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www.itp.net MAY 2010 Vol. 08 Issue. 05

Building and delivering IT solutions for the Middle East An ITP Technology Publication

CHIP CHANGES

THE NEXT CHAPTER

Intel to recognise channel CPU sell-through rates (14)

Distribution executives discuss the future of their business (38)

UNIFIED GOAL

STARRING IN SAUDI

Middle East UC market begins to blossom (24)

I(TS)² sets out its managed security services strategy (53)

BEHIND THE SHIELD Antivirus software vendors reveal how Middle East resellers can attack their competitors by defending end-users (32)

S hhma Sus maa Kajaria jar aria, a cchann n el ddevvelo e pme pment nt man m ageer MMEA ME , Tren Tren re d Micr Micro

SIT GAINS ISO CERTIFICATION GATEWAY LAUNCH IMMINENT EX-FOXCONN SALES CHIEF HITS OUT ASBIS LAMENTS CHANNEL CREDIT SITUATION

Licensed by Dubai Media City


DELIVERING IT ACROSS THE MIDDLE EAST We at Mindware are proud to be the leading distributor of quality IT products across the MENA region – anticipating and servicing the complex needs of our customers.

w w w. m i n d w a re . a e

Mindware FZ LLC Office 205, Building 2, Dubai Internet City PO Box 55609, Dubai, United Arab Emirates Tel: +971 4 391 3333, Fax: +971 4 391 3334


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DATA LIST (1) // HEADLINE NEWS FROM THE MIDDLE EAST IT CHANNEL

::

DESPERATE TIMES FOR RETAIL

Fears grow that the channel hasn’t yet seen the last of the carnage as high costs, over-competition and unsustainable strategies continue to damage the retail sector

THOMAS QUITS DELL FOR HP

T

he rivalry between Dell and HP is unlikely to show any

let-up in the Middle East after

>>

Confirmation that Cellucom’s majority shareholder is awaiting verdict on an application for its liquidation has reignited debate over the real health of the Middle East IT retail channel. Senior players claim the market remains firmly under the cosh,

especially in the UAE where the global economic crisis appears to have exacerbated the existing pressures that IT retailers faced. Mobile phone and accessories supplier Cellucom once laid claim to several hundred stores across the GCC before running into

trouble last year, but its departure from the market is certainly not an isolated case. RadioShack and Telefonika have also disappeared from parts of the Gulf market after their owners decided to pursue other retail interests in areas such as fashion, where the rewards are higher. “If you take the margin in electronics and the margin in fashion there is a huge difference,” insisted Mahmoud Hamoud, who used to head the Telefonika business in the UAE. “You are talking 75% to 100% margin compared to 7% margin,” he said.

Self-styled ‘smart home pioneer’ Eon also left the market, while i2 wound down its operations in Saudi Arabia and closed many of its unprofitable smaller UAE stores. Market commentators are adamant that other retailers would also have shut shops if it wasn’t for the deep pockets of owners reluctant to be seen taking that step. “There are other retailers that are suffering quietly, but eventually their problems are going to surface,” warned one executive. Intertel Electronics, the old Virgin Megastore concessionaire partner, unveiled bold - - - > (4)

one of Dell’s key distribution executives, Mathew Thomas, quit to join its competitor over the road at Dubai Internet City. One Dell channel partner said Dell’s loss would be HP’s gain: “Mathew oversaw the consumer portfolio and he is the guy who drove the business during GITEX and things like that. Dell’s numbers shot up in retail over the last couple of months and a lot of that was due to him.”

HP Middle East confirmed that Thomas was joining the

INTEL OPENS DISTRIBUTION

FOXCONN HITS OUT AT CLAIMS Insists it has not reduced channel focus Foxconn has rejected claims made by its

>> former MEA sales chief that it has reduced focus on the Middle East channel. Najib Nesrini, who led Foxconn’s channel sales activities for six years, says he quit the vendor after calls for greater investment in the channel business went unheard by the company’s HQ. “Their reaction to the credit crisis and slow demand was not positive, and instead of supporting the channel they withdrew all the support,” he blasted. “My argument

- - - > (7)

company although it did not specify details of his role.

CPU giant scraps territorial contracts to allow disties to sell where they want

Thomas could not be reached

>>

it is thought that he will take

In a move that it claims is partially motivated by the desire to increase channel credit levels, Intel has given all six of its distributors in the region the go-ahead to sell into any Middle East and North African market they wish. The unprecedented step means distributors now have free reign to supply CPUs to customers throughout the MENA region, rather than being confined to specific geographic territories as their contracts previously stipulated. It is understood that the only exception is Saudi Arabia, where Intel is persisting with its existing set-up. The change in policy effectively allows Intel’s GCC distributors — Empa, Logicom and Mindware — to sell to non-Gulf customers for the first time, - - - > (9)

as we went to press, however on senior management duties inside HP’s distribution team. Thomas (pictured above left) is no stranger to HP having previously worked for Redington Gulf, one of HP’s largest disties. Dell did not get back to us with details of its plans for replacing Thomas, but it recently hired ex-Tech Access CEO Tony Ward as distribution director for emerging markets.


// INSIDE THIS ISSUE >>

FRONTLINE

// CONTENTS CHANNEL MIDDLE EAST_MAY 2010

04_Acer lines up Gateway partners

10_Credit risks threaten distribution

04_New roles for market veterans

10_AOC scrambles into Egypt

07_Shift in channel dynamics

10_Nortel ace forms independent unit

07_ITE to carry MS software lines

12_ISO endorsement for SIT

CHIP CHANGES

09_Local stocking for Optimus

12_Riverbed targets reseller channel

09_Lenovo overhauls sales operations

12_Hasoub unveils store concept

Seismic shifts in the partner landscape provided the basis for several major channel announcements at the 2010 Intel Solutions Summit.

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INSIDE INFORMATION

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SOLUTIONS

22_BUILDING A LEGACY

49_AL-ALAMIA ON SONG

Ramkumar Balakrishnan explains how Redington Gulf’s value arm is developing an identity of its own

Enterprise reseller carries out twomonth HP ProCurve project to help Kuwaiti bank improve performance

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CONSUMER ELECTRONICS

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51_CREATIVE THINKING

Hitachi distributor claims it is poised to surpass revenue landmark if plans to launch news showrooms prevail

Adobe releases latest edition of design software suite into market

45_JARIR IN GOOD FORM

OKI aiming to capture SMB share with launch of MB400 MFP series

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BUSINESS INSIGHT

UNIFIED GOAL Half of all enterprises plan to deploy unified communications in the next three years, creating a huge opportunity for the channel.

51_FULLY FUNCTIONAL

(31) THE NEXT CHAPTER Distribution is by no means an easy business in these tough times, but there is still a bright future for those who can evolve and adapt.

(19) SUNNY OUTLOOK

47_PC MARKET RECOVERING Sustained demand for mobile devices cited as the driving force behind anticipated growth in global market

(24)

PRODUCTS

45_EROS SALES TARGET

KSA retailer makes a solid start to the year with 20% sales growth

(14)

>>

Exclusive interview with the chairman of Tech Access

(34)

47_INFOR ADDS NEW RESELLER Advoco given the green light to resell vendor’s EAM software to midmarket

BEHIND THE SHIELD IT security is an area that customers can ill afford to compromise in any climate — or so the region’s leading antivirus providers tell us.

(16) EDITOR’S NOTES How important is winning

>> market share these days?

(41) EXPERT’S VIEW What does the future hold for the CEMA printing market?

>>

(53) RESELLER FOCUS >> KSA security ace I(TS)²

(56) GET TO KNOW Felix Baretto,

{} LG Electronics

(43) FACT FILE (15 )) 115

Enterprise switches market looks to bounce back after .... .. ... recent turmoil

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// CHANNEL MIDDLE EAST_MAY 2010

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< - - - (1) plans to launch its own network of ‘Tango’ stores last year, but what surely would have been its flagship outlet at the gigantic Dubai Mall remains padlocked. The Pragma Group, its onetime owner, claims it “does not have any connection with Intertel anymore”. Calls to an alternative phone number provided by Pragma go unanswered. Such developments only appear to reiterate the strain that the Middle East retail market is under. While each case must be taken on its own merits, it is impossible to survey the landscape without questioning whether retailers simply refused to accept that the market was never actually large enough to support so many players. There is a growing

feeling in the market that some retailers are now paying the price for expanding too quickly and recklessly. Other retailers, meanwhile, have been guilty of falling for what one channel executive describes as the “lemmings approach” — following their competitors into new malls or opening units for the sake of it just because they see other companies in the sector doing the same. That has created its own problems due to the high operating expenses that are incurred from leasing multiple premises. According to the boss of one major computer chain, if IT retailers are to realise any sort of satisfactory return from a mall location then rental rates have to be 50% of what they are today.

But while vendors stand accused of caring only about their own sales targets and failing to support the channel with stronger transactional margins, there are some who believe retailers need to look at their own actions first. One distributor claims some retailers have built their entire business model on the branding and opening fee money that they demand from vendors. “They will come to us and say they want US$30,000 to open two new stores and they will then do the same for the other top 20 or 30 vendors they work with,” commented the distributor. “This was the only source of income for a lot of retailers, but what has happened is that the money has dried up in the last 12 months.”

ACER LINES UP PARTNERS TO FRONT GATEWAY BRAND

Vendor calls on former KSA sales chief to build regional channel for commercial PC business

G

ateway PCs and storage systems could be available in the Middle East from this month onwards if Acer succeeds in concluding discussions with a series of partners it has lined up to market the products across the region. Acer has re-hired its onetime country sales manager for Saudi Arabia, Sunil Nair, to launch the Gateway business in the MEA region and he has begun the task of building a partner network from scratch. The vendor is looking at two types of partner to carry the commercial-focused Gateway line-up, which consists of servers, storage systems and PC clients.

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“Our primary focus is on what we call enterpriseclass partners and these will be large partners who represent our products on a back-to-back basis in large deals and government tenders,” said Nair, whose most recent management role was with BDL Gulf. “The second category is country-specific distribution partners, which will have the rights to stock and sell. For the time being we are looking at partners with a lot of experience selling servers and storage.” Discussions with prospective partners are already at their third stage and Nair remains optimistic that the company will

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shortly be in a position to confirm at least 10 tie-ups. “During the initial phase we are looking at countries such as Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman, and we will appoint partners there immediately,” he said. “I am also looking at Egypt and South Africa.” The Middle East roll-out of Gateway, which Acer purchased for US$710m back in 2007, follows on from last year’s launch in Western Europe, where the product range is largely sold to resellers through distributor Tech Data.

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Sunil Nair has rejoined Acer to develop its Gateway brand

NEW ROLES FOR MARKET VETERANS Increased responsibilities for channel executives

C

omstor and Fujitsu Technology Solutions have both reinforced their regional management set-ups by promoting executives to new posts during the past month. Comstor Middle East’s divisional manager, Renton D’Souza, has had his responsibilities expanded to include a wider regional territory as the Cisco-focused distributor bids to grow its emerging markets business. He will now serve as Comstor Business Lead for Westcon’s MEA and India Cisco business in addition to managing the Middle East business he oversaw before. Jon Pritchard, executive VP for Comstor Worldwide, called the appointment “hugely important” for the networking distribution company’s business as it continues with efforts to globalise its brand. “This role will give us a key point of focus within our MEA and Indian business, which is the region we see as having significant potential for growth,” stated Pritchard. Fujitsu, meanwhile, has elevated its Egyptian country boss, Hussein Shehab, into the newly-created role of channel director for sales and operations in the Middle East. As well as managing the company’s partner-related affairs in the Middle East, Shehab (below) has been entrusted with the task of developing the Fujitsu Select Partner Programme regionally.


