Street life

Khalid Bin Al Waleed Street has seen its peak during the IT boom years, but it has also been through turbulent periods. With relative calm on the street, what are the issues facing resellers in Dubai’s Computer Street?

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Street life Vasant Menghani, Managing Director, Quality Gulf Co
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By  Manda Banda Published  September 25, 2013

Khalid Bin Al Waleed Street has seen its peak during the IT boom years, but it has also been through turbulent periods. With relative calm on the street, what are the issues facing resellers in Dubai’s Computer Street?

Khalid Bin Al Waleed Road is a sanctuary for IT resellers and retailers operating in Dubai. Computer Street as it is affectionately known by the local channel, plays a vital role in the reselling and re-export of IT products beyond the boundaries of the UAE.

The street has made tremendous improvement from the challenges it experienced as a direct result of the global economic meltdown four years ago. The business climate has improved somewhat, although there are still resellers on the street that are struggling to identify new opportunities and broaden their business.

Declining margins on IT hardware in general, over competition, budget cuts and a slump in PC sales has made an improving market to suffer further setbacks.

And because some players on the street depend on the re-export business to survive, the latest tightening of trade sanctions against Iran, Syria and Sudan has added to the challenges Dubai-based IT resellers operating from the street have had to deal with.

While relative calm has been restored following a spate of IT traders fleeing Dubai with unpaid debts a few years ago, it is the continued slump in PC sales that has affected not only resellers, but also distributors involved in the PC and components segment.

Both IDC and Gartner have over the past two months released numbers that paint a continuing global downturn in PC units shipped in the last three months, for Q2, 2013.

IDC reported a global slump of 11.4% of PC units shipped compared to the same period last year. Gartner pegged the drop at 10.9%.

Industry Pundits say it is no longer a shocker that the PC market is struggling given the rapid adoption of tablets and smartphones.

Vasant Menghani, managing director at Quality Gulf Co, a Dubai-based reseller that has operated from the street since its inception over two decades ago, said while the IT channel is improving and getting better than last year, most companies are suffering as a result of declining margins and the minimal support they receive from multinationals. Menghani said while the slump in PC sales is a global one, in Dubai it has been affected by the lack of proper guidance from vendors in protecting margins. “Most vendors especially hardware manufacturers have not done enough to help cushion the channel from the thinning margins,” he said.

This, said Menghani, has been compounded by the tightening of trade sanctions on Iran, which accounted for 40% of IT hardware products shipped from resellers operating on the street. “It’s no secret that the most profitable market in the past was Iran. The tightening of trade sanctions especially on government and public sector institutions has put a huge impact on many distributors and reseller businesses based in Dubai.

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