Channel Middle East - August 2010 by ITP Business Publishing

www.itp.net AUGUST 2010 Vol. 08 Issue. 06

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

DIRECT ATTACK

Mohammed Ali Addarrat, General Manager Middle East, Lexmark

Distributors fear being frozen out by shift in vendor strategies (16)

MONEY MATTERS 10 tips for successful cash ﬂow management (20)

PACKING PUNCH

How vendors are stepping up their investigations to stop counterfeit goods inﬁltrating the channel (34)

n bu the sin roa e d ma ss d wi na ev th K ge elo ob r (5 pm ian 3) en ’s t

SEARCH AND SEIZE

TH EL IFE

Six commercial printers that will make the channel money (28)

DA Y O

EX-CISCO GULF BOSS JOINS SAP HP LAUNCHES PRINT INITIATIVE FRAUDSTERS TARGET UAE CHANNEL FOXCONN CONTRACT FOR AVNET ESET SIGNS EMPA

Licensed by Dubai Media City

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

DIRECT MODEL DIVIDES CHANNEL Vendors assess whether a direct transactional and logistics arrangement with retailers for PC hardware will lead to stronger growth, even though it could hurt IT distributors

ENTER THE ACN AWARDS

he nomination deadline for the 6th annual ACN

ArabTech Awards has been set

PC vendors are exploring the possibility of engaging directly with large retail accounts in the Middle East — but the move threatens to harm relationships with distributors who fear it will cost them business. Several vendors have confirmed they

are currently assessing their logistics and sales engagement models as the battle for market share in the retail channel intensifies. Elena Danici, retail sales and marketing manager at HP PSG Middle East, stressed that the preferred mode of engagement for

Toshiba Gulf, confirmed it intends to have 10 “named accounts” in the region by year-end. Talk of vendors going direct, however, is a worry for disties, which fear losing sales. “This could have a very serious and detrimental impact on our business,” said one distributor. “You need to remember that we have put a certain amount of investment in when it comes to people and infrastructure and this would leave us completely ill-prepared as far as that investment was concerned.”

Channel companies warned of threat IT re-exporters in the UAE are being warned

>> to be careful who they deal with following

a spate of incidents involving African fraudsters posing as legitimate European channel companies. According to ITDistri, a provider of EMEA-wide distribution directories, the fraudsters have been attempting to carry out their scam in a number of European countries and the UAE after originally targeting German IT suppliers. It said the rogue

- - - > (4)

for Thursday 9th September, so make sure you get working on your entry as there are plenty of categories to interest vendors and channel players.

ACN is a sister publication of Channel Middle East, focusing on CIO and enterprise IT issues across the Middle East region. More than 300 leading technology professionals from the region will be attending the ACN Awards to recognise the outstanding work that has been carried out in the enterprise market over the past 12 months.

Turn to page 20 for a special report on vendors going direct.

AL SUWAIDI IN HP VENTURE

FRAUDSTERS TARGET UAE

buyers typically pose as European IT

many retailers would continue to be through distribution, but said there were cases where a direct relationship might make sense. “I would say that we are cautiously investigating this option,” she said. “I think that everybody in the market today is checking what would be the best and most efficient way — time and cost-wise — of getting the products [to the market]. All options are on the table for all players,” she added. Toshiba is one vendor that is looking to drive direct engagements with select retailers. Binu Thomas, head of sales at

There are 19 awards in total,

UAE reseller joins forces with vendor to launch region’s first ‘Print Station’

including five ‘Vendor of the

HP Middle East has teamed up with Al >> Suwaidi Computer to launch the first HP ‘Print

fields: software, hardware,

Station’ in the UAE. Al Suwaidi, which will operate the store, has converted its former showroom close to the Dubai International Financial Centre (DIFC) into the Print Station and will offer customers a one-stop printing shop for businesses. The outlet is primarily targeted at micro businesses and SMBs. HP already has about 50 print stations in nine countries across the globe, of which 45 stations are spread across EMEA. “We have already rolled out three Print Stations in the Middle East with our local partners in their respective countries, namely Espace Bueno in Lebanon, CompuME in Egypt and NAF in Jordan,” said Amin Mortazavi, general - - - > (7)

Year’ categories for the following networking, security and cloud. Channel categories include ‘Systems Integrator of the Year’ and ‘Service Provide of the Year’. The nomination process is incredibly easy. Simply visit the official awards website (listed below) where you can download a nomination form and access the entry criteria. Get cracking now so you meet the deadline! www.itp.net/acn-awards

// INSIDE THIS ISSUE >>

FRONTLINE

// CONTENTS CHANNEL MIDDLE EAST_AUGUST 2010

04_Former Cisco boss joins SAP

11_ISIT sees sales shift to Abu Dhabi

04_Avnet gains Foxconn contract

11_Aptec and GSME get active

07_Iraqi sales on the way up

11_GCT builds Edimax channel

07_D-Link announces channel offer

13_Netgear launches KSA initiative

DIRECT ATTACK

09 _Redington aVlue launches portal

13_ iVewsonic rewards distributors

09 _Security signing for Empa Saudi

13_CompuMe hires brand specialist

Talk that PC vendors will bypass distribution to serve power retail accounts directly is poised to change the regional channel landscape.