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// CHANNEL MIDDLE EAST_MAY 2010

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FRONT LINE (7)

< - - - (1) with them was that it was a great time to show our commitment to the channel because competitors were withdrawing from the business,” he added. Nesrini accuses Foxconn of failing to provide the resources and marketing funds that he believes were necessary to reinforce the good work it has carried out to develop its channel base in recent years. “If you cannot deliver any value for the company and for the customer you cannot justify your position, it is as straightforward as that,” he said of his departure. However, Foxconn has angrily hit back at Nesrini’s claims. It insists he left for personal reasons, not because of any de-investment in the channel. David Shih,

:: managing director for the Middle East, India and Africa at Foxconn, stressed that the motherboard maker remains firmly committed to its partners in the region. He said the channel was “very important” to Foxconn, with 50% of its regional turnover coming from partner sales and the other half from the local integration of its systems. “Globally, our group did more than US$85 billion last year and the Foxconn MEIA branch had revenues of about US$80m in channel alone,” said Shih. “We still maintain growth of 15% to 18% in the MEIA regional channel yearby-year since we begun in 2004. It is obvious that there is no reason we would lose focus on the channel business. It is true that we did some conservative plans

ITE TO CARRY MS SOFTWARE LINES

I

TE Distribution has been given the nod from Microsoft

to distribute Windows Office and other commercial software in a move that deepens the on marketing expenditures, which was part of our company’s global plan to minimise operational expenses during the global recession in 2009. As all are aware, this strategy was implemented by nearly 90% of the companies globally during 2009,” he added. Shih also said that Foxconn, which employs around a dozen people in the Middle East, had moved quickly to fill the vacancy created by Nesrini’s exit by appointing Nader Redjeb as its regional sales manager.

pair’s relationship in the Gulf.

Najib Nesrini and David Shih during more amicable times

The only Microsoft software that ITE had previously been allowed to sell was Mac Office, although it does offer the full range of Microsoft PC hardware, such as gaming devices, keyboards, mice, webcams and headsets, following an agreement between the pair last April. The new contract covers all of the Gulf region with the exception of Saudi Arabia. “ITE’s performance through the past year clearly reflects on our strategy to provide access to local outlets and retailers

SHIFT IN CHANNEL DYNAMICS Resellers will need to adapt their services strategies once cloud computing model takes off in the Middle East region

S

ystem integrators will be required to rethink their offerings as more Middle East enterprises begin to adopt cloud computing, according to the head of Fujitsu Technology Solutions’ business in the region. The topic of web-based services has so far divided the industry, with some parties expressing fears that the channel could be sidelined if vendors pursue direct delivery sales models. Mark Wilson, senior VP for MEA and India at Fujitsu, believes the “all embracing” nature of cloud computing is set to create opportunities for the channel to

offer the specialised skills that are necessary to deliver a solution. He says solution providers need to accept their role will change in the future, although it won’t alter their significance in the market. “Does it mean that vendors are not going to see channel partners as strategic? Far from it. I think there will just be a different expectation, especially from the corporate- and systems integratortype markets,” he said. One question that cloud computing throws up for the channel is the issue of customer ownership. Wilson admits that enterprise clients generally want

>>

where premium Microsoft

a “singular point of reference” — usually the vendor — to unite all of the strategic relationships that comprise a cloud solution, but denied this meant the door would be slammed shut on the channel. “Partners play an important role in any organisational strategy, especially for us in the emerging markets — I can’t stress that enough,” he said. “What you will probably find is a different type of system integrator being developed as we go forward in the market place and we will look for different things from system integrators. I think you will see a lot more partners moving up the value chain and those who don’t will unfortunately become more marginalised because commoditisation just leads to a corrosion of margin,” he added.

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products can officially be available to the local consumer with the support that matches it,” said Armagan Demir, head of Microsoft’s Entertainment and Devices Division. Shams Jafery, director of business development at ITE, added: “We will stay committed to offering our channel expertise and support to further increase Microsoft’s market share across the region.”

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<- - -

(1) and gives Asbis, Metra and Raya licence to develop business outside of Egypt and North Africa. Ozerk Ege Ertem, Middle East, Turkey and Africa sales manager at Intel, insists it will result in channel partners benefitting from increased access to products and credit lines. “We were working with our distributors on limited locations, but as we are seeing more opportunities in every market and our distributors are willing to open new offices in new countries we said let’s set them free and enable them to open business in whichever country they want,” he explained. “So getting new opportunities in new countries was one of the reasons for it, as well as increased availability of credit for the channel.”

Ertem said some resellers in the region were maxed up from a credit level and the move to allow distributors to sell across borders would provide fresh credit sources. It should also make it easier for partners to access the products they need locally, rather than turning to European distributors for stocks, which Ertem says has happened in the past, particularly in North Africa. Shahood Khan, sales director at Intel distie Empa, agreed the new policy was a chance to grow sales. “There are some territories where we were requesting franchises, like Algeria and Tunisia, but because of existing distributors there that was pending and Intel was not willing to open it up. But now that has changed we can approach those markets,” he said.

::

LENOVO OVERHAULS SALES OPERATIONS

L

enovo has restructured its regional sales operations

in a move that corresponds with the appointment of Ali Al Amine as its regional general The shift in strategy comes after a difficult period for the Intel distribution channel. Steve Dallman, boss of Intel’s reseller unit, admits that a lot of distributors saw sales stall last year, leaving them overloaded with inventory: “We took back a tremendous amount of inventory over and above what their regular stock rotation was and the only thing I asked from the distributors was that they would take that cash and put it out on the street.”

manager for the Middle East, Ozerk Ege Ertem believes the move to an open distribution model will benefit Intel’s partners

Egypt and Pakistan (MEEP). Al Amine said of the new internal set-up: “We are actually segmenting MEEP into four geographies. One of them is the UAE and we have a focused business model for that. Adjacent to that are KSA, Egypt and the Rest of Middle East (RoME). From a structural perspective we are going to market within that model, which means we will have a focused business structure for those four geographies.” The revised approach is also being supported by an

LOCAL STOCKING FOR OPTIMUS

Networking equipment distributor looking to steal a march on rivals by holding Avaya kit in Egypt, Qatar and Pakistan

O

ptimus Technology and Telecom is to begin holding Avaya stocks in Egypt, Qatar and Pakistan, making it easier for local resellers to source the product SKUs that they need. The Dubai-based distributor believes the move will allow it to respond to the channel’s buying requirements in a timelier manner and in turn improve service deliveries to customers. Meera Kaul Sawhney, managing director at Optimus, claims that after growing the business during the last two years, the time is right for the company to strengthen its logistics capabilities.

She cites Egypt as a particularly key market for the firm, with strong potential for voice, data and video product sales. “To enhance our support to our partners in Egypt and North Africa and to provide local logistical support, we decided to stock some of our products locally for faster delivery of customers’ requests,” explained Sawhney. “No other distributor offers the channel stocking options locally, which clearly demonstrates our commitment to our customers and partners in the region, who will now be able to receive advice, high-quality technical support and

>>

expansion in headcount.

consulting services closer to home from Optimus’ dedicated team in Egypt. We will also be replicating this model in countries such as KSA and Pakistan soon.” Optimus claims that it has plans to expand further by opening new offices in the region and recruiting channel partners in untapped markets. The distributor presently carries products from brands such as Extreme, Mitel, Molex and Tandberg, but it remains keen to bring additional vendors onboard. “We have a wide network across the region and are looking forward to tying up with more reputed global vendors who want to expand their operations to the MENA region and offering our customers an extensive portfolio of IT and telecom products,” said Sawhney.

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Lenovo currently has around 25 people staffing its MEEP operations, but Al Amine says there are plans to “almost double” that figure this year. Al Amine, who joined Lenovo last May as transactional business director, had been carrying out the general manager’s role on an acting basis since former boss Khaled Kamel quit to pursue other opportunities earlier this year.

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DISTRIBUTION CHANNEL BEING SQUEEZED BY PERILOUS CREDIT SITUATION, WARNS ASBIS Distributor insists credit risk has emerged as one of the biggest threats to the health of its business as the impact of insurers withdrawing customer credit limits becomes clearer

C

omponents and systems distributor Asbis has revealed that its financial performance remains highly susceptible to credit risks as a result of the havoc wreaked on the IT channel by the global economic downturn. The Cyprus-listed outfit published its 2009 annual report last month and made it clear to shareholders that credit risks could have a material adverse effect on its business. “Due to the recent market developments following the credit crisis that affected all countries the Group operates in, credit risk has become one of the most important factors that might affect the Group’s results in the future,” said the company. Asbis added that although it had managed to

insure a large portion of its receivables, credit insurance providers had become more risk averse and were cancelling or withdrawing credit limits to customers. “As a result, the Group is exposed to more credit risk and the ability of the Group to analyse and assess its credit risk is of extremely high importance,” it warned. Asbis has secured credit insurance from Atradius and Euler Hermes, which covers 50% of its revenue in the event that it is unable to recover payments from a customer. It generally provides credit to resellers on terms ranging from 21 to 60 days, although in a few special cases it offers 90-day payment terms. One regional distribution chief believes the ability to provide credit has taken on

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audi-based Bright Star Communications (BSC)

Programme as it looks to strengthen relationships with customers in the kingdom. BSC is an independent channel company created by BTC, Nortel’s long-term partner in the Saudi Arabian market. a whole new meaning for distributors in the past year. “You have got to be competitive in terms of pricing, but more importantly competitive in terms of credit services and offering credit where it is due,” said the source. Asbis saw total company sales decline 22% to US$1.16 billion last year, with the Middle East — now worth 15% of its turnover — ending the year as the only geography to register any top-line growth.

Brian Liu, VP sales for MEA, CIS and Central Asia at AOC, claims the move into Egypt fits with its plans of entering more emerging markets. It first introduced its offering to the region in June last year after striking distribution agreements with Asbis and Compunics. “Since the launch of AOC last year in the Middle East region, we are aggressively investing more resources to support our channel

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Connect Channel Partner

Display vendor appoints local distributor and field personnel as part of ongoing regional channel push

M

NORTEL ACE FORMS INDEPENDENT UNIT

has enrolled on Avaya’s

AOC SCRAMBLES INTO EGYPT onitor vendor AOC has signed a distributor in Egypt and hired a person to run its business in the North African country as it looks to build on the progress it has made since launching in the region last year. AOC, which is part of Taiwanbased display manufacturer TPV Technology, will work with local electronics distributor I&M to establish its brand in Egypt and develop a domestic channel base.

::

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Distributors remain wary of their exposure to credit risks

partners in the region to expand our reach,” he said. “The LCD market is evolving at a faster rate in these regions and we will be leveraging on our business partnership with I&M to drive our sales in this crucial market.” Liu adds that AOC will attempt to crack the Egyptian market with products that are rich in functionality and applications. Consumers will have access to its full line of LCD/LED monitors, Green 36 series monitors and Slim Monitor TVs straight away. AOC claims to be the sixth largest LCD vendor after shipping around 13 million units last year.

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The 150-strong business was formed to manage and service Avaya’s existing client base in KSA following its acquisition of Nortel’s Enterprise Solutions division last year. According to the vendor, previous Nortel Enterprise customers now have access to a “dedicated” Avaya partner in the shape of BSC, which it says already manages a Nortel installed base that spans more than two million lines. Avaya and BSC have devised a combined go-to-market strategy that will allow BSC continuous and direct access to technical support and training from the vendor’s team. Incidentally, BSC’s admission to Avaya’s partner programme comes less than two months after BTC became a ‘strategic business partner’ for AlcatelLucent in Saudi Arabia.


// CHANNEL MIDDLE EAST_MAY 2010

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MOBILE DEVICES DISTRIBUTOR RECEIVES ISO ENDORSEMENT FOR AFTER-SALES SUPPORT

SIT Distribution hopes international certification will help it to further develop brand portfolio and provide comprehensive coverage to HTC customers based in the Gulf and Levant

M

obile devices distributor SIT’s aftersales support credentials have been given a boost by news that its service centres have received ISO 9001:2008 certification. The international accreditation provides a major endorsement of the quality of SIT’s services capabilities, which encompass both the distribution and post-sales support of mobile devices. SIT’s service centres in the UAE, Saudi Arabia and Kuwait currently offer support for HTC-branded smartphones that cover warranty service, repair and software upgrade, as well as provide board- or component-level repair to ensure units are restored to their original condition. “As a distributor for high-end products like HTC

smartphone devices, part of our commitment is to meet and improve our customers’ expectation for the services available to them,” stated Adnan Al-Falah, chairman of SIT Distribution. “Receiving the ISO compliance certification is a testimonial to our commitment to provide quality after-sales service to our partners and their customers. Our improved after-sales service and quick turnaround times helped us earn the ISO certification,” insisted Al-Falah. SIT claims the certification is crucial to its future expansion plans, which include extending its services to other major handset brands. It aims to provide comprehensive coverage through its service facilities across the Gulf and Levant regions.

