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Tough times ahead

Distributors featured in this year’s Power List paint a bleak second half for the regional channel

Tough times ahead
Regional distributors featured in the 2015 Power List don't expect the market to grow in the second half of the year.

Middle East-based IT distributors profiled in Channel Middle East's annual Power List survey, have painted a tough second half for channel partners in 2015, as business in the region has been impacted by sluggish hardware sales and continued political instability in some countries across the region.

Although majority of the companies featured grew their sales revenue in FY2014, most distributors said that they are concerned about the overall profitability in the channel as PC sales have been slow-moving.

Collectively, the revenue figures for 2014 told a promising story, with distributors making this year's Power List ranking making up over $7bn in sales. Most of the distributors saw considerable growth, some modest with a few witnessing a dip in sales.

Distributor said while they see areas to be positive and have been evolving and transitioning their business models to embrace more value-based and solutions distribution, the ongoing instability in Iraq, Egypt, Yemen and Libya is causing consternation for channel partners that are dependent on the export market for their survive.

Distribution executives interviewed, said their reseller partners are anxiously awaiting for the nuclear deal to be finalised between Iran and the six nations, with the hope that it will lead to the lifting of trade sanctions and the opening up of the Iranian market.

Hesham Tantawi, vice president, Asbis Middle East, a company that features in this year's Power List, said until the ban on banks is removed, it will be extremely hard for anyone to do trade with channel partners based in Iran. "We are not expecting much growth in the regional channel in the second half of 2015," he said. "This is because the market has been shrinking and compounded by the lukewarm PC sales across the region. Even the tablet market , which 12 months ago was booming has slowed down."

Tantawi pointed out that resellers in the Middle East are still doing business on a seasonality basis rather than cultivating new untapped markets and sustaining their growth based on expertise and understanding of the markets they are playing in.

A detailed report on how the top IT distributors ranked in the 11th annual Power List survey 2015 will be published in the June edition of the magazine.

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