Intel to build on Pentium 4's successful Egyptian launch
Intel's wants to use its recent successful Pentium 4 launch at Gitex Cairo as a foundation for exerting greater influence over the Egyptian PC market.
Intel Middle East not only managed to successfully launch the Pentium 4 in Egypt during Gitex Cairo, it also took advantage of the presence of numerous IT representatives present at the exhibition, by helping to identify effective strategies designed to reduce the level of grey market merchandise currently flooding the market.
“The big PC players have a relatively small market presence in Egypt and Intel is aiming to ensure that the independent enterprises have adequate access to a legitimate source of Pentium 4 processors,” said Dijana Likic, project manager for Gitex Cairo.
“Intel knows that by providing direct training and product support to the volume PC assemblers, it can have a significant and positive impact in Egypt.”
There can be no doubting the importance of the Egyptian PC market to Intel: according to recent figures, the year 2000 saw 300, 000 PC s being sold there. Roughly 70% of the units sold were locally assembled using imported components, and Intel is, indeed, specifically targeting small and medium sized enterprises that assemble computers, recognising that this sector plays a significant role in helping Egyptians gain Net access.
“We want to build a legitimate network of Intel distributors in the region who can ensure that Egyptian consumers have access to affordable, top-quality systems,” said Gilbert Lacroix, general manager, Intel Middle East. “This will enable them to leverage a range of efficiencies derived from being wired in global markets. The Pentium 4 processor has very specific features that enhance Internet capabilities in relation to multimedia applications, particularly when combined with a DSL connection.”
Intel has stated fairly recently, on a worldwide basis, it expects Pentium 4 sales to account for 50% of Intel’s total revenue by the end of 2001. Responding to the assertion that the new chip was expensive, Lacroix pointed out that the complete PC systems featuring Pentium 4 technology are available in UAE markets for less than $1400, adding that Egypt’s import duties may mean higher costs for similar systems in Egyptian markets.
“We know that current import duties are reducing the general population’s access to this technology in Egypt right now, and we are hopeful that the Egyptian government may consider implementing new policies that may help remove some of the barriers IT suppliers have in reaching Egyptian markets,” commented Lacroix. “Some Middle Eastern countries are keen to increase computer literacy among the masses and have undertaken unique measures to generate market conditions that support this goal, including the removal of import duties on IT commodities. For example, recently both the Jordanian and Lebanese governments implemented a 0% import duty on this type of commodity, driving sales upwards.”
According to Lacroix, Jordan removed the import duty on IT products over a year ago, leading to a substantial growth in its PC markets. Following the removal of import duty, Intel has embarked on an investment programme to encourage local support from inside Jordan.
“Intel products are now stocked locally and are widely available through official (rather than grey) distributors, providing consumers with affordable access to quality training products and support,” said Lacroix, noting that a similar scenario is now unfolding in Lebanon which implemented an identical policy two months ago.
Although Lacroix would not comment further on discussions focusing on political issues, a study conducted by the Dubai World Trade Centre (DWTC) in autumn 2000 on the current state of the Egyptian IT industry revealed that the majority of respondents held a similar view.
The study suggested that there is a general consensus among IT sector representatives operating in the region that, if Egypt were to implement alternative options for raising revenue from IT products, PC sales in Egypt would escalate significantly. For instance, reducing import duty and simultaneously implementing local sales tax on IT components could help reduce barriers faced by components exporters, while ensuring government taxation revenues remain buoyed by ongoing growth in demand.
“By working with the authorities, we are confident we will be able to maximise accessibility to Egyptian consumers,” concludes Lacroix.