::

HASOUB UNVEILS STORE CONCEPT

S

audi integrator Hasoub has added a new string

to its bow by opening a retail store targeting the surveillance and physical security market. The launch of the Pro Express outlet in Riyadh is aimed at security professionals that want easy access to the latest range of electronic security equipment. Sami Said, general manager Anthony Yu-Huang Ho, regional service manager for SIT Distribution, says the accreditation will also enable the distributor to measure the quality of its management and services. “It keeps track of where our company stands and how we can improve,” he explained. “Through this certification, we aim to continue to maintain quality processes and policy. Our objective is to improve the customer’s satisfaction with our services,” he added.

SIT intends to extend its aftersales services to new brands

at Hasoub, said the launch of the store reflected a “growing interest” in security solutions throughout the region. Pro Express will stock more than 150 high-volume physical security-related technologies, including surveillance systems and access control systems. In addition to supplying products, the company will provide on-location technical support from experts with extensive knowledge of security solutions and applications. Hasoub has opened the store

RIVERBED TARGETS CHANNEL Latest distribution appointment signals attempt by vendor to enlarge reseller base across the Gulf region

W

AN optimisation software vendor Riverbed has widened its regional distribution network even further by appointing Aptec as an authorised partner in “selected” Middle East markets. The tie-up is part of a concerted effort by Riverbed to reach out to more resellers in the GCC. Last year the vendor hired emerging technologies specialist FVC as a Middle East distribution partner, deviating from a model that

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had previously seen most of its business delivered through Naizak. Aptec’s role will be to manage the supply of Riverbed products and train and educate resellers on its WAN optimisation solutions through roadshows and seminars. Aptec claims Riverbed’s offering frees businesses from common IT constraints by increasing application performance and providing enterprise-wide network visibility without the

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need to increase bandwidth. “As applications and technologies become more bandwidth-intensive, IT decision-makers are seeking ways to improve application performance over the WAN rather than investing in additional bandwidth capacity,” said Bahaa Salah, managing director at Dubaibased Aptec Distribution. “Riverbed can make a big difference for organisations and, after looking at the potential, we have decided to distribute Riverbed in the region. We will ensure that we have the right mix of trained partners to address the market demand,” he added.

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in conjunction with UTC Fire and Security, which counts the integrator as its main local partner in the Saudi market. The firm, which also has offices in Egypt, Jordan and the US, is one of the largest integrators in KSA, focusing on enterprise and networking sales.


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NEWS ANALYSIS (14) // Extended coverage of the top stories

CHANNEL CHANGES FORCE INTEL’S HAND Had it not been able to cut a deal with The Atlantis hotel in Dubai, Intel’s Solution Summit (ISS) might not have gone ahead this year. In the end, EMEA partners were glad it did. Andrew Seymour was there to hear the vendor’s plans.

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To those who assume that the likes of Dell and HP keep Intel’s business ticking over from one quarter to the next, it might come as a surprise that the channel is actually still pretty important to the CPU vendor. In fact, if you listen to the company’s senior management, the channel is collectively Intel’s biggest customer, or to put it another way: the revenues that are generated from channel sales exceed those that come from its largest multinational vendor. While Intel’s partner base caught the impact of last year’s economic downturn full in the face, the vendor can still count on a hearty throng of assemblers and integrators to push its products out into the market. “There has been some consolidation, but when we look

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at our total membership it has remained incredibly flat in the multi-hundred thousand or so,” reflected Steve Dallman, VP and general manager of Intel’s worldwide reseller organisation. There are around 225,000 Intel partners globally to be more accurate, with 50,000 of them based in EMEA. Of that EMEA figure, 500 hold ‘Premier’ status on its partner programme. What the numbers don’t indicate, however, is the pace at which the dynamics of Intel’s channel community are changing. It wasn’t long ago that the typical profile of an Intel partner was a local PC builder that used its CPUs during assembly. Not anymore though. Partners are now responsible for developing anything and everything that features a chip, be it an ultra-

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light PC or a sophisticated electronic medical device. On top of that, the amount of ‘pure integration’ that is carried out locally has fallen due to assemblers sourcing full or partially built systems from ODMs in the Far East. Sell-through rate Such seismic shifts in the landscape provided the basis for several major channel announcements at ISS. For starters, Intel now admits the time is right to recognise channel partners for the “technology sellthrough” they do, regardless of where the integration takes place. “Most of you are moving to solutions and in some cases it maybe a system that is manufactured by somebody else, but if you are a technology partner selling it to the consumer or the enterprise we want to make sure we start recognising you and your sales people for selling through any Intel technology,” said Intel’s director of sales and distribution for its reseller channel operations in EMEA, Maurits Tichelman, to the 400 or so partners in attendance. Intrinsic to that is the launch of the Channel Authorised Manufacturing Programme. It has been running in pilot phase for the past year, but has now been

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Intel executives, including Maurits Tichelman (second left) and Steve Dallman (second right), take questions from the floor during ISS.

formally rolled out as Intel seeks to facilitate stronger relationships between partners and ODMs. Dallman outlines why the programme is so important to the future of both local integrators and its own channel operations: “When mobile started up, the channel didn’t really jump onto the bandwagon right away, but interestingly when netbooks came out — which was more of a difficult thing to integrate because the CPU had to be soldered down into the boards at the manufacturing point — they have really done pretty well,” he remarked. “So we said we need to go get with the ODMs and really work together and start looking at them differently. The difference is we used to look at them as a customer because they bought components and assembled them and now we are looking at them to a certain degree as a channel. They buy components, they assemble, but then they ship them somewhere. And the people they ship them to are the ones my sales guys are calling up,” said Dallman. A key advantage of the initiative is that it will allow Intel to act as a “matchmaker” for partners


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and ODMs, smoothing out a relationship that has often been sticky for both parties in the past. “We are actually working together to figure out what the demand is and what Intel needs to do from a pricing standpoint to keep them competitive,” said Dallman. “Perhaps somebody might have trouble getting delivery or there is a quality issue — we now have people in Taiwan that we can call who will run down those issues. I think we have got a pretty good result in that the volume going through those guys is growing pretty rapidly, much faster than the market,” he added. Barebone orders For Saudi Arabia-based PC builder, Fourth Dimension, the creation of the Channel Authorised Manufacturing Programme is welcome news. The small form factor specialist builds between 300 and 350 machines per month, and says it will now be recognised for the Intel CPUs that it effectively purchases when it places barebone orders with ODMs. “This will help us because the ODM will be able to report the purchasing orders to Intel,

which will show Intel that we are working and that we need their support,” explained Abdulrahman Al-Kayali, executive manager at the hardware manufacturer, which offers solutions based on a variety of Intel processors, including Core i3 and Core i5. To further reinforce the point that Intel is now willing to recognise the role that partners play in influencing the sale of systems that feature its CPUs — regardless of whether they have actually integrated them or not — it has introduced the Intel Technology Provider (ITP) certification. It is designed to ensure that sales people who work for its channel partners are recognised for their expertise and understanding of its products. Small and nimble The use of CPUs in all manner of systems and devices these days is leading Intel to urge partners to develop incremental revenue streams by working with new industries and application providers. One organisation that has sat up and taken notice is UAE outfit Sky Electronics. It continues to build a range of systems including Atom-based

>>

mobile devices, gaming PCs and workstations. Managing director, Manoj Thacker, says the company has even expanded into the digital signage and kiosk markets. He believes that as long as Intel gives partners early access to new products, the channel will prevail. “As a channel we will always have new things from Intel to play around with. It depends on how big the window is — do we have six months, one year or two years before the MNCs can take over? As a small company, the more new things we have, the more attention we can grab from our partners and our customers.” That sentiment is shared by Pascal Karam, general manager at Lebanese hardware assembler CTServ. It claims to control 70% of the local server market, but says it is imperative that Intel continues to furnish the channel with the latest technology. “With the new capabilities that Intel has provided we are able to build a real solid storage solution,” said Karam. “Storage solutions had always been a total monopoly for the MNCs, but now we are able to provide, sell and support successful storage solutions through the channel.” The last word goes to Intel’s sales manager for the Middle East, Sven Beckmann, who insists the channel must continue seeking the opportunity to lead in the market. “They have the local touch, they understand the needs

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Sky’s Manoj Thacker (top) and CTServ’s Pascal Karam believe local hardware developers will grow if they have early access to the latest CPU technology.

of the customers on the ground and they can do the service and support,” he explained. “The larger customers have obviously got large inventory build-ups and products to move whereas our channel is nimble and small and able to react to niches.”

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EDITOR’S NOTES (16) // by Andrew Seymour

HOW IMPORTANT IS MARKET SHARE? Just how important is market share to IT providers in the Middle East these days? Dare I say it, but the answer to such a question is no longer as obvious as it once might have been.

Seagate hopes the decision to slash distribution numbers will improve profitability for its remaining wholesale partners in the region.

Vendors that don’t recognise the changing capacity of the market risk being saddled with an over-stocked channel, which corrodes the value of the franchise for distributors.

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When the regional channel business was expanding at a rate of high double-digit figures from one quarter to the next, market share was the metric that most firms wanted to talk about more than any other. And nowhere was that better illustrated than in the vendor community. Market share has always been more of an obsession for vendors than it has their channel partners, perhaps because it is a conclusive measurement of product sales in a given category, and therefore far easier to quantify and a lot more readily accessible. At distribution level it gets a little bit harder to calculate — sure, you can work out a distributor’s share of a certain brand or even the approximate volume of business it does in a particular sector – but it is not as clear-cut as the percentage of PCs sold into a specific country during a specific quarter, for example. And when you get down to the reseller tier it becomes more complicated still, mainly because of the sheer number of variables at play. Some of this explains why there has always been a noticeable discord between vendors and channel partners

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when it comes to their acclaim of market share data. As I’m sure numerous disties would testify, the emphasis given to it by vendors is routinely the cause of some of the more unscrupulous behaviour — channel stuffing especially — that is common sight at quarter-end when vendors are desperate to meet their numbers and ultimately enhance their positions. The channel has come to accept these practices because they are often woven into the fabric of a vendor’s culture. Whether it’s sales people’s incentives being tied to such metrics or merely the level of attention afforded to them by corporate HQ, the end result is that it encourages a system where the focus is never any longer than the next threemonth period. In contrast, a distributor or reseller is far more likely to want to talk about a six-month or full-year plan than getting too fixated with quarterly performance. But while these dynamics have been allowed to exist, there is no escaping the fact that the channel business has changed enormously in a short space of time. It now remains to be seen whether vendors can still drive a business model

which is geared to making significant market share gains without compromising the needs of channel partners that are far more risk-averse these days and a lot less willing to be messed around. Many of the lessons that the channel has learned from the financial crisis — from adopting stricter credit policies to turning down unprofitable business — fly in the face of the very things that vendors have relied upon for market share gains. I have no doubt that market share remains an important and valuable indictor of performance, but the principals that continue to regard it as their number one driver would do well to ensure that it doesn’t alienate them from their partners. I recently posed the question asked at the beginning of this piece to an executive at one large vendor and his response at least suggested the market is starting to think in the right way. “Market share is the result of how well you are doing in the market place, but anybody can gain share by losing money,” he said. “Profitability is how smart you are at driving your business. If you can gain share while keeping profitability then you are doing a good job.”


As Oracle and Sun devise their go-to-market strategies as a joint company, the channel remains awash with speculation about how much is set to change locally. One outfit with more reason to be interested than most is Tech Access, Sun’s pre-eminent distributor in the region. In an exclusive interview with chairman Sardar Ghalib, Channel Middle East found out why the firm is heralding a new dawn in value added distribution.

