Preparing for the year ahead
Channel industry experts reveal what 2016 will bring to reseller partners in the Middle East
Although the overall business climate in the regional channel continues to improve, there is still some elements of uncertainty especially in the PC segment.
According analyst firm IDC, Global PC unit shipments could take a dive of as much as 8.7% in 2015 and not stabilise until 2017. The tech-industry research firm’s ‘Worldwide Quarterly PC Tracker’ shows growth declining yet again, throughout 2016, which will be the fifth straight year of decline.
IDC expects growth to resume in 2017, led by the enterprise segment, while consumer demand will continue to shrink slightly until the end of 2019.
According to the research firm, the first half of 2015 was restrained as the industry prepared for the move to Windows 10, but the second quarter shrinkage was even more than had been projected.
IDC attributed the decline to a “stubbornly large inventory of notebooks from prior quarters and severe constraints posed by the decline of major currencies relative to the US dollar”.
Other factors that are likely to dampen growth in 2016 are: free Windows 10 upgrades, a relative lack of fresh products in the Windows 10 transition period and partner channels that are reluctant to take stock.
Vasant Menghani, founder and CEO at Dubai-based mobile device brand Touchmate, said the negative sentiment in the PC sector is largely due to the contribution and growth of OEM tablets and smartphones.
“While tablet sales of premium brands like Samsung and Apple have stagnated over the last few quarters, most local OEM brands across the region have continued to see growth and will do so even in 2016. We have certainly seen it with our Touchmate tablets and that’s why we have cemented our offerings with the addition of Windows 10 tablets and new smartphone models,” he said.
Menghani added in 2014 and 2015 the IT market was generally flat because consumers were transitioning from using desktop PCs and notebooks as the primary devices to consume information to tablets and smartphones as their preferred gadgets. “This has severely affected PC sales growth and continues to do so as most reports from research firms like IDC, Gartner, GfK have confirmed the decline in PC sales,” he said.
Rex Neate, development consultant, Sofware AG Middle East and Turkey, said while the PC market has seen declining sales over the past few years, the current interest is towards solutions that adapt to digitisation, which pays strong focus on saving and efficiencies. “Markets like the KSA are tight due to the reduction in oil revenue and therefore choosing the right projects with perceived limited budgets has added to an already precarious situation,” he said. “Understanding costs and efficiencies of processes are a key point in Software AG’s go-to-market strategy.”
Neate said as the channel is constantly being made aware of the continual surge in the growth of data, this is an area that will continue to grow and resellers that are not already playing in this segment should explore possibilities of doing so in 2016.
Guurprit Ahuja, director, Middle East and Africa at backup and disaster recovery (DR) solutions specialist Acronis, said the regional channel has to look into aligning with the pains and trends of their customers. Ahuja added that offering subscription licensing and cloud-based services to customers that are in need of such solutions should be an area partners need to look at.
“Predicting the future is a complex and difficult task. Today, technology has surpassed earlier predictions, which demonstrates that the IT solutions we are seeing now are better than what was predicted,” he said. Ahuja added that partners can always count on technology to change the way people live and do business. “Consider the role of cloud in backup and DR. Companies and organisations are now starting to veer away from traditional backup and DR involving tape and disk-to-disk methodology,” he said. “In fact, a recent report from Gartner predicts that by 2016, nearly 20% of organisations will abandon traditional backup and recovery. There is a prominent role that cloud is playing in today’s backup and DR solutions.”
At regional value-added distributor Logicom Middle East Group, regional director Mounir Sarkis, said transformation is the key word. Sarkis said this is taking place at a fast and sometimes erratic pace across the different layers and elements of the channel, either through adoption of new technologies or adoption of overall new business models. “Pretty much all businesses are constantly trying to reinvent themselves and to a large extent determine, define and shape their respective future,” he added.
Sarkis said delivering more on the distribution as a service (DaaS) is key to Logicom’s strategy going forward in 2016 and beyond. He said while operational excellence remains a key metric for the company’s overall distribution/fulfillment engine, the main focus will revolve around strengthening the structure to deliver more competitive and innovative DaaS capabilities in the regional channel.
While some IT organisations are still hesitant to move some of their IT infrastructure to the cloud, partners that successful guide clients on the cloud journey will not only be creating recurring revenue streams for their businesses, but will also be guaranteed of steady business from customers that develop trust in them.
Rui Silva, channel manager, Middle East, Alcatel-Lucent Enterprise, said one of the biggest challenges in the Middle East is how the partners will evolve to the next level. Silva said vendors are noticing this and looking at ways for solution provider partners to grow their businesses and profit by becoming specialists and carve a niche for themselves in the market.
He added that another challenge is the lack of knowledge transfer within partner companies. “Some company managers in certain countries in the region have shown reluctance to invest in skilling their employees due to the high turnover of staff and the cost to train them,” he observed.
That said, Silva pointed out that the regional channel should look to the next 12 months with optimism, regardless of the challenges existing in the market. “Business will not stop. It will definitely be an interesting period but in my opinion it is time that each channel partner selects on what they want to specialise in, this will be key,” he said. “Each partner needs to find their niche and their space to become successful and stand out.”
Silva explained that cloud solutions are definitely where Alcatel-Lucent Enterprise sees the business model moving to. “Virtualisation is also a growing trend and this will definitely bring some real cost savings to customers. However, the big challenge for partners will be the move to an OPEX model versus a CAPEX model,” he said. “In my view the new WiFi 802.11 ac standard is clearly an opportunity that will bring new revenue streams to the channel, which will definitely have a huge impact in 2016. We will see existing and new hotels wanting to upgrade their WiFi infrastructure to offer their guests a better experience.”
Maya Zakhour, channel director, Middle East at Fortinet, said: “The regional channel has been evolving and needs the right encouragement to continue developing.
Zakhour said partners, likewise, should always be focused on enhancing their skills and looking for new opportunities. However, she said this cannot happen without a focus on being the best.
Zakhour added that over the years, the regional channel has seen financing schemes getting stronger and partners understand they can secure a profitable business, only if its related to the skills and services they provide. “The beauty of the channel in the UAE is the mix of partners, where you have strategic partners that understand the value-add model, as well as those resellers who follow the old trading box moving model. It is this mix that allows us to address every segment from large enterprises, telcos, public sector and governments, where partners sell solutions, services and expertise thereby providing added value even to SMBs.
Zakhour said the UAE will continue even in 2016 to have the strongest channel and this is largely due to the economy, infrastructure and the nature and number of businesses and the rate of growth within the country. “The main driving force in terms of vertical growth will be security since it now makes up increased investments from companies and governments,” she said.
Zakhour explained that the GCC is growing in terms of infrastructure investment, various government initiatives, and is attracting top talent from around the world, while creating more opportunities for businesses. “This gives rise to an increase in IT investments to enable businesses to be on par with the rest of the developed world and that’s where channel partners come in,” Zakhour added. “IT security is foremost in investments and is therefore a golden opportunity for the channel even in 2016 and beyond.”