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IT vendors tip weary market to recover

Middle East PC suppliers look on the bright side despite market woes

IT vendors tip weary market to recover
Sales in some categories of the IT sector have dropped by 40% this year, say local executives.

PC components and equipment makers claim there are still pockets of robust growth in the Middle East despite admitting that sales in some areas of the market have tanked by as much as 40% this year.

Hardware has been one of the main areas that customers have cut back on in a bid to rein in IT expenditure, leaving systems vendors to accept that the high growth rates which previously characterised the region are unlikely to return for some time.

Santosh Varghese, regional general manager for notebook vendor Toshiba, said the current outlook for the Middle East IT landscape was “not very encouraging” due to the effects of the global financial crisis on the market.

“B-to-B investment in IT has dropped over 40% compared to the previous year,” he said. “And in the B-to-C segment consumer spending on bargain deals or low-end models has negatively affected the revenue growth and profitability of vendors, distributors and channel partners.”

According to chip vendor Intel, spending in the government sector has fallen short of the level last year while the commercial segment has been particularly hard hit by the downturn. GCC regional manager Nass Nauthoa said second quarter IDC data showed corporate purchases “continued to lag” as businesses kept up their cautious approach to IT spending.

But despite the depressed conditions, vendors insist there are enough indicators to suggest the Middle East PC market is capable of riding out the storm it faces.

“The channel is continuing to see growth although in single-digit numbers due to the downturn,” pointed out Nauthoa. “We have started seeing some of the channel leaders in the region capitalising on the lucrative SMB market by putting together turn-key solutions with after-sales services to boost their profit.”

He also said that the netbook market had grown “exponentially” since it emerged in the region last year: “Netbook sales accounted for more than 20% of the notebook sales in the UAE and almost 10% in Saudi Arabia in the second quarter. And globally Intel Atom revenue grew by 65% in Q2.”

Western Digital, a major provider of storage devices to PC makers, also acknowledged that the Middle East market was “slowing down”, but regional sales chief Khawaja Saifuddin insisted there were still plenty of growth spots.

“Notebook drives are still selling well with capacity points only increasing. In addition, external drives are in good shape as people have a need for add-on storage and back-up of their increasingly growing collection of digital content,” he commented.

While achieving sales growth presents more of a challenge for Middle East providers than they might be used to, it seems resellers can still expect to see PC suppliers investing in the channel.

Toshiba said it was focusing on channel incentives to drive sales-out behaviour during the current climate, while officials at Lenovo indicated that partner engagement remained a top priority as it looks to fulfil ongoing demand in the SMB segment.

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