SUNNY OUTLOOK

hen Oracle supremo Larry Ellison revealed earlier this year that a big chunk of Sun Microsystems’ largest accounts would be managed directly post-acquisition, the trepidation among channel partners could be felt all the way from here to the software giant’s Redwood City headquarters. But if the man who founded and continues to head one of the most prominent Sun allies in the Middle East is troubled by such a prospect then he certainly doesn’t show it. “I have heard Larry Ellison and his staff speak about it,” remarks Sardar Ghalib, chairman of value added distributor Tech Access. “Basically what they have said is that they would want to deal with the top 4,000 accounts directly — that was the case anyway — and the rest will be left to the partners.” As the only enterprise-level Sun Channel Development Partner operating in the region today, any attempt by Oracle to move more of Sun’s business direct potentially threatens to harm its own interests by leaving less on the table for the dozens of resellers that purchase Sun products and related services from it each month. Ghalib understands the fears that exist in the channel about possible direct-indirect conflict, but he is adamant it will all work out just fine. “I think as yet at this level nobody really knows what is going to happen, but I am sure sanity will prevail. Sun-Oracle won’t want to disrupt or destroy business; they will want to do better business. After all, that is the idea,” he reasons. That said, between now and June 1st — when the new Sun contracts come into force — Tech Access, like other partners in the Sun-Oracle ecosystem, will be feverishly evaluating how its role will pan out once the two entities go to market as a combined operation. Ghalib is resolute that the merger of two of the IT industry’s genuine heavyweights will work in its favour, mainly because the truss

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(19) BY ANDREW SEYMOUR

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endorses the solutions-led philosophy that Tech Access first claims to have subscribed to more than five years ago. Indeed, while its regional association with Sun is arguably what it remains best known for, the distributor also has long-standing ties with Hitachi Data Systems, NetApp and Symantec. Ghalib also says it is approached by “three or four reasonably large vendors” every month, but has so far refrained from exploring any further alliances until the Sun-Oracle situation is clearer. One thing it will not do, however, is reduce its focus on Sun. Although the company has previously expressed plans to make the non-Sun brands a larger part of its sales, Ghalib stresses that growing the Sun portion of the business is central to its ambition of becoming a US$350m-plus distributor within the next three years. “Don’t forget, the majority of our business should remain SunOracle because contractually we are bound to that, so my way of thinking — and maybe I am a bit too loyal — is that if we grow our Sun-Oracle business to, say US$200m, only then will we be able to achieve US$350m in total. That is the way I look at it. If we put the right amount of time, money and effort into it we can achieve that.” For now though, talk of lofty revenue growth remains just that. Market conditions have been extremely difficult for enterprise-focused suppliers during the past year, with many potential orders delayed or even cancelled — a situation Ghalib believes was made worse by corporations over-reacting to the economic crisis. Yet while the company’s revenues remained flat in 2009, the last 12 months or so have turned out to be some of the most defining in its history. The main reason for that, explains Ghalib, is that vendors’ expectations of it have grown enormously, particularly when it comes to the subject of providing services on their behalf. “Even if we wanted to tighten our belts, we couldn’t,” says Ghalib. “We actually had to hire more people because we are talking about value add and the value add that we give to Sun. So when vendors were throwing more at us to keep up to that level of value add, we had to hire more people. And then they wanted us to do more over and beyond what we were doing.” Evidence of that comes in the shape of both a dedicated services division — launched last year — and expanded pre-sales support. Additional investments in 24-hour call centre support and product architects to reinforce its technical capabilities have also helped swell the company’s headcount to almost 160 people across the UAE, Saudi Arabia, North Africa and Pakistan.

Sun-Oracle won’t want to disrupt or destroy business; they will want to do better business. After all, that is the idea Ghalib admits that if the company hadn’t incurred initial losses from the investments it made to expand its services portfolio, it would have posted a healthy profit last year. But as an advocate of looking at the bigger picture, he insists there was simply no other option than to support its vendors and the channel irrespective of the cost. “It had to be done and we said [to the vendors], ‘okay guys, we will go ahead and do this.’ Hopefully they will remember what we are doing and in the long run I think intentions count more than the result. I know right now we’ll hurt for a while, but long term I think it will pay.” There are plenty of Sun — and Oracle — resellers out there that will be hoping that proves to be the case too. „

SUPPLEMENTARY SERVICES Tech Access now provides a range of services for resellers unable to invest in technical or support skills due to financial or expertise constraints. Far from blurring the lines between resell and distribution, chairman Sardar Ghalib insists the model is all about creating a viable channel, particularly in markets where the business is not yet sufficient for resellers to develop all of the required skills in-house.

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“I would honestly be the happiest person if every one of our resellers was able to take care of themselves fully because that not only brings in more business, it takes a lot of headache away from us and our principals,” he says. “Our aim is to develop resellers so that they are able to stand on their own two feet and whatever element they cannot do themselves we will try and serve them.”


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INSIDE INFORMATION (22) // EXPERTS IN THEIR OWN WORDS

CREATING A LEGACY OF ITS OWN When broadline giant Redington Gulf first announced plans to develop a value added distribution arm it was greeted with raised eyebrows by many in the market. But as Redington Value gets set to enter its fifth year of operation, the man at the helm of that division — Ramkumar Balakrishnan — explains the strategy that has helped it create an identity of its own.

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CHANNEL MIDDLE EAST: When people talk about Redington they generally think of volume distribution. How is Redington Value different to the boxshifting side of the business? RAMKUMAR BALAKRISHNAN: It is basically about three aspects and all our endeavours are on those. The first aspect is in terms of how we can shorten the sales cycle — be it for the principal or for the reseller. The second is how we can make technology expertise available locally and the third is how we can help demand generation. As an indirect company we cannot do that on our own, but we can definitely play a role in generating demand, which is why we work closely with the vendors and do a lot of co-branded events. CME: Have you found Redington’s reputation as a volume player to be prohibitive when it comes to convincing prospective vendor partners of your value added skills? RB: During the first two years, yes, because obviously we had to prove ourselves and vendors needed to know that we were going to be serious about it. But if you look at it today I think we have crossed that line quite significantly. Even for Redington, the value division is a very significant contributor to the bottom line, so the focus and attention has been dramatically different in the last two years, both internally and externally. CME: Are there any benefits that the value division can derive from belonging to a much larger group? Or is it completely autonomous? RB: Fundamentally we are a separate business unit so the only common

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things are finance and logistics; everything else is run separately. We even sit in separate offices, which was done for a reason because the kind of people that you have under the value division warrant different compensations and structures. In terms of benefits though, it does give us a ready made channel that knows Redington, as well as infrastructure, logistics and finance capabilities. And most of the vendors initially look at us for the reach — they know that if they start talking to Redington they can get across to 19 end-markets almost instantaneously. That is a huge benefit which we drive out of the volume distribution. CME: Your portfolio already spans technology from vendors such as Avaya, HP ProCurve, Juniper, Molex and SonicWall. Are you looking to pick up more franchises? RB: Yes, we intend to bring a few vendor franchises on board for the infrastructure and security silos of our business. This will be purely on areas where we don’t exist today. By their very nature, security vendors are very specialised so there are quite a few areas in the security portfolio to look at, while infrastructure is a completely virgin area for us so we intend to bring in a few more vendor franchises there. CME: What parameters do you use to measure your success as a VAD? RB: The fundamental characteristics are return on human capital and profitability. Those are two very key measurements for value added distribution as compared to volume distribution, which is driven by return on working capital.

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CME: So having feet on the street is an important element of the value added distribution business then? RB: Yes, because it is about being able to deliver a value proposition on a solution basis. 80% of the business that we are able to do today is some kind of a solution. We don’t have anything in our portfolio which is just off-the-shelf and you are able to just sell. We currently have 56 people in the value added division across the region and those are split in terms of sales, sales support, products, product support, operations, marketing and pre-sales. And for us, the investments in presales have all been in-country. CME: Who do see as your main competitors when you survey the Middle East VAD landscape? RB: I think the most respected players are Westcon Group and Aptec Group. Avnet is also a player but it is only restricted to a certain portion of its business, it doesn’t represent the entire portfolio. Once you start looking at the specialised kind of distribution then you have FVC and Computerlinks, but they are very boutique players and we don’t usually cross paths because we are not dealing with the brands they are. CME: How do you see the dynamics of the VAD landscape changing? RB: I feel that in the next three to five years there will be three large players which will probably have a significant portion of the play, so there is scope for some consolidation to happen. It is something that will definitely happen in due course because of all the consolidation taking place at vendor level.


UNIFIED GOAL With research suggesting that half of all enterprises in the Middle East plan to deploy unified communications (UC) in the next three years, networking and telecoms resellers that havenâ&#x20AC;&#x2122;t already explored the revenue opportunities available in this growing market need to start giving it the attention it deserves before itâ&#x20AC;&#x2122;s too late.

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U

combined UC market in the same countries is expected to reach US$238 million by 2014.” The Middle East channel, then, should be poised to ride the rising tide in demand. Systems integrators are cautiously optimistic that this will materialise. “I believe that enterprise adoption of UC continues to increase,” says Venkat Raghavan, general manager at Al-Futtaim Technologies. “However, implementation rates remain low. In a conservative post-2009 economic scenario, some CIOs will choose to retain valuable existing investments in technology rather than a quick ‘rip and replace’ technology. But I believe the smart CIO will adopt UC as an opportunity to cut costs and increase overall productivity in order to further reinforce the profit focus attitude of his IT department.” Raghavan says financial institutions and geographically-dispersed enterprises are among the typical early adopters, and cites Etisalat, an Alcatel-Lucent My Instant Communicator project for 10,000 users across the UAE, as an example. The solution integrates with Etisalat’s existing enterprise e-mail infrastructure, allowing users to connect with teams and collaborate via voice, e-mail and messaging, and to share documents through appropriate applications. Alcatel-Lucent’s regional approach — strong partnerships with local system integrators — reflects typical vendor strategy in the region.

> Venkat Raghavan, Al-Futtaim Technologies

> Wael Abdulal, Cisco

nified Communications (UC) seems to have been with us for years. In reality, until very recently, it was always a concept waiting for vendors to develop the technology and integration tools necessary to deliver the promise. They have just about done that now and a new generation of applications is penetrating the market, delivering a genuinely unified, collaborative communications environment. As a relatively new high-tech market place, the Middle East is particularly well positioned to exploit the benefits of UC. Multinational enterprises have been effective harbingers of the technology, demonstrating the potential of unified, global applications that truly incorporate voice, video and data in a single, user-friendly platform. “The Middle East UC market is still in its early growth stage, offering plenty of opportunities for vendors,” says Frost & Sullivan analyst Gassan Mutwali. “We are witnessing a growing demand from enterprises to understand the UC value proposition and reap its benefits of increased productivity, collaboration and OPEX savings. The economic recession negatively affected Middle East enterprises’ ICT budgets. However, according to a recent study conducted by Frost & Sullivan, over 50% of enterprises in the UAE, Saudi Arabia and Egypt expect to deploy UC applications in the next three years. The

According to Mutwali at Frost & Sullivan, most UC vendors are focusing on increasing and strengthening their channel partners across the Gulf region. “Partner specialisation programmes are conducted regularly, ensuring that the partners are well-trained to assist customers,” he says. “Middle East UC vendors have realised the impact of the SMB sector and created customised solutions for the segment to realise greater revenues. Further, networking vendors like Cisco have been leveraging their existing customer base on the networking side to up-sell UC applications.” Cisco, like Microsoft, represents the onestop-shop approach to UC of many — though not all — vendors. Others, like Avaya, IBM and Siemens have opted for co-opetition, delivering application sets themselves while looking for integration with best-of-breed point solutions from other vendors. Cisco aims to cover all UC capabilities, and most of its recent brace of 61 UC products are already available in the Middle East, says Wael Abdulal, product sales manager for collaboration. “I can comfortably state that the UC market has taken off in the Middle East — a little late, but we have taken off. In terms of revenue opportunities, Cisco can now address all layers — infrastructure to applications — and application is a major revenue stream. Video is on the top of the list and we are

(25) BY PIERS FORD

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seeing a positive demand from the market for TelePresence and Business Video in general.” Abdulal says many of Cisco’s partners reflect this focus and their investment in training, seminars and webinars has prepared them to add application skills on top of their proven expertise in IP telephony. Ideally, he says, a UC channel partner will have a combination of telecoms, networking, audio/ video and applications skills — a sophisticated portfolio, even in today’s fast-moving market. The unified communications opportunity has also reached the open source space. One company benefitting from that is DVCOM, the regional partner for Digium, which develops the Asterisk open source telephony platform. Sabu Thomas, vendor and channel manager at DVCOM, says regional enterprises are gradually coming round to the open source way of thinking when it comes to deploying call centres and IP telephony platforms. “The