INSIDE INFORMATION

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PRODUCTS

25_BACK IN BUSINESS

49_WELL-CONNECTED

iVewsonic’s Junaid Gul talks regional expansion and reseller engagement

Latest Promate hub with 10 USB ports now available in the market

26_BROCADE BOOST

49_CONSERVING ENERGY

Amanda Giddins outlines how latest programme changes will aid partners

AOC says US$179LED monitor delivers massive power savings

BUSINESS INSIGHT

47_SUPPLY ISSUES EASING Datatec insists that product lead times are starting to improve

47_ALLIED TELESIS MOVES IN Switch vendor hires ex-Aptec networking chief to run business

We pack our bags and head to work with a member of the channel community to find out what a typical day on the job entails. This month: Anshum Anand, Kobian Gulf

(28) PACKING PUNCH Six of the region’s top printer providers shine the spotlight on a big-hitting printer model that will make the channel money.

49_BLADE RUNNER HP launches P48 00 BladeSystem SAN delivering 3 6TB of storage

49_GAMING ON THE GO

(34)

LG’s latest quad-core notebook model features high-end 3D content

SEARCH AND SEIZE The trade of counterfeit products has always been a problem for the Middle East IT channel, but vendors are hitting back.

(20) CASH FLOW SUCCESS

DAY IN THE LIFE

53_SUPER SALES

(14)

(16)

Guy Whitcroft gives his 10

>> tips for managing cash flow

(40) NET VALUE Netbook sales are soaring, but there are still question marks over how sustainable the ultra-small form factor business actually is.

EDITOR’S NOTES Why resellers need to follow the marketing trail

(51)

EXPERT’S VIEW

Manjeet Singh says ROI reigns supreme in solution sales

(54) MARKET EVENTS >>

Update your calendar

(45) (15 )) 115

(56) GET TO KNOW Syed Hammad Ahmed

{} Gigaset Communications

FACT FILE

EMEA PC market almost back to its old self after buoyant .... .. second quarter ...

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// CHANNEL MIDDLE EAST_AUGUST 2010

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FRONT LINE (4)

< - - - (1) distributors and then approach genuine resellers by e-mail or fax to set up an account enabling them to buy products. Once they receive delivery of their order, they request 30-day payment terms and then go to ground. Sometimes they will pay for the first order to make their intentions seem genuine and then pull off their scam after successfully taking shipment of a second order. “Once the products are delivered, the buyer disappears and sells the products on the grey or black market,” said ITDistri’s Alain Godet, who estimated the total value of the fraud was as much as US$1.2m so far. Godet claimed the fraudsters were mainly from the Ivory Coast

and Mali, but posed as French channel companies. In order to deceive their victims they have been registering domain names almost identical to those used by legitimate distributors, as well as creating similar websites. Some have even placed orders using the names of real employees working for the companies they were impersonating. It is not clear how many UAE resellers have been approached by the fraudsters or if any have lost money as a result of the scam. Given the UAE’s status as a major regional re-export hub, however, it is likely that the fraudsters may feel the market represents easy pickings for them. Shailendra Rughwani, president of the Dubai Computer Group

(DCG), said he was not aware of any members that had been taken in by this particular scam, adding that the dealer channel was used to heading off such threats. “There are a lot of these companies based in Europe — usually in the UK — who send e-mails wanting to buy against delivery or pay online with a credit card, but we are aware of that and we never entertain these people,” he commented. “That said, there is always the possibility that an opportunist dealer might have lost money to this and if that is the case we will sit down with them.” ITDistri’s Godet urged resellers to be extra vigilant when receiving enquiries from foreign firms and to assess the authenticity of any buyer before despatching goods.

FORMER CISCO GULF BOSS TAKES ON SAP CHALLENGE Alkharrat to join software vendor after bringing down the curtain on career with networking ace

AP is poised to reinforce its regional management set-up in the next month by bringing former Cisco Gulf boss Samer Alkharrat on board. Alkharrat recently left the networking vendor after more than 15 years at the company. He served as managing director for the Gulf and Pakistan, overseeing the expansion of Cisco’s operations to in excess of 350 people. Alkharrat will join up with the enterprise software company to begin his new assignment during the first week of August. At this stage it is not clear what his precise role at the Germany-based outfit

.... .. ...

will be. Talk in the channel suggests he will manage SAP’s Gulf business, but it is also possible that he could take a MENAwide role. That is likely to depend on whether SAP is planning any changes to its senior management structure in the region. Currently its Middle East and North Africa managing director is Sergio Maccotta, who has been in charge of affairs since SAP bought back SAP Arabia’s exclusive regional licence more than two and a half years ago. SAP declined to provide details of the arrangement, except to issue a statement through its PR firm that read: “SAP is continually

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hiring top talent as we expand our operations across the region. SAP adheres to a policy of announcing new hires only when they are onboard.” Alkharrat has a comprehensive understanding of the Middle East market from his time at Cisco. During his tenure as managing director of the Gulf, he also chaired Cisco’s Real Estate board, which is responsible for driving the development of the networking vendor’s real estate solutions business at a worldwide level.

