RIM not planning to appoint more distributors

BlackBerry maker says Axiom deal completes channel sales model for now

Tags: Axiom TelecomEmitac Mobile SolutionsResearch In MotionUnited Arab Emirates
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RIM not planning to appoint more distributors Khaled Kefel insists the appointment of a second distributor in the shape of Axiom will lead to better sales coverage for BlackBerry products in the Middle East. (ITP Images)
By  Andrew Seymour Published  November 29, 2010

RIM's appointment of Axiom as a second master distributor — its first attempt at moving away from a single supplier model in the Middle East — does not signal plans to open up the market to multiple distributors, according to its regional general manager.

Khaled Kefel, who runs the smartphone vendor's business in the region, said the company currently had no intention of supplementing the Axiom deal with more distributors.

"I think we are happy with where we are at today and we are not considering adding a third or fourth distributor," he told Channel Middle East. "We will continue to assess the market and we will continue to see where our strengths and weaknesses are, and if we need to change strategy in the future we would certainly do that. But as of today we are very pleased with the model we have now and for the foreseeable future I don't see room for a third distributor."

RIM has always served the region through one distribution partner — Emitac Mobile Solutions (EMS) — but Kefel said the appointment of Axiom reflected a need to expand the coverage and availability of its products in region, particularly in the micro-distribution and independent dealer channels, which are notoriously harder to reach.

The arrangement with Axiom covers all six GCC markets, as well as Jordan and Lebanon.

In the prospectus for its forthcoming IPO, Axiom indicated that the distribution contract would boost its bottom line numbers.  

According to a Reuters report last week, Axiom wrote: "We believe that this master supply agreement will have a positive impact on our results of operations and, in particular, on our gross profit and gross margin, as we will be able to source BlackBerry smartphones directly (which have generally been a high gross margin product for us) at a lower cost than through a distributor."

Asked whether Axiom's retail stores would therefore be able to buy products at a more favourable price from its distribution entity than a rival retailer in the market might expect, RIM's Kefel said: "Not necessarily. That is something they would have to manage. The other retailers also still have the ability to buy from Axiom's competitor in the market, EMS. Overall, everybody has to keep healthy margins in the market because it is not in anybody's interest to have lower margins. The sustainability of the market and the channel is important."

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