I believe that enterprise adoption of UC continues to increase. However, implementation rates in the Middle East region still remain low interface card is already approved by the TRA here in the UAE, so it is easy for organisations to customise their own PBX solutions or a unified communication platform through Asterisk software,” insists Thomas. As much as the channel understands UC applications, Gassan Mutwali suggests it might not yet have a total grasp on the holistic value proposition of the technology. “The simplest reason for that is that many channels are still product pushers rather than trusted client advisers who understand the unique needs and business processes of each

client,” he says. “Once you view every enterprise as unique, you can advise on how UC applications fit into the picture and overall make the enterprise more productive and efficient. Channels are advised to position point applications that meet current demand and collaborate closely with enterprises to work out the right roadmap for UC adoption, based on future growth and needs.” Mutwali says there is still much to be done in terms of educating enterprises and demonstrating ROI. UC should be pitched as a business process-enabler — and that means every pitch will need to reflect the subtle differences of every potential customer. But ROI is not always easy to illustrate. Allan Scott, head of marketing for unified comms and collaboration at systems integrator BT Global Services, says that the benefits of collaboration — in product design or training, for example — which return a virtual

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Immersive Experience (CIE) and Office productivity software and OCS would enable them to successfully sell and deploy UC.” In the open source domain, DVCOM’s Sabu Thomas insists the growth opportunities are bountiful. “We are developing a lot of verticals and other applications around this [Asterisk] software. We have done a complete fax solution, we are coming up with integrated SMS and we are planning to develop a unified solution with CRM, content management and database integration,” he reveals.

Middle East UC vendors have realised the impact of the SMB sector and created customised solutions to realise greater revenues Gassan Mutwali agrees that telephony resellers are in prime position to grow the potential revenues of telephony applications. But he also suggests that systems integrators have an important opportunity, because they have vital interoperability skills. “Further, resellers with a large presence in key UC-demand verticals such as government, financial services, oil and gas, and with a genuine understanding of the challenges and business processes in these industries, are suited to offering UC,” he adds. “Some vendors, such as Avaya, have realised the impact of the SME sector on the regional

> Allan Scott, BT Global Services

> KS Parag, FVC

organisation to traditional, more intimate ways of communication, are almost tangible. But putting a dollar value on them is much more difficult. He agrees that global financial services enterprises are leading the way by virtue of their distributed office networks. Many of the facilities promised by UC, such as single number reach, and the desktop video technology of Cisco’s TelePresence platform, for example, are a natural fit with the demand for instant location spotting and messaging. “It’s difficult to say precisely who is driving adoption in the Middle East at this stage although I suspect that those countries and emirates with a high concentration of multinationals will lead the way, and that will impact on regional and local enterprises,” he says. Value-added distributor FVC, which favours an integrated Microsoft/Polycom approach to UC, reports early adoption in oil and gas, real estate, hospitality and education. “We see two different types of customers investing,” says managing director KS Parag. “The early adopters who are always ahead of their industry, leveraging new greenfield technology to increase productivity and ROI; and enterprises overhauling their analogue phones and systems, expanding their infrastructure into digital technology. “As a technology that is reliant on hardware and software for success, there are advantages for channel partners that are already in the IP telephony market. Combining this with familiarisation with Microsoft’s Customer

business and appointed partners specifically to cater for this segment of the market.” For their part, resellers look to vendors for more education, particularly when it comes to helping businesses appreciate the ease of integration that is an increasing feature of UC. “To sell UC, you need to understand and demonstrate to the customer the business benefits of integrating the hitherto disparate systems such as telephony, messaging, video and data,” says Raghavan at Al-Futtaim. “The spirit of UC lies in the integration of these complex systems into a single intuitive platform, and therefore to deploy UC you need the combined knowledge of the systems and a strong systems integration skills set.” Eyad Shihabi, CEO at managed services provider Smartworld, which offers hosted UC packages in the Middle East, notes a growing appetite for the single unified client model, adaptable to any size of customer. “The Middle East channel’s understanding of UC is currently dependant on what is being provided by the traditional telephony providers, offered as a UC solution,” he says. “A true UC platform is a comprehensive solution combing collaborative tools under one platform. The Middle East channel will need to enhance the understanding of the various offerings in the market and ensure partnerships with key vendors and providers who [themselves] have a full solution — technology and service — that brings tangible savings and efficiency for their customers.” „

(29) // CHANNEL MIDDLE EAST_MAY 2010 _www.itp.net_


THE NEXT CHAPTER Distribution is by no means an easy business, especially during these tough times. The threat of vendors selling direct looms ever large, credit risks continue to increase and the pressure to develop additional revenue streams is relentless. With that in mind, we asked several distributors featured in our recently-published 2010 Power List to predict the future of IT distribution in the Middle East and reveal how they expect the sector to evolve.

Hesham Tantawi, Asbis Middle East The IT market in the Middle East will continue to grow for the next five years and I foresee distributors playing a major role in this industry because of the logistics complications and differentiation between the 22 countries in the region. Distributors are needed to handle the different processes that exist. I expect to see the major distributors expanding geographically so that they have coverage of all countries and there will be more consolidation in 2010.

Mehdi Amjad, Almasa IT Distribution You will see the channels becoming more focused on their own area of expertise rather than being generic, which is good. And as the market becomes more competitive, the players with a stronger niche will win in their own areas. You will see them evolving and looking more at value added distribution because you have to think about adding more value to your channel base and financial strength. I think the same heat is being felt by the channel base and they are controlling what distribution does. The overall pressure during 2009has filtered all the way down and has actually made the market place healthier.

(31) BY ANDREW SEYMOUR

// CHANNEL // CHANNELMIDDLE _www.itp.net_ MIDDLEEAST_APRIL EAST_MAY 2010 2009_www.itp.net_


Mario Gay, Mindware I think that there could be some big changes in the future caused by the entrance of the components ODMs into the market directly. It is probably a long way down the line, nobody knows, but this could be one of the key changes in the bigger picture. In terms of the local landscape, I don’t think anything will change during the next two or three years. You might see some companies disappearing in the next year or two because of bad management or finances — we have already seen a lot of small companies close down, leaving the big ones to eat the business. Distributors today are definitely looking to make more money and will no longer accept being compromised by vendors as there are not enough players left for that anymore.

Nicholas Argyrides, Logicom Distributors will remain an integral part of the IT channel formula. Vendors require the credit, local expertise and product availability, especially in such testing times as the ones that we are currently going through. In a part of the world like the Middle East, vendors also want companies with experience who can assess risk, assess resellers and develop the market for them. The only sure thing is that this ‘crisis’ has proved to ser ve a big lesson that will generate much leaner, prudent, smarter and profit-driven distributors in future.

NY Prasad, Metra Computer Distribution is here to stay. I definitely don’t see that there is any need for pessimism given the [economic] situation. This region has got millions of people; products and technology have got to get to them and distribution is the best way to get the technology from the producers to the users. I can’t think of a better, more efficient or more cost-effective method by which the technology makers and the technology users can connect. Distribution has to be the vehicle for it. I think the global phenomenon is for consolidation and fundamentally it is only the strong companies that will survive.

Faisal Jamal, Despec MERA There will be more consolidation in the market because vendors are continuing to analyse where there is still re-organisation to be done. Almost all of the vendors have done some restructuring, but what they have done is moved it around. This year, instead of moving it around, they will actually start saying, ‘okay, you guys focus on where you are doing well and maybe take some additional line items.’ They don’t need to have six or seven distributors for one product range because the distributors don’t make enough money and it hurts everybody. I am surprised that no real pan-European player has come in to the market. I don’t know how good the market is going to be in 2010 or 2011, but I think we could see a few people looking at opening up here. I think you are still going to see people go crazy on in-country and invest in in-country. We are doing in-country in the Middle East and have got where we wanted to be so we are going to start focusing a lot on Africa right now because I think that market still has opportunity. People want stock there — whatever stock we have put into Nairobi, it has been sold. People want stock on the ground and the ability to touch and feel the product without having to wait seven or 10 days. That makes a difference, so in-country will work.

Tamer Ismail, BDL Gulf The market will continue to witness higher growth rates due to the fact that many markets were able to overcome the global financial crisis and there is an increasing number of people relying on technical products. We are focusing more on the retail segment as we feel that the market trends are more [geared] towards the hypermarkets and superstores. That was the trend in the US and European market, and I think it has started to become popular in the Middle East, which will lead to a change in the way we deal with the IT market. Finally, I believe there will be fewer distributors in the market but they will work on covering a larger number of markets. This is a trend that more vendors seem to be following after initially trying to hire an increasing number of distribution partners. This step affected their business and the potential available market that each one of them had to grow. Many vendors now prefer to hire fewer partners to achieve better growth in the market.

(32) // CHANNEL // CHANNEL MIDDLE EAST_MAY 2010_www.itp.net_ MIDDLE EAST_APRIL 2009 _www.itp.net_

BY ANDREW SEYMOUR


BEHIND THE SHIELD Forget the financial crisis, IT security is an area that customers cannot afford to compromise in any climate â&#x20AC;&#x201C; or so the main security vendors like to tell us. With that in mind, we brought together the regionâ&#x20AC;&#x2122;s top antivirus software suppliers and asked them how they see the market shaping up, and more importantly what they have to offer the channel.

(34) // CHANNEL MIDDLE EAST_MAY 2010 _www.itp.net_


GARETH WILLIAMS: The antivirus market still stands strong after the financial crisis. In fact, with the economic situation cyber criminals have become even more active and, as such, business and consumers have increased their security precautions online. The Middle East region is still investing large sums into the IT industry and that requires continuous development of security products and awareness-building campaigns. SUSHMA KAJARIA: Firstly, attacks are growing in volume and complexity, and are becoming more targeted and focused. An important factor is that antivirus is becoming a smaller part of IT security, so when we talk about security we need to include wider elements such as data leakage protection, data centre security and encryption, for example. While 2009 was a tough year for our partners and customers it has been equally tough for the ‘bad guys’, meaning they have had to try harder. For the channel, this means making smart choices with the right vendor. Even in this financial crisis it can mean growing their business via depth — selling more into existing accounts — and breadth — such as opening up new opportunities in their markets. HAMED DIAB: The antivirus market in the Middle East is moving towards the commodity area and this movement is the same for other markets across the world. Antivirus is a generic need that everyone has due to the increasing threats and risks posed by cybercriminals. However, it has become

increasingly clear that the need for security has gone beyond antivirus software only. The growing threat of cyber-attacks requires more comprehensive and sophisticated security systems and this is the direction the security market is moving towards. The security sector is weathering the storm better than many other technology sectors because customers need to protect themselves as much in rough times as they do when the economy is strong. RAMZI ITANI: The IT security market has grown in line with the increase of malicious software in the Middle East region. Over the past few years, the threat landscape distribution model in the Middle East has shifted from a relatively small number of threats affecting millions of users towards one where millions of new threats are released every month and which target a few users in specific segments, in particular banks. For several years we have stood by the belief that with the increasing complexity of the threat landscape, antivirus on its own will not protect company infrastructure. Protection needs to take place at many levels, including firewall, intrusion detection, antivirus, antispam and network access control. Hence our products constitute a full protection suite. : What sort of training and expertise does a partner need to sell your

> Hamed Diab, McAfee

: What is your assessment of the antivirus software market in the Middle East today given the challenges created by the financial crisis?

