, which also made up for the slower organic growth they experienced. Those who chose not to expand their portfolios, meanwhile, naturally lost revenue due to the increased competition they faced.

THE 2010 POWER LIST
Distributor
2009
Audited 2008
Stated 2008
Auditor
Staff
Active Accounts
Focus
Redington Gulf
$1.19bn$1.13bn$1bnDeloitte Haskins & Sells4003,520PC Hardware, Networking, Storage
Metra Computer Group$530m$471m$465mErnst & Young9003,000PC Hardware, Networking, Storage
Emitac Distribution$358m$383m$401mKPMG2001,300PC Hardware
Almasa IT Distribution$355m$440m$433mDeloitte2001,200Retail, Networking, Security
FDC International$344m$282m-Puthran Chartered Acc.200600PC Hardware & Components
Aptec Holdings$336m$306m
-Ernst & Young3003,000Networking, Storage, Software
BDL Gulf$320m$285m
$285mUsamah Ali Tabbarah & Co285m2,700PC Hardware & Retail
Logicom Dubai$280m$271m$250mKPMG1702,000Networking, Software, Components
Jumbo IT Distribution$269m$324m
$324mGrant Thornton65250PC Hardware & Retail
Asbis Middle East$206m$169m
$169mDeloitte Limited90900PC Hardware & Components
Mindware$189m$210m
$210mDeloitte & Touche1351,000Networking, Software, Components
Despec MERA$155m$144m$145mKPMG70700Supplies & Consumables
Empa$131m$123m
$123mBDO Patel & Al Saleh85740Components & Retail
Trigon$128m
$115m
$118mEl Syed El Ayouty & Co.95325PC Peripherals & Retail
Golden Systems Middle East
$109m$95m
$95mSalim Rajkotwala100500Components & PC Peripherals

Editor’s note:

It is probable that Al Yousuf Digital would merit a place on this year’s list. In 2008, the Epson and ViewSonic distributor claimed it made sales of US$160m. We would expect the number for 2009 to be between US$140m and US$170m based on the performance of distributors with comparable portfolios.

However, Al Yousuf Digital recently underwent a change of management and had not got back to us ahead of publication. We should also point out that Westcon Middle East Group, which was part of the 2009 Power List, only just missed out on making into this year’s edition due to the addition of volume distributors that were not included last year.

Westcon’s sales rose from US$94m to US$107m last year, putting it slightly behind Golden Systems Middle East, which occupied the final place on this year’s list.

We’ve made a point of emphasising that revenue is merely one measurement of performance and certainly does not suggest that one distributor is ‘better’ than another just because its sales figure is higher. After all, The Power List generally excludes many prominent value distributors because the very nature of their business means they simply don’t do the volumes needed to warrant a place on the list.

However, what revenue does give us is a snapshot of market demand and an indication of the size and scale of the IT distributors involved in the majority of transactions that take place in the Middle East market today.

Aside from that, this year’s Power List gives you a valuable insight into the plans and strategies of each distributor through an exclusive Q&A with a senior executive.

As you’d expect, the answers they give reflect the diversity of the distributors themselves, but there are some common themes that emerge. Many stress the importance of putting profitability at the centre of every decision they make nowadays, while there is also a firm emphasis on the steps that need to be taken to drive customer loyalty.

In addition to the contact and ownership details of each distributor, we reveal the number of staff they employ, the in-country coverage they have and the brands they are authorised to carry. Each profile also includes the number of active accounts they serve. Most distributors have thousands of customer names in their databases, but the number of active accounts specifically refers to the ones they transact with on a quarterly basis.

It goes without saying that a dose of reality has been injected into the distribution sector during the past year. The leading players have all had to make some extremely difficult decisions to ensure their survival, but it appears they have emerged from this tough period with a better understanding of their business and with their prospects still intact.

Revenue Verification

As The Power List seeks to indicate the largest Dubai-based distributors by scale we have a responsibility to ensure the accuracy and authenticity of any figures we publish. Once again, we have taken measures to verify the revenues by requesting distributors to provide evidence of the sales figure they state. Due to the publication date of this article, most distributors do not yet have copies of independently-audited financial accounts for the most recent calendar year.

However, all distributors in this year’s Power List have either shown us a copy of pre-audited results or provided a figure they claim to be accurate. To build in an extra layer of verification, we have also asked each distributor to show us a copy of their audited accounts for 2008.You will therefore see a ‘VERIFIED’ stamp next to figures we are satisfied are genuine based on viewing independently-audited statements. This is a policy we began last year when we asked companies to show us their audited 2007 sales and supply a preliminary figure for 2008. Having now viewed the audited 2008 figure this time around, we are pleased to say that all disties provided a number that either matched what they stated last year or was close enough to be deemed satisfactory.

We intend to adopt the same policy going forward, so next year we will request evidence of the 2010 figure as well as independently-audited accounts showing the confirmed 2009 revenue. If for any reason the 2009 figure conflicts with the number provided to us this year by what we consider to be an unacceptable margin then we reserve the right to exclude the company from The Power List.

It goes without saying that revenue is only one indicator of a company’s size and should not be regarded as a statement that one company is better or more significant than another. However, we believe it is imperative that all data published in these pages is verified to the best of our ability. We hope the measures outlined above will contribute towards building a more accurate and transparent picture of the Middle East market, as well as creating a level playing field for each distributor included in the list.

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