Up and comer
Infrastructure specialist Allied Telesis has made its first foray into the region, appointing regional manager Sabbah Khan. Imthishan Giado reports.
Why has Allied Telesis decided to establish a direct presence in the region?
Typically, we have a strong presence in the West, Europe, Far East and the Indian subcontinent as well. However, the Middle East and Gulf region was typically left alone – the reason for that is that the Gulf is supposed to be a part of EMEA’s territory. But for the past few years, the EMEA guys were really busy with their own stuff and a lot of business was coming in from Europe. Recently, people said that they wanted to diversify in EMEA because thing were a little shakey in Europe.
I would say the recession has awakened people to address all markets available to them. The Gulf is a big one and the competition is doing extremely well. We have competition that has been in this market that has perhaps half of our portfolio so we definitely understood that this was a huge untapped market and we wanted to grab this opportunity.
How long have you operated in the region outside of the direct model?
For the past two years we’ve been having very few partners and operated through a 100% indirect model. When we decided to come to the region, we had some solid plans because we knew that there is a huge potential and marketshare available to us.
Normally what countries do is to hire one or two people in a home-office type of arrangement and start driving business. Allied Telesis didn’t do that – we invested first in a sizeable office in DIC. Then they hired me to manage the region. I’m now in the process of hiring and developing my own team. As we speak, we are interviewing technical people to start with. By the end of the year we should be having a team of four to five people on board.
Which vendors would you describe as your biggest rivals?
Our target market is SME moving upwards to enterprises. We don’t operate in the SMB segments, don’t compete with D-Link, Netgear and all of those guys.
However, we do compete head on with HP ProCurve, Cisco to a certain extent and other names like Juniper and Brocade.
What will comprise your unique go-to-market strategy for this region?
The biggest challenge that we have in the region is creating the brand awareness. If it was about case studies, we have ample references to provide globally. It’s more about market penetration through brand visibility, which is going to be our focus for the next few years.
The other aspect we are focusing on is training partners and end users. That’s where the bulk of our marketing budget will go for the next year or so. Once people have actually dealt with our products, they’ll really understand the value.
We’ve been a weak marketing company globally, but we’ve been a very strong technology company which we are addressing now. We are putting more efforts into R&D and into marketing our name as well. Another USP is the fact that since our cost base is not the likes of Cisco and HP, our pricing is in accordance to that, which makes the total ROI very effective for people dealing with our products.
Is price still a key driver for the regional market?
I would think so. What is happening now is that customers are leaving it to the partners to decide which product they want to position. That means they are willing to consider different products from different vendors, but it’s based on whether the partner can support them from a technical perspective and obviously pricing.
Cisco is losing market share drastically. Competition is beefing up in terms of pricing but that’s not the only thing, let me emphasise. As Cisco loses market share, HP is penetrating into this space, Juniper is penetrating into this space. Allied Telesis has therefore considerable market share to address.
Which markets are you going to focus on?
We’ve divided our plans into different phases. Phase one includes UAE, Saudi Arabia and Pakistan. The next wave will cover North Africa and the rest of the GCC countries, in 2011.
The plan will be chalked within the November-December timeframe. The plan is to have people on the ground to support the partners and the customers.
What major challenges remain for regional networking vendors to address?
The challenge for all networking vendors is that considering the recession, not many people are willing to spend a lot of money on new equipment.
That’s what I feel is going to be our key success – our cost base is not so high, we like to offer good quality products at the right price to people and eventually start winning deals in the region and start developing some references for us.
The problem is with the other vendors are that looking at the past growth, they increased their cost base too much and now it’s not under their control. It’s very difficult for them to justify pricing versus the cost base. We are conscious of this and want to deal with it very carefully.
At the end of the day, we’re here to sell. If our pricing and cost structure doesn’t allow us to sell, that means that we’ve taken some wrong decisions.
Why is it so difficult for vendors to provide exact data on the size of this market?
All the vendors are not able to determine the exact value of this market in terms of dollar value. There’s a lot of export business happening. I read in Channel Middle East that roughly 30% of the goods go off-site. I think that’s a conservative number – I think it’s much more than that.
Other vendors might be happy with the figures they have right now but realistically they need to understand that by showing these fabricated numbers, they might be able to please a few people at the top level, but that’s not going to run for long. Controls and checks will build up and become a problem for everybody.
This is in the interest of the business here. I strongly believe that, even at the cost of lower volumes. That’s OK – once you determine the right size of the market, then you can have the right kinds of cost structures.
Has a grey market emerged for network infrastructure?
I feel that recessions always are a source of grey business. Whatever one says, recession will always lead to grey and parallel business. Everyone wants to do something and have a cost base. They might not be into that kind of business but once they see the opportunity, they tend to fall into that trap.