Stuart Wilson<\/em> <\/a><\/p>\nSales are great, but profits are even better. In a region where financial transparency is pretty much non-existent, sizing markets and understanding channel dynamics is a tough task. After extensive research, Channel Middle East presents the lowdown on the big boys of the UAE distribution scene. Based on a degree of trust due to the scarcity of published accounts, meet the diamond dozen of Dubai distribution.<\/p>\n
With a whopping US$2.29bn in combined sales in 2004, the sheer scale of the Dubai-based distribution powerhouses is awesome to behold. This year promises to be even better. Overall revenues for the dozen companies that made the power list are forecast to climb 35.8% in 2005 to US$3.11bn.<\/p>\n
Due to the lack of published accounts in the region, it is inevitable that some of the sales figures published should be treated with a degree of caution. Suffice it to say, only those distributors with published, audited accounts can claim that the sales figures given truly reflect the reality of the situation. Nevertheless, this attempt to rank the top Dubai-based distributors should represent the first step towards greater financial transparency in the regional channel at every level of the supply chain.<\/p>\n
This list is by no means as comprehensive as it could be. There are undoubtedly more players in the market that believe they are worthy of inclusion in any list profiling the top dozen distributors based in Dubai. All readers should feel free to highlight any discrepancies or omissions they observe in this feature. The point is that this is just a starting point in understanding the regional channel dynamics of the Middle East. It would be even more interesting to compile a similar ranking table for the top distributors in Saudi Arabia or any other country in the region for that matter.<\/p>\n
Table toppers (1-3)<\/strong><\/p>\n1. Tech Data<\/strong>
2004 SALES: US$305m
MAIN MAN: Adnan Al-Falah<\/p>\nOPERATION: Tech Data's Middle East operation is not only one of the largest distributors in the region, it is also a growing player in the value-add arena. Globally Tech Data is one of the biggest distributors in the world. The Middle East part of the company is split into five vertical business units: PC components, PC and retail, software, networking (including Cisco) and an HP business unit with each business unit focused closely on specific market needs.<\/p>\n
STRATEGY: With an ambitious sales target of US$400m in 2005, Tech Data will continue to expand its channel breadth in the region and further develop concepts such as micro-credit.<\/p>\n
MAJOR VENDORS: Acer, APC, Cisco, CA, FujitsuSiemens, HP, i-mate, Intel, Kingston, Maxtor, Microsoft, Oracle, Samsung, Symantec, U.S. Robotics, Veritas, Western Digital<\/p>\n
2. Aptec<\/strong>
2004 SALES: US$302m
MAIN MAN: Ali Baghdadi<\/p>\nOPERATION: Celebrating its 25th anniversary this year, Aptec is well-established as a premier player in the regional distribution landscape. With operations spread across the Middle East and Africa, and a vendor portfolio that reads like a Who’s Who of the IT industry, Aptec remains at the cutting edge in terms of the development of distribution in the region.<\/p>\n
STRATEGY: Aptec’s ultimate objective, according to VP Essam Baghdady, is to have a branch in every Arab city. Financially, Aptec is a strong performer and continues to invest internally to strengthen its offering to the channel. Aptec restructured its internal organisation during 2004 with the appointment of regional product managers to strengthen the sales organisation. Aptec will also develop greater centralised purchasing power as it takes distribution efficiency to the next level.<\/p>\n
MAJOR VENDORS: 3Com, Acer, APC, CA, D-Link, FujitsuSiemens, HP, Hynix, IBM, Microsoft, McAfee, Symantec, U.S. Robotics, Veritas, Western Digital<\/p>\n
<\/p>\n
3. FDC<\/strong>
2004 SALES: US$300m
MAIN WOMAN: Marissa Safe<\/p>\nOPERATION: FDC offers unparalleled channel breadth across the Middle East, Africa and CIS. FDC reaches out to a staggering 5,000 resellers. The company has a network of 500 close partners and combines logistics efficiency with genuine second tier reseller sales and marketing support. FDC has a proven track record of helping new vendors enter the regional market.<\/p>\n
STRATEGY: FDC aims to grow regionally and internationally with its vendor partners in the components distribution space. The company aims to deliver integrated IT solutions to suit the needs of every type of customer allowing them to keep pace with the cutting edge of technology development. FDC will also further develop its own-brand assembly operation during the course of 2005. The company has created strong brand equity with its FD XPC small form factor PCs based on Shuttle barebone systems.<\/p>\n
MAJOR VENDORS: Intel, Shuttle, NEC, nVIDIA, XFX, Western Digital, Maxtor, Apacer, Compex<\/p>\n
<\/p>\n
Strong performers (4-7)<\/strong><\/p>\n4. Redington Gulf-Africa
<\/strong>2004 SALES: US$280m
