The next chapter

Distribution is by no means an easy business, especially during these tough times. The threat of vendors selling direct looms ever large, credit risks continue to increase and the pressure to develop additional revenue streams is relentless

Tags: ASBIS Middle EastAlmasa IT DistributionLogicom DubaiMetra Computer GroupMindwareUnited Arab Emirates
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The next chapter Hesham Tantawi, Asbis Middle East.
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By  Andrew Seymour Published  June 15, 2010 Channel Middle East Logo

Distribution is by no means an easy business, especially during these tough times. The threat of vendors selling direct looms ever large, credit risks continue to increase and the pressure to develop additional revenue streams is relentless. With that in mind, we asked several distributors featured in our recently-published 2010 Power List to predict the future of IT distribution in the Middle East and reveal how they expect the sector to evolve.

Hesham Tantawi, Asbis Middle East

The IT market in the Middle East will continue to grow for the next five years and I foresee distributors playing a major role in this industry because of the logistics complications and differentiation between the 22 countries in the region. Distributors are needed to handle the different processes that exist. I expect to see the major distributors expanding geographically so that they have coverage of all countries and there will be more consolidation in 2010.

Mehdi Amjad, Almasa IT Distribution

You will see the channels becoming more focused on their own area of expertise rather than being generic, which is good. And as the market becomes more competitive, the players with a stronger niche will win in their own areas. You will see them evolving and looking more at value added distribution because you have to think about adding more value to your channel base and financial strength. I think the same heat is being felt by the channel base and they are controlling what distribution does. The overall pressure during 2009 has filtered all the way down and has actually made the market place healthier.

Mario Gay, Mindware

I think that there could be some big changes in the future caused by the entrance of the components ODMs into the market directly. It is probably a long way down the line, nobody knows, but this could be one of the key changes in the bigger picture. In terms of the local landscape, I don’t think anything will change during the next two or three years. You might see some companies disappearing in the next year or two because of bad management or finances — we have already seen a lot of small companies close down, leaving the big ones to eat the business. Distributors today are definitely looking to make more money and will no longer accept being compromised by vendors as there are not enough players left for that anymore.

Nicholas Argyrides, Logicom

Distributors will remain an integral part of the IT channel formula. Vendors require the credit, local expertise and product availability, especially in such testing times as the ones that we are currently going through. In a part of the world like the Middle East, vendors also want companies with experience who can assess risk, assess resellers and develop the market for them. The only sure thing is that this ‘crisis’ has proved to serve a big lesson that will generate much leaner, prudent, smarter and profit-driven distributors in future.

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