The 2008 Power list

The Middle East boasts one of the most vibrant IT distribution sectors in the world - and a major entry point for any vendor with aspirations to build a regional business.

Following an eventful year in the wholesale channel, we bring you an unrivalled guide to the Dubai-based movers and shakers influencing the development of the market.

 

The winds of change have blown forcibly through the corridors of the Middle East distribution channel during the past 12 months, but it's fair to say that a sector which sits at the very heart of the IT supply chain has emerged with its credentials unruffled and its prospects looking as auspicious as ever.

Leading distributors in this region are growing, maturing and even reinventing themselves in some cases, buoyed by the knowledge that distribution remains central to the plans of almost every IT vendor serving the Middle East.

Painting a lucid picture of distribution dynamics in this region has never been a straightforward task, but it's one that Channel Middle East has endeavoured to do since launching the Power List four years ago. This year is no different.

In fact, the 2008 Power List - an indispensable guide to the 15 largest Dubai-based distributors by annual sales - is more content-rich than its predecessors, offering a comprehensive snapshot of each major IT distribution house and their role in a market that has grown by a solid double digit rate during the past year.

One notable addition to this year's Power List is the inclusion of data that indicates how many Middle East offices each distributor operates outside of Dubai. With many companies continuing to expand beyond the UAE, and vendors looking favourably on second-tier partners that possess a local touch, this information offers a valuable insight into which distributors have developed a multi-country infrastructure throughout the region.

It goes without saying that many distributors rely heavily on the resources that they have from their Dubai business to drive their Middle East efforts, but an increasing number of players can genuinely claim to operate a truly pan-regional business model.

The number of employees and active accounts - both introduced for the first time in last year's Power List and updated this year following new research - allows you to build a clearer picture of each distributor's size and scale.

Active accounts, which refer to the number of resellers that each distributor typically trades with on a three-monthly basis, provides a useful clue of market reach and dealer coverage. It's interesting to note that players such as eSys and Comtronix call upon a loyal sub-distribution network, while volume distributors such as Redington, Aptec and Almasa generally trade with vast quantities of IT dealers due to the nature of their business.

As always, it is impossible to bypass the subject of financial transparency when it comes to compiling a list as extensive as this. Just three distribution houses - Asbis, Logicom and Redington - belong to parents listed on a stock exchange.

While the nature of publicly quoted life permits access to fully audited accounts, that trio find themselves in the minority when it comes to financial reporting obligations. We have attempted to crosscheck information with vendors and industry experts, but the reality is that the availability of explicit data is still scarce.

In an ideal world, everybody would be required to divulge details relating to gross margins, operating expenses and stock turns, thus providing an exhaustive overview of distribution performance throughout the region. Perhaps as more companies consider the possibility of an IPO or attract the interests of outside parties, we will one day be in a position to include that level of analysis.

Where distributors make significant intra-company sales or earn a considerable chunk of business from markets outside the Middle East - such as those in Africa - we have made it clear within the distributor's profile and endeavoured to explain the breakdown as succinctly as possible.

Similarly, three companies still operate meaningful hardware assembly businesses. We have outlined how much these distributors generate from those activities in their profiles and again in the Power List table on page 47.

The distribution of own-brand products - either those that are assembled locally or those imported from outside the region - still remains a major characteristic of this market, which is why we have chosen to include both an overall figure and a breakdown.

Removing any revenues generated from assembly activities does change the pecking order of the Power List slightly. Jumbo IT Distribution would jump above FDC into fifth place, Logicom and Mindware would overhaul Comtronix, and Asbis and Empa would leapfrog eSys.

So what does this year's Power List tell us? Firstly, it reveals that the combined revenues of the 15 largest Dubai-based distributors total a colossal US$3.881 billion - a 21% rise on the previous year.




Unsung heroes
An arbitrary guide to five other distributors playing a key role in the market.

Value added aces
Five Dubai-based distributors with value-added pedigree.

Saudi stalwarts
A rundown of the leading IT distribution houses based in Saudi Arabia.

Top 15 largest Dubai-based distributors
The fifteen largest distributors working out of Dubai, from broad-based distribution outfits to niche specialists and VADs