MAIN MAN: Raj Shankar<\/p>\nOPERATION: Redington expects to post sales of US$280m across the MEA region for the year ending March 2005. Taiwanese distribution giant Synnex snapped up a 36% stake in Redington for US$24m in late 2004 and an IPO looks likely in the near future.<\/p>\n
STRATEGY: Redington’s strategy for 2005 includes creating even more value in its supply chain by achieving greater cost efficiencies. In short, this means Redington will look to build and operate logistics centres in the region. Redington also plans to expand its business footprint by moving into new business segments and targeting new verticals. 2005 is shaping up to be a big year for Redington. The company will also build on its success as a retail distribution specialist.<\/p>\n
MAJOR VENDORS: HP, Intel, Acer, Samsung, Canon, BenQ, Microsoft, Toshiba<\/p>\n
5. Logicom<\/strong>
2004 SALES: US$190m
MAIN MAN: Omiros Pissarides<\/p>\nOPERATION: Logicom is a regional distribution operation quoted on the Cyprus Stock Exchange. With 190 staff, Logicom posted 2004 sales of US$190m and is aiming for US$250m in 2005. Logicom picked up Cisco Distribution Partner (CDP) status at the beginning of 2004, firmly establishing the company as a top-tier player in the region. Logicom also added McAfee as a vendor partner in 2004.<\/p>\n
STRATEGY: Logicom will accelerate its focus on in-country operations during 2005 as it aims to increase reseller breadth. To support its regional focus, Logicom plans to reduce transit times and cut logistics costs through the development of a new warehouse hub at Jebel Ali.<\/p>\n
MAJOR VENDORS: Intel, Cisco Systems, Microsoft, Kingston, IBM, Seagate, HP, Philips, McAfee, FujitsuSiemens<\/p>\n
<\/p>\n
6. Mindware<\/strong>
2004 SALES: US$140m
MAIN MAN: Jacques Chammas<\/p>\nOPERATION: As part of the giant MDS group — and an established name in the regional distribution landscape — Mindware has set about creating the perfect balance between volume and value distribution since Jacques Chammas took the helm. Mindware signed a partnership with Dell in 2004 to sell part of its product range in Saudi Arabia.<\/p>\n
STRATEGY: During 2005, Mindware plans to increase its pre-sales and post-sales resources to cement its reputation as a VAD. Saudi Arabia will be a focus market with Mindware working overtime to develop sales of Dell and CA product in the Kingdom. Mindware is also committed to strengthening its presence in North Africa during the year ahead.<\/p>\n
MAJOR VENDORS: Intel, Microsoft, CA, Citrix, Dell, Juniper, Veritas, Nexans, Foundry, NetApps, McAfee<\/p>\n
<\/p>\n
7. Emitac Distribution<\/strong>
2004 SALES: US$135m
MAIN MAN: Amer A. Khreino<\/p>\nOPERATION: Emitac Distribution — a major HP partner —has pushed hard into the value-add arena in recent years, building a strong software and services division and signing up major software vendors. The company has balanced this business diversification with the establishment of true regional coverage through a joint venture strategy.<\/p>\n
STRATEGY: Emitac plans to enhance its local presence across all Arab countries in 2005. The continued development of authorised service centres will offer even better support. Retail distribution will also be an area of continued focus in the Middle East. Emitac aims to offer customers the very best in terms of pricing, logistics and warranty terms.<\/p>\n
MAJOR VENDORS: HP, Symantec, Targus, Microsoft, Oracle, Philips, Avanza<\/p>\n
Rising stars (8-11)<\/strong><\/p>\n8. eSys<\/strong>
2004 SALES: US$98m
MAIN MAN: Pavan Gupta<\/p>\nOPERATION: From its offices in Dubai, fast-growing eSys Technologies covers the Middle East and Africa (MEA) region. eSys sales in the region rose to US$98m in 2004 and the company has set an ambitious target of US$180m for 2005. eSys core components business is rapidly being complemented by finished goods sales and contract assembly operations as well.<\/p>\n
STRATEGY: Top of eSys’ Middle East agenda for 2005 is ensuring its PC assembly division is working at full capacity. On the distribution side, vendor and channel partners can expect further value-additions from eSys designed to boost sales even further. Another major business objective is to successfully enter the CIS region and lay strong foundations for long-term growth. eSys’ highly efficient distribution model and global infrastructure has made it an attractive partner for a variety of vendors in both the finished goods and the components space.<\/p>\n
MAJOR VENDORS: Seagate, Maxtor, Western Digital, Hynix, BenQ, Aopen, ALPS, SMC, Glacialtech<\/p>\n
<\/p>\n
9. Empa<\/strong>
2004 SALES: US$80m
MAIN MAN: Rahb M. Hamidaddin<\/p>\nOPERATION: With solid reach into the emerging markets of Central Asia, Empa has 55 people in its organisation spread throughout the entire region. With a strong background in components distribution, 2005 is shaping up as the year when Empa fleshes out its product portfolio and becomes a genuine broadline operation. Definitely one to watch in 2005.<\/p>\n
