Emerging from the shadows

Despite its considerable size and oil reserves, Oman's sparse population and comparatively low GDP per capita has led the market to acquire a reputation as a secondary priority for vendors operating in the Middle East. According to security vendor McAfee, Oman constitutes between 6% and 11% of its Middle East revenues whereas notebook specialist Toshiba admits it generates just 2% of its GCC business from a country that only houses three million people.

Official statistics from IDC rank the market as the smallest in the Gulf territory and larger only than Jordan, Lebanon and Syria in the wider region. Total investment in technology products and services reached US$240m last year, according to the research house.

 

The Sultanate has traditionally been viewed as an entry-level market, but it is now showing strong signs of picking up the pace and developing into a much more sophisticated environment. In the enterprise space, resellers claim to be seeing extensive demand for server infrastructure, networking products, UPS systems and back-up and storage. Even in the retail space, consumer demand for notebooks is slowly creeping towards the higher end of the spectrum.

That said, Oman's sceptical approach towards investing in technology is still a key hurdle for members of the country's IT channel. Aymen Marashdeh, general manager at Oman-based reseller Al Madinah, admits it is still forced to stock large quantities of entry-level products to satisfy the market's needs. "It's a price sensitive market so any vendor with an affordable price will be very much accepted," he admitted. "Acer is moving along nicely, IBM has a good market share too."

One factor that shapes the Sultanate's IT scene is that Dubai's strength as a regional IT hub and proximity to Oman means the reseller sector isn't particularly dense. "There's only a limited number of local distributors and resellers present in Oman," said Marc Heger, district manager for the Gulf region at server vendor Sun Microsystems - a sentiment that is shared by other vendors supplying the market.

Santosh Varghese, regional general manager MEA at Toshiba, insists resellers in Dubai heavily influence what happens in the Omani channel and the way in which product flows into the market. "The market tends to be catered to from Dubai," he said. "But we do have an in-country distributor that does a lot of market development and from our side we push market development as well."

John Maliakal, country manager for the computer sales division in Kuwait, Qatar, Oman and Bahrain, also at Toshiba, reckons the fact that the company has signed up with local partners Bahwan Trading Company and Bahwan IT allows it to address the needs of local resellers more effectively than by simply having a distributor sitting in the UAE.

"I think that's given us huge mileage," he insisted. "If a reseller in Oman buys from Dubai, he has to pay cash. But here, our distributor offers credit."

Although some end-users in Oman have been known to head to Dubai in search of a bargain, Isam Mansoor, managing partner at Oman-based reseller Advanced Business Solutions (ABS), claims the market is rapidly maturing. He reckons customers demanding high-end IT products are no longer looking past the country's borders. "The customers dealing directly with resellers in Dubai are not looking for added value that they can gain from the local market. They aren't the ones looking for things like extra support, training or information," he said. "70% of the customers don't know what they're looking for - they know they need a solution but they don't know what they need. There are lots of technical aspects facing them and they don't know exactly what will suit their business. However, 30% of the customers do know exactly what they're looking for and they come to us knowing the products exactly by model number and part number," he asserted.

With local resellers focusing on entry-level products easily undercut by the high volume dealers in Dubai, Oman has emerged as market where box-moving is simply not an option for survival. "Our focus is mainly on solution providing," said Marashdeh. "Our focus is to combine solutions to the market, where we have an advantage and an added value to offer to the customer - that's how we do our business. You can't succeed in Oman by moving boxes so our core focus is on providing solutions. The added value is what makes us successful," he added.

However, the Omani government has taken strides towards elevating the level of maturity and buying behaviour of end-users through a number of state-funded schemes. According to Heger, the government has been playing an instrumental role in developing the market. "There's still a fair amount of education that resellers need to do on the market to clarify total cost of ownership or return of investment as opposed to just the price point," he said. "But there are signs with some of the moves made by the Oman government that we see that trend slowly changing and developing."

In fact, Toshiba, the fourth largest PC vendor in the market, claims its high-end notebooks are flying off the shelves in comparison to the demand it is used to seeing in the Sultanate. According to Maliakal, the market is beginning to give more consideration towards brand these days. "One good thing we're seeing this year is the trend of people shifting towards higher-end notebooks, although not exactly on the very high end," he said. "Two months ago we released a very high-end model, which was not normal for the market. We didn't bring much in terms of quantity, but the stock only lasted for a week, which was a good indicator."

Another symptom of Oman's maturity is in the corporate sector where the IT industry's most reputable names are noting a sharp rise in demand for enterprise-level IT deployments. "The Oman market has matured over the last few years and today it is fully geared up to handle any IT challenge," asserted Anil Kumar, sales manager at local distributor Bahwan IT. "The growth is seen in the government and project sectors over the last couple of years. Today, companies like HP, Cisco Microsoft and Oracle are investing in Oman which goes to prove the potential the country has and the commitment of these IT giants to the growing Sultanate requirements."

McAfee channel boss Samer Malak admits he too has seen a change in the market's buying behaviour of late. He reckons end-users are gaining in confidence when it comes to IT purchases and this is becoming reflected in the length of sales cycles. "The Oman market used to be known as a slow market, with slow decision making," he revealed. "But in the past two years I would say there has been a major boost in the sense of urgency of business operations."