Is business confidence returning to the channel?

Can the regional IT channel end 2012 on a high note?

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Is business confidence returning to the channel? ((ITP Images))
By  Manda Banda Published  November 21, 2012

For the past two months, I have addressed the issue of an improving channel marketplace and the need for resellers to plan properly if they are to reap any benefits from the opportunities that are emerging in Q4. Oppotunities will come from the Windows 8 global launch and the many PC brands that will ship with the new OS.

Windows 8 launch is being touted as the one event this year, that will spur PC hardware sales to soar as the regional IT has continued to show signs of improvement albeit at a snail's pace. How will the Dubai distribution channel handle the new PC products that will ship with Windows 8?

To put things into perspective, we have to look at what has characterised the regional channel in Q2 and Q3 2012. While PC sales were good in Q1 2012 in the region, sales slowed down in Q2 and Q3, leaving most Dubai-based distributors to grapple with high stock levels.

According to an IDC report, one of the key reasons for this slow growth was the combination of high volumes shipped by several vendors during Q1 of 2012, combined with a notable slowdown of PC demand from end-users during Q2 of this year. IDC confirmed that certain key PC vendors in the MEA region exited Q2

2012 with high inventory levels among their channels.

And although political instability continues to linger in some countries in the region, in those countries where stability has started to return, we haven't seen much PC uptake. For example, in Dubai, the distribution channels have struggled to clear the high levels of PC inventory in Q2 and Q3.

In fact, results in our annual Channel Confidence Survey have revealed that the overall financial health of the Middle East channel at present was not healthier or unhealthier than usual. More than half, 51% of respondents said that the financial wellbeing of the overall channel is no better or worse than it was in 2011.

However, what was even more despondent was that nearly 27% perceived the financial welfare of the market in general to be unhealthy.

On the expected trading levels during Q4 2012, about 33% of channel respondents polled said that they were very confident of trading levels trumping last year's record, while 41% expressed some level of optimism that trading levels would pick-up in Q4 of this year.

So, what does all this mean to channel partners and just how should those in the business of reselling IT products go about preparing for business in the last quarter of the calendar year 2012?

There maybe mixed signals about confidence levels in the channel, but majority of resellers are looking forward to trading levels getting better because of the new product launches that will follow the Windows 8 unveiling.

Unfortunately, not every reseller will benefit from this expected market pick-up. Partners that will profit from business opportunities that are emerging in Q4 are those that have maintained focus, are financially sound and continue to be prudent in their channel investments. Beyond this, resellers will also be required to cultivate and develop new customers and markets especially that the regional IT market has been affected by the trade embargo on Iran and the on-going conflict in Syria.

I do believe that the number of products (PCs & tablets) that will be released after Microsoft's much touted new OS hits the regional shores later this month should give enough thrust for resellers in the channel to bounce back stronger this quarter and beyond. If that happens, then confidence will have returned to the channel which has over the past three years been left in an indeterminate state.

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