STRATEGY: With notebook rights for Asus and Acer in various territories, Empa will increase its sales of finished products in 2005. The company will look to balance out its portfolio and add more finished goods vendors to cover product areas such as LCD monitors and digital devices. Geographically, the company plans to strengthen its customer base even further in key regional markets such as Saudi Arabia and Egypt. Retail distribution will also be a strategic area for Empa in 2005 as it looks to maintain its strong sales growth.<\/p>\n
MAJOR VENDORS: Intel, Acer, Asus, MSI, Kingston, Kingmax, Fujitsu, Biostar, Surecom, LiteOn, BTC<\/p>\n
<\/p>\n
10. ASBIS<\/h2>\n
2004 SALES: US$64m
MAIN MAN: Sergei Kostevich<\/em><\/strong><\/p>\nOPERATION: ASBIS is a powerful components distribution outfit spanning a vast geographic area. At the end of 2004, ASBIS established a partnership with Sifikile in South Africa to further extend its distribution footprint. At a group level, ASBIS serves over 11,000 active customers via four distribution centers and 33 local warehouses.<\/em><\/strong><\/p>\nSTRATEGY: In 2005 ASBIS plans to increase its focus on mobility and introduce innovative technologies to its portfolio. The company also intends to boost its investment in online business mechanisms to drive cost efficiency and provide better service to small customers.<\/em><\/strong><\/p>\nMAJOR VENDORS: Prestigio, Canyon, Hitachi GST, Seagate, LiteOn, Toshiba, Intel, AMD, ALPS, TrippLite, Adaptec, Promise Technology, Tandberg Data.<\/em><\/strong><\/p>\n <\/p>\n
11. Golden Systems<\/strong>
2004 SALES: US$60m
MAIN MAN: Ali Sharifi<\/p>\nOPERATION: Golden Systems has developed a powerful reputation as a close partner of component behemoth Gigabyte. With exclusive Gigabyte rights in some territories, Golden Systems has played a pivotal role in the expansion of the vendor's channel in the Middle East. <\/p>\n
STRATEGY: Golden Systems is looking to develop its retail distribution business in 2005 and will continue to strengthen its reputation as an after-sales service expert.<\/p>\n
MAJOR VENDORS: Gigabyte Technology, G-Max, Leadtek, TwinHan, Visionplus, TEAC, Kingmax, AXPER, ATI<\/p>\n
Future trends<\/strong>
Managing growth rates of impressive magnitude presents a tough challenge for senior executives at these channel giants. They strive to increase economies of scale while simultaneously maintaining a lean and mean internal infrastructure. This is the secret of success in a fast-growing distribution environment where margin pressure is relentless.<\/p>\nIT distribution remains a highly competitive business in Dubai with rivals looking to exploit any chink in the armour of their competitors. The fierce rivalry between distributors was epitomised by a recent quick poll on ITP’s website to canvass reseller opinion on the Dubai-based broadline distributor with the best overall service offering to the channel. The distributors themselves quickly hijacked the poll as they tried to ensure their company took the accolade.<\/p>\n
As the number of votes cast soared past the 34,000 mark, it became abundantly clear that vote rigging had taken place. Resellers quickly verified the fact that one distributor had sent out a mass e-mail to its customer base urging them to vote on the poll. An employee at another major distributor also blew his company’s cover by revealing exactly how easy it was to vote more than once by clearing the cookies on Internet Explorer (something both he and his colleagues had obviously been practicing repeatedly). While this blatant abuse rendered the results useless, it did serve to highlight just how competitive the IT distribution business actually is in the Middle East.<\/p>\n
While our rankings concentrate purely on revenues, it is profits that tell the real story behind the strength of a distribution operation. In Europe and the US, where detailed published accounts are the norm as opposed to the exception, it is comparatively easy to work out the distributors with solid margins and those struggling to turn a profit and control overheads. This level of financial detail will not be available in the Middle East market for some time yet. Not only does this lack of information hamper the ability of vendors to identify the distributors with the strongest finances, it also acts as a deterrent to consolidation in the regional channel landscape. The importance of financial transparency should not be underestimated in either case.<\/p>\n
Comtronix, a Dubai-based distributor not included this time around, recently secured exclusive distribution rights with fast-growing components vendor Albatron. One of the main factors behind Albatron’s decision to appoint Comtronix was the fact that the distributor’s financial situation was extremely strong.<\/p>\n
Over time, vendors tend to gravitate towards the distributors with the greatest financial stability. Vendors tend to be a risk-averse bunch and none of them want to be working with a distributor that could leave them with a bad debt. As such, the pressure for disclosure and audited accounts will grow as the Middle East and Africa channel matures.<\/p>\n
