Market check

Although the overall business climate in the regional channel continues to improve, there is still some elements of uncertainty especially in the PC segment, where sales of desktops and notebooks have continued on a downward spiral.

Tags: Systems integrator
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Market check
By  Manda Banda Published  November 22, 2013

Although the overall business climate in the regional channel continues to improve, there is still some elements of uncertainty especially in the PC segment, where sales of desktops and notebooks have continued on a downward spiral.

This has been of particular concern for the volume IT distribution and components sector because a slump in PC sales tends to have a knock on effect on the components hardware business. That, coupled with the slow adoption of Windows 8, has contributed to sluggish PC sales globally, while smartphones and tablet sales have been soaring.

The 2013 Channel Confidence Survey polled all channel stakeholders (vendors, distributors, systems integrators, resellers and retailers) in the regional market to determine the state of business in the Middle East.

In the coming pages, the 2013 Channel Confidence Survey highlights the key findings about the state of the regional channel business and what the outlook is like in the fourth quarter and the year ahead.

How did trading levels during the first half of 2013 compare with the same period last year?

Single-digit growth: 47.06%
Double-digit growth: 37.27%
Business was flat: 7.84%
Single-digit decline: 5.88%
Double-digit decline: 1.96%

In a year that has seen the desktop PC, notebooks and components market come under increasing pressure as a direct result of declining sales, it comes as no surprise that majority [47.08%] of the respondents in the Channel Confidence Survey experienced single-digit growth in the first half of the year. Sluggish PC sales have impacted volume distributors and in the process affected channel players in the components sector. However, the fact that 37.27% of those polled indicated that they have reported a double-digit growth goes to show that the regional channel did experience some solid trading levels. A further 7.84% indicated that their busines was flat, while 5.88% said their business declined by a single-digit.

What is your main financial priority during the second half of the year?

Generating revenues: 47.06%
Focusing on profitability: 33.33%
Improving gross margin: 7.84%
Reducing expenses: 0%
Better cash flow management: 11.76%
Collecting accounts receivables: 0%

Despite a tough business climate persisting in the Middle East channel, the priority for those companies involved in the region’s IT business remains the same. Focusing on increasing sales revenue and business profitability continue to be top of the agenda. A total of 47.06% of those polled indicated that they were focusing on generating revenues for their business, while a 33.33% said focusing on business profitability and bottom line was a top priority in the second half of 2013. Last year 35% of companies that took the survey indicated that they were prioritising generating revenues. If events over the last three years have taught companies to better manage their businesses, then 11.76% of firms that indicated cash flow management was priority, shows just how they are moving forward to sensibly manage their businesses.

How confident are you that trading levels during Q4 will be stronger than the same period last year?

Very confident: 49.02%
Slightly confident: 37.25%
Uncertain: 9.80%
Slightly unconfident: 1.96%
Very unconfident: 1.96%

The first half of 2013 might have disappointed many, but the channel community in the region is extremely confident that Q4 will stimulate growth to ensure that this year ends at an all time high. From the total respondents that took the survey, 49.02% said they were very confident about trading levels in Q4, while 37.25% of respondents indicated that they were slightly confident. Only 9.80% of repondents said they were uncertain. With Microsoft officially stopping support of its Windows XP OS in April, 2014, analysts are hoping commercial desktop PC sales will spur a refresh and upgrade cycle, and  this is likely to gain speed in the last quarter of 2013.

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