> Aman Manzoor, Kaspersky

Our line-up of antivirus software experts includes Khalid Muasher, regional channel manager at BitDefender; Ramzi Itani, channel and alliance manager MENA at Symantec; Gareth Williams, VP sales for emerging markets at AVG; Sushma Kajaria, channel development manager MMEA at Trend Micro; Aman Manzoor, Middle East channel manager at Kaspersky; Shobhit Mathur, director of sales and partner, eWall Technologies and Hamed Diab, regional director at McAfee.

products successfully and profitably? SUSHMA KAJARIA: We are one of the few vendors that have invested in three differing solutions that specifically cater for the three sectors: consumer, SMB and enterprise. For consumer, no real experience is necessary as these are consumer-ready solutions. For SMB, the market requires a security solution that is simple to sell, deploy and manage. Our products are specifically designed to address this market. As such, partner training needs reflect the reduced complexity of the products. For the larger customers that need more complexity to manage security, the training and certification reflects the need to make sure the customers have the right solution, which is optimised for them. AMAN MANZOOR: The training required for our partners to effectively sell and support our products is available online, free of cost to all our partners and resellers. After completing the training, the partner can choose to complete the certification examination, which is also available free of cost. RAMZI ITAINI: Symantec provides its channel with market-leading products, the best quality service and support, and programmes to help drive profitability. Training programmes include complete curriculums for

(35) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_MAY 2010 _www.itp.net_


: What sort of margin opportunities can resellers in the Middle East expect to generate from marketing your products in the region? KHALID MUASHER: It depends on the level of involvement of each reseller. If the resellers invest in their team by following our e-learning programmes then they can expect a lot from a channel-friendly company like BitDefender. This means qualified leads, on-site technical support, remote installations for the most important clients, pre- and post-sales support for their team and e-learning programmes for both employees and clients. As the BitDefender strategy is to increase channel distribution in Middle East, we are offering tempting margins that would attract even the most wary or perky reseller. SHOBHIT MATHUR: Quick Heal is Indiaâ&#x20AC;&#x2122;s leading antivirus[established in the MEA & CIS under eWall Technologies] and is unique through our patented technology for the worldâ&#x20AC;&#x2122;s first antivirus which can scan your mobile through your PC, and functionality to block access from unauthorised pen drives. That makes us very attractive for partners targeting the B2B and B2C segments. HAMED DIAB: Security has now surpassed traditional antivirus software into a full range of products including data protection, network security, identity theft and many more. What this means in terms of margin opportunities is that as products become more sophisticated,

there is a growing need for additional efforts, such as services, which can provide further revenue streams for partners. AMAN MANZOOR: The goal of every commercial entity is to ensure profitability in its operations while creating value for customers. The question here is what share of the total value created the reseller can retain. The answer would be more than a fair share. In order to demonstrate this further, we have instances where our resellers have provided creative support offerings to customers based on our VIP support solution and we encourage our partners to come up with creative ideas leveraging the services we provide. In addition to leveraging our offerings to create value, our partners currently have access to industry standard margins and funds as a part of our partner programme. : What do you want to improve about your channel this year? RAMZI ITANI: Symantec will work to identify the advantage of each partner in a market or a specific segment, and based on their specialisation Symantec will plan around that to leverage those resources. That creates a competitive advantage for the partner, meaning that Symantec can create more value for the

> Khalid Muasher, BitDefender

GARETH WILLIAMS: AVG partners and authorised distributors receive training in all the AVG product lines and services available to customers they serve. They are authorised to manage multi-tier relationships in their region in order to be able to provide local dealer, customer and technical support.

> Gareth Williams, AVG

sales, pre-sales and technical audiences within the partner community. Symantecâ&#x20AC;&#x2122;s Partner Opportunity Registration programme provides rebates to eligible Platinum and Gold partners who actively identify, develop and close sales opportunities in security, storage and systems management solutions. Partners need to be certified on the products for the Opportunity Registration Programme, so there are large numbers of partners looking to get educated.

customer. Symantec is also continuing to invest internally in its channel team by hiring additional channel professionals to work closer with business partners. We are decreasing the number of managed partners in order to focus on those who will bring value to the business by minimising competition between partners and increasing profitability. Moving into specialisation, partners which invest with Symantec will see more benefits in terms of rebates and price protection on the products that are covered under their specialisation. HAMED DIAB: Our main objective for 2010 is to educate our channel partners on the opportunities that result from our diversified product portfolio and on the benefits associated with each offering. We provide a comprehensive security offering with the required educational and technical support, and this is what our clients need in order to become security advisors. This year we launched a new channel strategy to further reward our resellers for their efforts to promote our solutions and support our expanding product range. SUSHMA KAJARIA: We have had strong demand from prospects in the SMB space and, as such, we need to grow our channel base to satisfy that demand. For the enterprise market

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we have to both selectively recruit new partners and develop existing ones to sell and support the new security solutions that Trend Micro has brought to market. KHALID MUASHER: We are aware that we need better communication with our channel partners and customers, and thatâ&#x20AC;&#x2122;s why we are working hard to create a localised website for the region. We will continue to enhance it until it becomes an interactive website with dedicated news, forums and blogs. : What are your main channel priorities this year and how has your go-to-market strategy evolved in response to changes in the industry? SHOBHIT MATHUR: Our investment is mainly in establishing our brand, and in strengthening our channels through training programs and incentive schemes. We are establishing our distribution network, and we aim to be loyal to our channel partners, and give them the right tools and support. HAMED DIAB: This year our focus is on expansion and expertise. We are recruiting more diversified partners who can help us to achieve the objectives of promoting our solutions, enabling our channel, demonstrating the technical expertise to support the products

(38) // CHANNEL MIDDLE EAST_MAY 2010 _www.itp.net_

> Sushma Kajaria, Trend Micro

> Ramzi Itani, Symantec

resources from sales, technical, post-sales and channel to create more of an in-country focused approach, managing fewer partners who will bring more value, and focusing on driving specialisation. We will also protect partner investment, drive partner profitability and increase the number of non-managed [partners] by driving more programmes through distribution.

and expanding our channel programmes. KHALID MUASHER: Our focus is on the SMB market and that is why we are in the process of recruiting more and more resellers. As we are ready to launch a top-notch version [of our products] for the SMB and corporate segments, we are looking for at least a twofold increase in our SMB reseller base. Local presence is also a key point in our strategy as we want to get closer to the market. AMAN MANZOOR: The channel priorities that we would like partners to benefit from this year are linked to increasing the overall resources available to them. These resources cover diverse fields starting from Kaspersky Lab sales tools and enablement to granular assistance in marketing and market development activities. We also want to increase access to technical resources and technical enablement. RAMZI ITANI: With respect to its security business, Symantec is continuing to monitor the public sector and will begin to enter the market more aggressively by driving specialist focus in the fields of data loss prevention, endpoint management and small business. The main channel priorities for MENA include putting focus on countries by aligning

: The security and antivirus software market remains very crowded. What can you tell us about your pricing strategy for the channel? AMAN MANZOOR: Our differentiation from our colleagues in the industry is not based on the strategy of pricing, but upon a strategy that pays equal attention to long-term investment and developing the infrastructure of our channel resources and skill sets. GARETH WILLIAMS: Our pricing strategy is about being competitive, clear and easy to understand for both resellers and end-users. This is oriented around being simple, dynamic and flexible with our pricing structures and channels while maintaining consistency with our propositions. SUSHMA KAJARIA: The antivirus market is crowded and it must be very difficult for the smaller antivirus companies at this time. Fortunately, with the investments we have made, our partners are in a situation where they can take a comprehensive portfolio of Trend Micro security solutions to customers. KHALID MUASHER: In times of crisis, people are not usually interested in having more for the same price, but rather having the standard offering for a lower price. This might be true in the short-term, but in the long-term it will hurt any company that engages in such actions. As a vendor, if you cut your prices, you must find a way to reduce your costs and usually the first step is a decline in the service level, such as technical or support. Since BitDefender is very careful with these segments, we have tried to impose the correct pricing scheme for the region. The message we want to transmit is that our products are always priced to be perceived as the best value in the market for customers that want to have the best technology and post-sales services. Â&#x201E;


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EXPERT’S VIEW (41) // TOP TIPS FROM MASTERS OF THE CHANNEL

FULL STEAM AHEAD What does the future have in store for the hardcopy peripherals (HCP) markets of Central and Eastern Europe, Middle East and Africa (CEMA)? One person who has a better idea than most is Mitri Roufka, CEMA research director for imaging and hardcopy devices at IDC. Mitri Roufka says customers are shifting their buying habits as they learn about the full costs associated with document infrastructure

It’s no surprise that slowing economies and shrinking demand in 2009 pushed companies to cut costs and scale back operations. And IT was no exception to this trend. Costcontrol measures introduced last year will be lifted only slowly and cautiously in 2010. However, IDC does see signs of a return to more normal spending, including investment in non-critical IT projects postponed last year.

Recovery will take time IDC expects the CEMA HCP market to return to growth in 2010, with businesses and government leading the way. However, given the size of the decline in 2009, a region-wide recovery is not expected before 2011-2012 as many key markets — including Russia, Turkey, South Africa and Ukraine — have been severely impacted.

Shift in usage patterns In 2009, economic pressures changed end-user behaviour, causing them to consider total cost of ownership (TCO) as well as purchase price when acquiring devices or supplies. This trend is

>>

expected to intensify in 2010 as users learn more about the full costs associated with document infrastructure, and how to control such costs. The economic crisis has increased internet purchases of HCP devices and ink/toner supplies, especially by SOHO and small business users. IDC expects online sales to continue gaining share in 2010 at the expense of physical stores. Large and very large businesses, as well as government organisations, will speed their adoption of managed print services (MPS) and document outsourcing services as they look to improve their bottom lines and manage costs more flexibly. Given the diversity of the CEMA region, however, levels of readiness to adopt outsourcing concepts vary considerably.

laser segment and will propel overall laser technology growth. At the same time, operating cost considerations will drive users to adopt tools that control colour printing. Sales of inkjet devices will continue to shift towards MFPs. IDC predicts that almost 80% of the inkjet devices sold in Central and Eastern Europe, Middle East and Africa in 2010 will be multifunctional devices. The continuous introduction of enhanced, competitively-priced models will continue to drive MFP sales, particularly to the small office home office segment.

Face-off between suppliers

Sales of laser devices will grow faster than those of inkjet devices in 2010 in the CEMA region. Laser HCP purchases will often be driven by the need to consolidate functionalities into one device, namely an MFP. Colour laser technology — especially MFPs — will constitute the fastest-growing

The financial crisis and increased vendor prices for original consumables pushed demand towards third-party suppliers in 2009. HCP vendors are expected to increase their efforts to regain some of the market share lost to producers of compatible consumables, while compatible producers try to capitalise on the momentum gained during the crisis to further expand their business. End-users could benefit, as the market expects new alternatives and price cuts. „

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// CHANNEL MIDDLE EAST_MAY 2010

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FACT FILE (43) // THE MARKET BY NUMBERS

SWITCHING ON Bright outlook for infrastructure sales

.... .. ...

The global enterprise switch market will be looking to bounce back this year after losing US$3.8 billion of its value during a turbulent 2009 in which many businesses froze or slashed their IT investments. There is growing evidence that the 15% decline will prove to be an isolated case, with data from UK-based market research firm Canalys revealing momentum is starting to build after the year “ended more positively” due to sequential unit growth. Data for the first quarter isn’t yet out, but fourth quarter results confirm that confidence began to slowly return to the market as units shipments increased 15% over the previous quarter and came in just 3.5% short of the same figure the year before. Canalys insists that the recession has created opportunities for enterprise switch vendors to displace competitors’ installed bases, with many businesses reassessing the value offered by their existing networking equipment suppliers. Long-term market champion Cisco saw its lead eroded last year as some of its closest competitors grabbed a higher portion of the business. “HP has made the most gains in 2009, with its share increasing from 5.8% in Q4 2008 to 8% in Q4 2009,” said Matthew Ball, senior analyst at Canalys. “The proposed acquisition by HP of the number three vendor 3Com will create a clear challenger to Cisco. 3Com gives HP a competitive core switching and router portfolio for large enterprises and data centres, as well as a low-cost product line for smaller businesses. Add this to the recent announcement of the ending of its resell agreement with Cisco, and HP should have many opportunities to make further gains in 2010.” Juniper Networks also made a big impact in the market by more than doubling its switch shipments as it extended its position in routers and security, according to Canalys. Brocade’s Ethernet networking business struggled on a sequential basis, but grew year-on-year, while Extreme Networks enjoyed a better quarter in Q4 following disruptions to its supply chain that impacted shipments in the previous quarter. “Merger and acquisition activity, as well as disruption to vendors’ go-to-market strategies, will have a major impact in 2010, with HP’s 3Com purchase as well as Avaya taking on Nortel’s networking business,” added Ball. Canalys believes the enterprise switch market will see annual growth in 2010, but said it is “extremely unlikely” to return to pre-recession levels just yet.

