Displaying growth

The monitors and display panels market in the Middle East continues to simmer nicely as a number of key factors combine to push monitors onto the enterprise agenda, creating a strong opportunity for resellers to reap the benefits.

Tags: AOC (www.aoc.com)EMPA Middle EastGfK GroupLCDLED
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Displaying growth Brian Liu, vice president of sales, MEA & CIS, AOC.
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By  Manda Banda Published  November 9, 2011

The monitors and display panels market in the Middle East continues to simmer nicely as a number of key factors combine to push monitors onto the enterprise agenda, creating a strong opportunity for resellers to reap the benefits.

The market for display panels and monitors, particularly in the Middle East is highly commoditised, however, a number of factors have recently helped in creating a healthier demand for display panels. IDC Middle East and Africa Quarterly PC Monitor Tracker says while the continued expansion of the PC market across MEA offers key opportunities for increased display penetration in the consumer and business markets, the market shift to LCD and widescreen displays, LED backlights, touch screen interface, shifts in aspect ratios, new usage models, or bundles with notebooks is driving major changes in the monitor market itself. This coupled with the push in the gaming and video conference segment has created opportunities for savvy partners with integration skills. So, how best should channel partners capitalise on the opportunities that lie ahead for them in the monitor and display panels market?

“It is evident that all aspects of the consumer display are experiencing significant growth and technical developments. The Middle East region is no exception to this and even with the fast growth of the notebook segment, the monitor business is still experiencing growth and the trend will continue,” says Suchit Kumar, DGM-Sales MEA & CIS Central Asia, for monitor vendor AOC.

Kumar says in the current year, the price of display panels has been stable and trending downwards. “This has made the overall business more challenging and left the space of business to only bigger players. Hence, the number of brands is shrinking and leaving more scope for larger players like AOC which has steadily built its footprint in MEA and CIS Central Asia region in the last three years,” he says.

Growth

According to Kumar, the Light Emitting Diodes (LEDs) market has been demonstrating amazing double-digit annual growth rates. In the earlier years, LEDs was prohibitively expensive for broad use. However with the price factor between traditional CCFL and LED narrowing and with consumers having more knowledge of technology trends, the demand for LEDs has increased.

“On top of the cost factor, LED displays are slimmer and lighter, and that makes the product more stylish thereby encouraging new buyers’ purchasing decisions. Moreover, it’s the concept of lower power consumption and greener environment contribution that has further enhanced the demand of LED monitors in the region,” he says.

Kumar says AOC is expecting to see customers switching or upgrading from CCFL to LED solutions in Q1 2012.

Kevin Ribeiro, business group manager, GfK Retail and Technology Middle East, a technology and consumer goods analyst firm, concurs and goes on to say that the UAE market has seen a surge in the flat panel TV and LCD TV solutions market, with this segment experiencing an 11% increase in Q2 2011 against the same period last year.

He says the increase is mainly due to the popularity of LED and 3D TV sets while at the same time, prices of LCD TV have drastically come down. “The price drop in LCD TVs has allowed many to upgrade to this platform. At the same time, vendors have been very aggressive with promotions leading consumers to embrace new technologies such as LED and 3D,” he notes.

Ribeiro said another reason for flat panel displays showing so strongly in the UAE market is because of the launch of ‘smart’ TVs which allow consumers to browse, access applications and social networking Websites using the television without having to connect a PC.

Ribeiro remarks that the increased awareness and usage of social media will have a positive spin on the TV and displays market in particular the smart TV segment. “This will lead to prices coming down and volumes increasing over time,” he says.

As a result of this continued growth, AOC is planning on establishing its own regional presence in the Middle East to gain greater control over the development and support of the company’s channel in the MEA.

Brian Liu, vice president Sales, MEA & CIS, AOC, says that despite the global recessionary pressure over the last two years, AOC has managed to introduce its brand and build its channel business from scratch. “We have moved from selling nothing in the market to almost one million units sold in the last two years. Our target in the next two years in the Middle East is to start selling a million units per year,” he says.

Liu says that because AOC’s goal is to become the number one monitor vendor, it is critical that the company aggressively develops its in-country presence and channel business, especially in emerging geographies where business growth is still in double digits.