Too many distributors — especially those with slightly smaller operations than the dozen profiled in this feature — continue to lead a hand-to-mouth existence: constantly on the brink of financial implosion, living by their wits on a daily basis and with no real concept of long-term business planning. This not only places their business in a perilous position, it also means external investors are unlikely to take a risk and invest in the company should it hit financial problems.<\/p>\n
Admittedly, distribution in the Middle East remains a complex business characterised by unpredictable product flows, the effects of grey channel activity, shadowy dealings needed to serve markets still under embargo, and a constant credit risk when dealing with the reseller community. Against this backdrop, it is little wonder that to date, many of the global distribution powerhouses have yet to enter the region either through acquisition or organic growth. Several deals have been considered in the past year. One European distributor pulled back from a proposed deal to snap up a company included in our diamond dozen because of the risks associated with receivables and a high asking price for the business. Ingram Micro continues to take a watching brief in the Middle East, preferring instead to concentrate its expansion strategy on the new EU accession countries of Eastern Europe and putting this region on the backburner for now.<\/p>\n
Synnex’s decision to purchase a stake in Redington cemented the latter’s reputation as a top-tier distributor in the Middle East and Africa. With Redington toying with the possibility of an IPO in the not too distant future, this deal has also helped set a benchmark for the valuation of distribution companies plying their trade in the region. There is a top-tier of Dubai-based distributors emerging led by Tech Data, Aptec, FDC and Redington in terms of pure sales volume. However, when comparing any distributors it is important to realise that no two business models are same. Myriad factors including vendor portfolio, target market, customer base, geographic scope and the mix between volume and value distribution ensure that each company has its own specific strengths and weaknesses.<\/p>\n
Some of the companies in this list are perfecting low-cost components distribution while others are pushing hard into value-added software sales backed up by in-house IT services expertise for resellers to draw on. Some are positioning themselves as genuine broadliners with extensive product portfolios while others are nailing their colours to the masts of just a few major vendors. Others make significant sales outside of MEA and minimal investment on the ground in the region for the vendors they represent.<\/p>\n
The year ahead promises to be one of continued change for the Middle East distribution landscape, including the Dubai-based behemoths that continue to wield considerable power over the regional channel dynamic. Mergers and acquisitions (M&A) should not be ruled out as the region reaches critical mass and the importance of scale — especially for those working with commodity IT products — continues to intensify. Emerging markets such as Iraq appear poised for strong demand growth offering significant opportunities to boost sales, but simultaneously, more and more vendors will look to crack down on grey product coming out of the region. As always, in the world of distribution the old adage of ‘get big, get niche or get out’ holds true.<\/p>\n
The Middle East and Africa region remains a land of opportunity for distributors. The current market landscape is by no means set in stone and it is those companies that position themselves today to cope with the challenges of tomorrow that will reap the long-term rewards. For the Dubai-based distribution powerhouses, this means moving in-country, developing the ultimate offering in terms of logistics efficiency and product breadth, and never losing sight of reseller needs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Sky-high sales Source: ITP, Monday, 28 February 2005 ITP is the largest business and consumer magazine publisher in the Middle East, with a wide range of market-leading titles covering almost all major areas of interest. by Stuart Wilson Sales are great, but profits are even better. In a region where financial transparency is pretty much non-existent,…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[12],"tags":[],"class_list":["post-98","post","type-post","status-publish","format-standard","hentry","category-media"],"yoast_head":"\n
ITP Technology and Channel Middle East presents the lowdown on the big boys of the UAE distribution scene. - ASBIS<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.asbis.com\/news\/media\/itp-technology-channel-middle-east\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ITP Technology and Channel Middle East presents the lowdown on the big boys of the UAE distribution scene. - ASBIS\" \/>\n<meta property=\"og:description\" content=\"Sky-high sales Source: ITP, Monday, 28 February 2005 ITP is the largest business and consumer magazine publisher in the Middle East, with a wide range of market-leading titles covering almost all major areas of interest. by Stuart Wilson Sales are great, but profits are even better. 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