CISCO STILL THE KING OF SWITCHES Networking giant loses share but retains 68% of global market

_WORLDWIDE ENTERPRISE SWITCH MARKET SHARE BY VENDOR SHIPMENTS DURING Q4 2009

Cisco 68% HP 8% 3Com 5% Brocade 2% p 2% Juniper Others 15%

SOURCE: Canalys

POCKETS OF GROWTH STILL FOUND HP and Juniper build on installed bases during solid Q4

_WORLDWIDE ENTERPRISE SWITCH SHIPMENT GROWTH BY VENDOR DURING Q4 2009

Cisco -12% HP +30% 3Com +14% Brocade +16% Juniper +157%

Others -5%

SOURCE: Canalys

>>

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CONSUMER ELECTRONICS (45) // RETAIL CHANNEL NEWS

RETAIL EXPANSION CRUCIAL TO EROS REVENUE TARGET Despite current market challenges, Hitachi distributor claims it is poised to surpass revenue landmark if showroom plans prevail

R

etail supplier Eros Group believes its target of generating AED2 billion (US$544m) in sales this year is achievable if forthcoming plans to open a series of new outlets come to fruition. Eros serves as the regional distributor for electronics giant Hitachi. It also sells a host of other brands through its retail chains, including Samsung, Hitachi, Taurus and Lennox. Deepak Babani, CEO at Eros Group, says the company has been eyeing the AED2 billion milestone for some time, adding that achieving the target depends on its ability to get closer to customers by expanding the size of its retail operations.

“We intend to open three to five outlets in the UAE and have already opened a new warehouse in Abu Dhabi to address the growing consumer demands in the Emirate,” said Babani. “Regionally, we are setting up branch offices in Qatar, Bahrain and Oman.” If Eros is able to meet its sales objectives then it would represent a 25% growth on the AED1.6 billion (US$435m) turnover that it claims to have recorded last year. The company can certainly expect its main vendor partners to push it hard as it sets about accomplishing its quest. Last month, Hitachi’s management in the region revealed that their

aggressive expansion plans for the Gulf include achieving growth of 50% during the next three years. Eros Group now oversees 28 retail outlets in the UAE after launching its latest showroom in the recentlyopened Mirdiff City Centre. News of Eros’ bold plans comes at the same time as research on the UAE consumer electronics sector puts the addressable market for computing devices, mobiles and AV products at US$2.8 billion this year. The research by UK-based Companies and Markets.com predicts that the UAE consumer electronics market will be worth US$3.7 billion within the next four years due to the uptake of new devices

Deepak Babani says Eros intends to open at least three outlets this year

such as LED and 3G TV sets, 3G mobile handsets, feature-rich notebooks and Blu-ray format DVD players. Saudi Arabia’s consumer electronics market is projected to be worth around US$4 billion this year, while in Egypt sales are expected to reach close to US$3.2 billion. The Egyptian market is tipped to grow by US$2 billion over the next four years as digital lifestyle products become more affordable and popular.

posting a 20% rise in sales to SAR795m (US$212m) for the

JARIR QUICK OUT OF THE BLOCKS

three months to the end of March. Reports put the growth

KSA retailer in good Q1 form

S

audi-based IT and office supplies retailer Jarir Bookstore has enjoyed a solid start to the year after

down to higher smart phone sales and the launch of four new stores, taking its total to 28. Jarir only managed to grow sales by 1.5% in 2009 so its first quarter result already suggests that it will improve on last year’s performance. While the spike in sales indicates a rise in consumer confidence in the Saudi market, Jarir will be equally satisfied with its bottom-line showing. Net profit increased 10% year-on-year to SAR118m (US$31m). Jarir opened its latest store in Riyadh’s Panorama Mall last month following a reported investment of SAR10m (US$2.6m).

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BUSINESS INSIGHT (47) // INDUSTRY-WIDE NEWS

::

ANALYSTS PREDICT 20% SALES SPIKE AS WORLDWIDE PC MARKET REGAINS HEALTH Sustained demand for mobile devices in both mature and emerging economies cited as the driving force behind a market that should grow to 366 million units this year esearch house Gartner has raised its forecast for 2010 worldwide PC shipment growth to 20% on the back of signs that the market is finally beginning to stabilise after a sustained period of volatility. The move will be warmly recieved by the PC assembly community, which has been desperate for signs of a market recovery. Gartner said back in December that the global PC sector would grow 13% this year, but it now expects that number to be considerably higher after revising its valuation of the market to 366 million units. The company also has encouraging news for PC vendors concerned that any growth in volume is likely to be undermined by falling price points and higher consumption of entry-level

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devices. It predicts the value of the worldwide market will increase to 12% this year, up from its initial forecast of just 2%. All regional markets should return to growth and exhibit more normal seasonality in 2010, according to Gartner, which believes accelerating home PC demand and a rise in professional replacements will help the sector to put its recent troubles behind it. “The PC industry will be overwhelmingly driven by mobile PCs, thanks to strong home growth in both emerging and mature markets,” predicted George Shiffler, research director at US-based Gartner. “Mini-notebooks are again forecast to boost mobile PC growth in 2010, but their contribution is expected to decline

green light to resell Infor’s

(EAM) software into midmarket accounts across the Middle East following an extension to the pair’s existing relationship. US-based Advoco has typically been operating as a services partner for Infor on an international basis, but the new noticeably afterwards, as they face growing competition from new ultra-low-voltage (ULV) ultra-portables and nextgeneration tablets. Deskbased PC shipment growth will be minimal and limited to emerging markets,” added Shiffler. Gartner believes that mobile PCs will drive 90% of PC growth over the next three years and account for almost 70% of all shipments by 2012, up from 55% at present.

Networking vendor claims new EMEA partner programme offers improved margin support and more sales benefits

A

A

dvoco has been given the

enterprise asset management

F5 AIMS FOR PARTNER UNITY pplication delivery networking (ADN) vendor F5 Networks is vowing to drive “more open, integrated partnerships” with VARs and distributors through a new channel programme that it has introduced in the EMEA region. F5 claims that the UNITY Programme aims to create openness in the VAR community by establishing clear success criteria to reward partner investment and help resellers

INFOR EXTENDS RESALE RIGHTS

build stronger relationships with clients. F5 insists there are three key pillars to the new programme: improved margin support, revised entry criteria and better support of partners loyal to its brand. Michael Schoenrock, channel sales director EMEA at F5, believes the vendor has built a scheme that identifies, measures and rewards behaviour that leads to a better experience for customers that use its products.

The PC market could expand by as much as 20% in unit terms this year, according to revised forecasts from Gartner

>]

distribution agreement covering Infor’s EAM software. The finalisation of the resale agreement brings the total number of partners that Infor works with in the Middle East to 22, having brought five on board during the last 18 months. Paul Hammond, regional VP and GM at Infor, is confident the expanded partnership with Advoco will pay dividends. “Our strategy is to work alongside partners who understand the value that Infor solutions can bring to their

“F5 is the global and EMEA market share leader in application delivery,” he said. “The UNITY Programme allows both F5 and our partner community to cement this success by making it easier to offer F5 solutions that solve the most pressing issues around the delivery of secure, fast and highly reliable applications,” he said. In terms of the entry criteria, F5 insists the programme will now offer greater clarity, with clear benefits linked to each level of the scheme. It is also promising to provide partners in the EMEA region with increased levels of marketing and channel support.

.. >> .... ...

arrangement includes a regional

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client base and also work with them to help build a pipeline of new prospects across the Middle East,” he said. “Advoco will now enable us to open up even more opportunities in the upper midmarket space because of their experience in this sector.”

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// CHANNEL MIDDLE EAST_MAY 2010

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SOLUTIONS (49) // SUCCESS STORIES FROM THE CHANNEL

AL-ALAMIA OPENS ACCOUNT WITH KUWAIT BANKING ACE Enterprise reseller carries out two-month HP ProCurve networking project to help local bank enhance its IT infrastructure and improve performance

K

uwaiti IT solutions provider Al-Alamia Technology Group has finished an HP ProCurve networking implementation for Burgan Bank, a subsidiary of Kuwait Projects Company (KIPCO). The ProCurve deployment follows investments by the bank to enhance its IT infrastructure and support its expansion plans. As a fast-growing financial institution, Burgan Bank wanted to enhance its network infrastructure to support a higher and increasing number of users. The bank’s objectives included reducing its downtime, network restrictions and server connection capabilities and providing employees

with access to enhanced facilities. Burgan Bank has more than 20 branches across Kuwait and intends to add more in the future. “As we have grown dramatically and continue to expand into the region, we had to re-assess the capabilities of our older systems and network,” explained Ivan Jensen, CIO at Burgan Bank. “After conducting a thorough study and testing different solutions provided by the vendors, we chose to standardise on ProCurve technology from HP.” Jensen insists there were several reasons why HP’s solution stood out from the crowd. “One of the key benefits of partnering with HP was its IEEE standards,

round-the-clock customer support, an open standard platform which offers us the flexibility to work with other technology and the smooth, seamless migration process which ensured that no data or time was lost during the change,” said Jensen. Al-Alamia used an extensive portfolio of HP networking equipment to complete the two-month project, including the Switch 4200 series, 5400 series, 8200 series and high-performance LAN networking products. Alaa Al Shimy, general manager at HP ProCurve Middle East, claims Al-Alamia’s deployment has resulted in clear business gains for Burgan Bank. “Since introducing the

new solutions there is less network maintenance and higher productivity. This means that the bank’s IT team can now attend to other IT-related concerns without worrying about the network connections. The solutions provide a secure and reliable connection for all end-users so it is worryfree as well,” he said. Al-Alamia is one of the largest IT providers in Kuwait and specialises in a number of brands including Dell, Microsoft and Oracle.

Alaa Al Shimy (far left) says ProCurve kit has helped drive Burgan Bank’s productivity

NTS GETS THE NOD FOR UAE PROJECT

A

four-week testing period was all that UAE conglomerate Juma Al Majid Group needed to decide it wanted to

deploy ESET’s NOD32 antivirus software on its network in an implementation overseen by enterprise reseller NTS.

Reseller installs latest security software at Juma Al Majid Group

NTS — which has operations in the UAE and Qatar — worked closely with ESET’s regional distributor Adaox to complete the project without reducing network performance or causing downtime. “The implementation of the ESET solution was done in phases so that no workstation was left unsecured,” explained Muhammad Habib, senior network administrator at Juma Al Majid Group. “After installing ESET Smart Security, the virus infection reports have almost reached zero. The team from Adaox and NTS trained our staff during the test phase and final implementation.”

>>

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// CHANNEL MIDDLE EAST_MAY 2010

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PRODUCTS (51) // MARGIN-MAKING OPPORTUNITIES

[] SOFTWARE

[] MEMORY CARDS

LONG-TERM MEMORY

CREATIVE THINKING

Sony Gulf launches new range of SD cards in the region

Software vendor unveils latest version of design suite

Sony Gulf claims it has introduced a “unique blend of quality, reliability and performance” to the memory card market by launching a new range of SD and SDHC cards, including micro versions. The cards comprise class 4 data transfer speed, enabling high-definition video recording and providing sufficient sspeed to cope with the advanced fu functions of compact digital cameras cam and highend camera phones. The SD/SDHC range is available in five capacities from 2GB to 32GB 32GB, while the microSD/microSDHC microSD/microSDH line-up consists of 2GB, 4 4GB and 8GB ca capacities. The cards can also install software that th simplifies the retrieval of fil files that are dam accidentally damaged or deleted.