“We believe having a regional head office will help the brand to penetrate the market further,” he says.

Liu explains that the MEA region is an important region for AOC’s emerging markets strategy and it’s for this reason that the company has decided to formally establish a regional hub which will be complemented by a warehousing facility.

“The warehouse will help in providing efficient logistics to the channel and shorten times for partners to receive our monitor range from our production plants,” he says.

He added that the warehouse will provide products and logistical services to all partners in the region. “With a regional warehouse capability in the Middle East, partners can expect improved stock holding and inventory,” he adds.

At regional IT distributor EMPA FZCO, Chandan Kr Das, business unit manager, says consolidation in the panel manufacturing segment has helped to bring stability and confidence to distributors and resellers. “The market for monitors has been stable and growing as prices are relatively steady at the moment,” he says.

Das says EMPA supplies the regional channel Philips LED monitors from 18.5 to 24 inches size, in four major series namely: V,E,S,C and Blade LED monitors.  “Out of the range that we provide our partners, the LED 18.5 and 21.5 inches panels are the best moving models among system integrators and export customers.

LED & 3D adoption

AOC’s Kumar adds that the past three years have seen dramatic advances in display technology.  He says technology leaders continue to make major investments in core imaging technology that yield significant improvements in all aspects of displays, including size, quality, form factor, reliability, and costs. “AOC has been in the forefront in releasing products that suit the demands of the consumers in various segments like 3D,” Kumar says.

AOC is very confident that 3D technology can help to further drive the growth of demand both from ordinary users and also more demanding users, like gamers.

Meanwhile, AOC is also focusing on introducing LED-IPS into the market, a product the company says will give consumers brilliant colour picture quality unlike traditional TN CCFL or VA display. The Taiwanese monitor manufacturer already has several models of IPS monitor and more new IPS monitors are expected to be introduced to the line up soon.

“LED monitors are gaining momentum due to their sleek design, size, HD readiness, and the DVI connection is making significant impact because of the digitised image capability. Enterprise segments have been leading with the adoption of LED displays,” says EMPA’s Das.

Product commoditisation

But given the commoditisation of the monitor market and declining margins on products, how can reseller partners remain profitable by  selling monitors?

EMPA has a rebate programme in place based on the target achievements which motivates resellers to target and achieve the highest rebate slab. “Normally resellers are happy if they make $2 to $3 in volume deals, however, for slow moving brands or product arrays, most partners are happy with a $10 to $15 mark up per unit,” says Das.

Das believes that if resellers focus on unique models and less exposed brands they might make decent margins because most of their peers prefer to focus on the fast moving brands where margins are thin.

Kumar adds that AOC faces the challenge of commoditisation through two different paths – technology and protection. He advises partners to take advantage of new technologies that will help businesses recognise competitive advantage versus just levelling the playing field. “We always innovate to offer a competitive advantage and also increase the ability to react to competitive threats with speed,” he says.

Secondly, according to Kumar, through very close networking within the channel base, AOC has completely eliminated grey market business and helped the distribution channel enjoy a more ethical business environment, making it more profitable for them to grow their operations.

Kumar says in addition the retail business is very important for AOC and the company is currently on the retail shelf aggressively in the Saudi and Kazakhstan markets.

“We are also working with partners closely in Iraq, Egypt and Pakistan on the retail front. One of the biggest challenges we saw in Middle East this year was the factor of unrealistic pricing due to unethical business conduct. This eventually led to many partners ending up in debt to the market, and the products being sold going below the cost price,” he notes.

The good news for any solution provider serious about the monitors and display panels business is that both business and consumer awareness of the ever improving technology is encouraging continued growth, as well as ongoing demand from gaming enthusiasts. Resellers with specialist services and integration skills will particularly benefit from the enterprise adoption of monitors and large format panels as video conferencing solutions also become widely adopted.

“Over the last two years we have been successful at creating a new market and value network without disrupting any existing markets and value network. This has been the success for AOC in MEA and CIS Central Asia business. We are going to consolidate our position further with the launch of several new models of LCD, LED and 3D, monitors that would allow partners to tap into the opportunities the market offers apart from increasing efforts to protect margins for channel partners in the Middle East region,” says Kumar.

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