Adobe has released the latest version of its design software family into the market — Creative Suite 5 — which features integration with online content and digital marketing measurement capabilities for the first time. The new range is headlined by the Creative Suite 5 Master Collection, which includes all of Adobe’s top creative tools, such as Illustrator and Dreamweaver, in a single package. Creative Suite 5 products offer access to signature Omniture technologies to store and analyse information generated by websites and other sources. _WEBSITE: www.adobe.com

WEBSITE: www.s www.sony-mea.com

[]]

[] MEMORY PRINTERS

ELECTRIC CHARGE Ultra-low voltage memory aimed at desktop users Kingston Technology has unveiled what it claims is the industry’s first ultra-low voltage memory for desktop PCs, running 1.25 volts at 1600MHz. The new offering is part of the vendor’s new ‘LoVo’ HyperX DDR3 high-performance memory product line, which Mark Tekunoff, senior technology manager at the components vendor, insists sets the standard for the new generation of energy-efficient systems that yield higher performance. “Energy-conscious consumers need look no further for memory than the HyperX ‘LoVo’ line when they are assembling the components needed to achieve better PC power performance,” he said. The dual-channel kit also comes preprogrammed with a 1.35 volts at 1866MHz XMP-ready profile. _WEBSITE: www.kingston.com

FULLY FUNCTIONAL Printer ace targets SMB success in the MFP space OKI is aiming to capture more of the SMB market with the launch of its new multifunction printer series, the MB400. Building on the success that it claims to have had with its B400 mono printer, OKI insists the he new s ss line-up offers the robustness and value that small businesses require. John Ross, regional general manager at OKI, says MFPs represent the fastest growing sector of the market. “At the same time, mono output remains d dominant in the office off sector, representing about 80% represent of total pr print,” he added. _WEBSIT _WEBSITE: www.okim www.okime.ae

>>

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// CHANNEL MIDDLE EAST_MAY 2010

_www.itp.net_

RESELLER FOCUS (53) // PROFILING THE REGION’S TIER-ONE SPECIALISTS

THE STAR OF SAUDI SECURITY SALES

I(TS)² ADDRESS:

IT Security Training & Solutions — or I(TS)² as it is better known — has emerged as one of the leading providers of security solutions in the Middle East. Its blend of product knowledge and consulting expertise has already seen it earn plaudits in its native Saudi market, and now the firm is keen to replicate that success elsewhere.

>>

In a region where IT resellers have a tendency to play in any field that takes their fancy, I(TS)² stands out as something of a non-conformist. The reason for that is the Riyadhbased outfit has spent the best part of eight years carving out a business model that is focused squarely on security solutions. “We are a specialised company that doesn’t try to be all things to all people and through this specialisation we have been able to achieve both brand recognition and trust in the market,” explains Samer Omar, general manager of the 135-strong organisation. “Our philosophy is end-to-end security, so we have developed and designed our company around being able to be a one-stop information security partner.” The way I(TS)² has achieved that is by developing four business units that are closely linked, but

which are also self-supporting. One of the most important units is its ‘Security Academy’, which provides a range of training and certification services to customers. As well as working with third-party providers, I(TS)² prides itself on having created its own fully-fledged security curriculum. It can also offer tracks based on specialities and specific industry expertise. Supplementing the training unit is its ‘Security Solutions’ division, which provides technologies from more than 20 international network and security brands. “This is where we sell the products and solutions, however we do not classify ourselves as a box-pusher, nor do we enter into engagements where that is the case,” stresses Omar. “If we do not add value in terms of being able to integrate a solution into our larger end-to-end security

>>

Al Mohammedeah, King Fahad Road PO Box 1255 Riyadh, 11321 Saudi Arabia

vision then we just don’t do it.” The remaining two units that comprise I(TS)²’s operations could perhaps be considered the most high-end: security consultancy and managed security services. Omar makes no secret of the fact that managed security services hold the biggest growth potential. He says the company has invested a “significant” amount of money to develop the unit. “What we have done is created the first regional hub for fullblown managed security services capability by building a tier-four security centre, which allows us to manage a secure infrastructure in-region,” he points out. “And in the last two or three years, as we have evangelised managed security services, we have started to see an uptake and more conversations around it. People are moving further away from

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CONTACT:

Tel: +966 1 207 7008 HEADCOUNT: 135 VENDOR PARTNERS:

Cisco, Juniper, Symantec MARKET FOCUS:

Information Technology Security Training & Solutions - I(TS)² provides integrated security solutions, consulting services and training to governments, financial institutions and commercial enterprises in the Middle East. WEBSITE:

www.its2.com

having to have a tangible product or software and moving towards more of a service-led purchasing model, and that is really where we want to be,” he says. Despite the success that I(TS)² has had in Saudi Arabia, where it is present throughout the country, the company has not yet exported its specialist model to many other markets. That is something it is looking to change, admits Omar. “We have a broader geographic scope in terms of the company charter and mission, which is the Middle East and North Africa, but I’d say that 90% to 95% of our business comes from Saudi Arabia because that is where most of our infrastructure resides,” he says. “However, the next five-year strategy is to do more throughout the region. Managed security services is a product that will really go beyond being delivered to Saudi Arabia.”

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// CHANNEL MIDDLE EAST_MAY 2010

NEXT MONTH (54) // INSIDE THE NEXT ISSUE

COMING UP

THE MONTH OF JUNE REBATE RELIANT Financial rebates form a major part of any vendor’s channel incentive programme, but they have to be structured correctly to work.

Registered at Dubai Media City, PO Box 500024, Dubai, UAE Tel: +971 4 210 8000; Fax: +971 4 210 8080; Web: www.itp.com Offices in Dubai and London ITP Technology Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director Karam Awad General Manager Peter Conmy Publisher Natasha Pendleton EDITORIAL

BRAND BALANCE Retailers discuss how to balance vendor loyalty in a way that adds value to their business without becoming over-exposed to one brand.

Group Editor Mark Sutton Tel: +971 4 210 8225 e-mail: mark.sutton@itp.com Editor Andrew Seymour Tel: +971 4 210 8320 e-mail: andrew.seymour@itp.com ADVERTISING Advertising Manager Kausar Syed Tel: +971 4 2108 361 e-mail: kausar.syed@itp.com STUDIO Senior Designer Michel Al Asmar

Q2 2010

EVENTS UAE 18th-20th May 2010: Digital Consumer Channel Back for a sixth time, Digital Consumer Channel (DCC) MEA badges itself as a ‘must attend’ event for retail executives and vendors focused on channel development in the region. This year’s DCC, which takes place at the Meridien Al Aqah in Fujairah, will once again gather senior decision-makers, purchasers and IT buyers from the region’s top suppliers in one place. For more information visit www.dcc-mea.com

Channel Middle East recently spoke with Farouk Hemraj, CEO and co-founder of Distree Events, to find out what DCC has in store for vendors and retailers this year. How are preparations going for DCC? Very well. We have been successful in terms of new brands coming on board - this week we have had a confirmation from Canon and also Lenovo as a first-time sponsor of the event, for example. We are trying to bring more brands in from the consumer electronics sector and we expect to have some major players from the imaging products field participating this year too. We have created a new package this year, which will mean a new area in the event for A-brand vendors to make product presentations and conduct meetings. And of course it is more private as well, so that is getting a good response. Can attendees expect the same tried and trusted format that they are used to with DCC? Yes, the agenda is pretty much the same. The major component of the event is again the one-to-one meetings, sponsors presentations on stage and the Academy Awards. For the second year running we will also have the Strategy Forum, which attracted very senior people last year. Any new plans for the Strategy Forum this year? We actually have a new format that we are working on because we feel that there is a real need for the key executives from both the vendor side and the retailer side to discuss common issues. Last year’s Strategy Forum was a mixture of presentations from different market experts and local views from some retailers in the region, but this year it will be more structured discussions with a formal agenda. This seems to be the request that we are getting from the participants now.

UAE 11th & 25th May 2010: Channel Buzz Workshops Resellers and distributors in the UAE have a chance to get to grips with managing credit and managing social networking at two separate Channel Buzz workshops scheduled to take place at the BurJuman Rotana this month. The credit workshop will give attendees an insight into determining credit limits and understanding how to use credit insurance, while the social networking workshop promises to guide attendees through the various social networking tools that are available to channel players in the market and how they can be utilised effectively. There is a LinkedIn Group for companies that are interested in participating in or learning more about the workshops. This can be accessed at http://bit.ly/abIWP0

_www.itp.net_

PHOTOGRAPHY Director of Photography Sevag Davidian PRODUCTION & DISTRIBUTION Group Production Manager Kyle Smith Deputy Production Manager Ali Fahmi Production Co-ordinator Basel Al Kassem Managing Picture Editor Patrick Littlejohn Image Retoucher Emmalyn Robbles Distribution Manager Karima Ashwell CIRCULATION Circulation Manager Shadia Basravi MARKETING Head of Marketing Martin Chambers Event Manager Preeta Panicker ITP DIGITAL Assistant Editor Vineetha Menon Group Sales Manager Ahmad Bashour Tel: +971 4 210 8549 e-mail ahmad.bashour@itp.com Senior Sales Manager ITP.net Nathalie Akl Tel: +971 4 210 8520 e-mail nathalie.akl@itp.com Internet Development Manager Mohammed Affan Content Manager Asad Azizi Web Advertising Manager Meghna Jalnawalla Creative Director Craig Willers ITP GROUP Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

Circulation Customer Service Tel: +971 4 286 8559 Printed by Atlas Printing Press Controlled Distribution by Blue Truck Subscribe online at www.itp.com/subscriptions The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.

Channel Middle East is audited by BPA Worldwide. Average Qualified Circulation 7,567 (6 month audit Jul to Dec 2008).

Published by and Copyright © 2010 ITP Technology Publishing, a division of ITP Publishing Group Ltd. Registered in the B.V.I. under Company Registration number 1402846.


// CHANNEL MIDDLE EAST_MAY 2010

_www.itp.net_

GET TO KNOW (56) // CHANNEL CHAMPIONS UNCOVERED

Felix Baretto, Business Manager for Notebook PCs MEA, LG Electronics > What’s your career history in the industry to date?

> What do you enjoy most about working in the Middle East IT market?

I started my career with Global TeleSystems in India as channel sales personnel, promoting mobile brands such as Ericsson, Motorola and Siemens. I then moved to the UAE and worked with companies such as Seven Seas, Tech Data and Tripp Lite. Since 2007 I have been with LG Electronics addressing the areas of channel sales, business development and product management for the MEA region.

In this market you make good friends and relationships over a period spent working with people, which becomes part of your routine life. Apart from relationships, this market also offers challenging opportunities and goals to meet, which makes us better each day and keeps us going on and on.

Having sampled life in all tiers of the Middle East channel, we thought it was time to get up close and personal with LG Electronics’ Felix Baretto...

> What are your top channel tips for the next 12 months? Business in the current scenario cannot be driven at a low margin and high volume wherein investments are high and risky. Plan your business with the long term in view and add value to your products or services. That goes a mile and will put a smile on your customer’s face. Retaining a loyal customer is important first of all, as getting a new one can be quite expensive.

> What is the best deal you have ever closed and your proudest moment to date? I believe in delegation and the empowerment of responsibilities to drive the business. Making a team member a part owner of the tasks they are assigned should ensure they feel the sense of accomplishment when it is achieved. My proudest moment is winning the CEO award for the MEA region at LG Electronics twice in a row between 2008 and 2009, as well as the best business support manager award from US Robotics while at Tech Data.

> How do you relax outside of the work environment? I am currently learning golf and pursuing new languages. At home I like to read management-style books that are written by great management gurus.

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> What do you dislike most about working in the market? Being in the centre zone and catering to regions across from this zone invites a lot of attention from outside the region in terms of the influx of parallel imports and fake goods. When that happens in the market it disrupts the existing channel setup and the trends for particular models, so it can take a while for things to get back to normal from a customer confidence view.

> Which IT industry figure do you admire most and why? I admire my current regional CEO, KW Kim, for his charisma, leadership qualities and continuous motivation to set high goals in all aspects of your life; monitoring those goals until you reach them and never giving up or making an excuse. This enables and motivates you to focus on the positive aspects rather than the negative ones.

> What is the most valuable business lesson you’ve learnt? In this region, relationships and commitment matter the most. It is better to see all the aspects prior to committing than to let the other party down later on. As the saying goes, ‘commit a little lower, but deliver more then your commitment’.


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Channel Middle East - May 2010  

Channel Middle East - May 2010

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