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Former Cisco chief Samer Alkharrat is set to join SAP MENA

AVNET GAINS FOXCONN CONTRACT Agreement for AMD-based models extended to MENA

oxconn has expanded its existing European distribution agreement with Avnet Technology Solutions to include the Middle East and North Africa. The move means Avnet is now authorised to distribute Foxconn’s AMD-based motherboards to its customers throughout the region. Foxconn offers a range of motherboards based on AMD chipsets, including the A7GM-S 2.O and A74ML-K models. Avnet serves the MENA region from its Dubai HQ, where it has built up a broad customer base of system developers and OEMs. Its local operations are headed Jamal Qaffaf, who is supported by Chris Green, Farooq Khawaja and Omar Fakhri, who recently joined the company from DTK. In a separate move last month, Avnet named Graeme Watt (below) as its EMEA president. Watt was formerly president of worldwide distribution for storage distributor Bell Micro, which Avnet recently acquired for US$252m. “I am committed to helping this team, as well as our customers and suppliers, take advantage of all the new opportunities available to both organisations,” stated Watt. Watt was also once president of Tech Data EMEA at a time when the broadline distribution company still had operations in the Middle East.

The new Satellite A660 powered by an IntelÂŽ Coreâ&#x201E;˘ i7 Processor that delivers the ultimate in smart performance

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FRONT LINE (7)

<- - -

(1) manager for the imaging and printing group at HP Middle East. “We plan to roll out additional stores in the UAE within the next year, and in the region our next Print Station will most probably be in Kuwait,” he revealed. Mortazavi says HP plans to open a chain of Print Stations along with Al Suwaidi in the UAE, although he didn’t specify how many. He did say, however, that it is likely to include a presence in shopping malls to cater to smaller companies which traditionally go to the consumer space to fulfill their IT requirements. According to HP, the UAE’s print market is forecast to be worth US$330m within the next two years, which would represent a growth of 9% on 2009 numbers.

Jaimi Cyrus, director of channel sales and programmes for HP EMEA, says the Print Station will offer one-stop-shop services for high-value print and design jobs for SMEs. “The SMB sector constitutes about 85% of businesses in the UAE, and with the government’s support in boosting this sector, we see a huge potential to address the printing services market here,” she said. “Also, considering the printing service needs for businesses in the UAE, it will be the first 24-hour Print Station in the world.” HP and Al Suwaidi believe the Print Station will offer benefits to three main audiences: individuals who don’t have a printer at home and are looking for convenience and quality; professionals who require

D-LINK LAUNCHES CHANNEL OFFER

etworking vendor D-Link has launched a special

promotion targeting sales staff working for retail partners and resellers in the Middle East. The promotion, which is designed to encourage the specific solutions for their specialised applications; and businesses that need high volume print-outs and are looking for cost effectiveness and quality. Shibu Das, general manager at Al Suwaidi Computer, commented: “This is a unique customer oriented initiative, bringing more convenience, high quality and cost effectiveness to every single audience and we are happy to be a part of that.”

sale of D-Link’s energy-saving

Jaimi Cyrus says there is a huge opportunity to address the printing services space in the UAE

Ethernet switch series, will run until the end of September. Sales staff will receive a monetary reward based on the quantity of products they sell over the next three months. Partners must register on D-Link’s channel portal to be eligible for the promotion. D-Link has been selling its Ethernet switch series in the MEA region for the past two years, but is now actively pushing sales of what it calls its ‘green product’ series.

IRAQI SALES ON THE WAY UP Spending on ICT hardware leads the way as research suggests local market will be worth US$63m this year

he IT market in Iraq is set to grow at a rate of around 13% this year, reinforcing suggestions from regional channel companies that the country is becoming a more viable place to do business. New data from market intelligence firm Springboard Research puts the anticipated value of Iraqi IT sales at US$63.2m in 2010, up from US$55.7m last year. Unsurprisingly for a market still considered to be in its nascent stages, hardware sales are likely to account for the overwhelming portion of IT spend. Springboard predicts hardware will represent

62% of IT sales in Iraq this year, followed by services (22%) and software (16%). The company attributes the growth to the “relative stability” being felt in the market, as well as a rebound in oil prices since the onset of the financial crisis. “ICT use in Iraq has increased moderately in some areas and more substantially in others,” stated James Erickson, research manager for the Middle East and Africa at Springboard. “In the latter case, this is due to increased private investment and initiatives undertaken by international organisations to

Harrison Albert, regional

introduce the Iraqi population to new technologies,” he added. Government efforts to improve internet infrastructure are leading to increased web adoption, according to Springboard, which notes that internet cafes are regarded as the most popular means to use computers and access the web. It predicts that once broadband is widely available and affordable, the growth of the PC and internetbased businesses in Iraq will outpace the growth rate of the wireless phone industry. Furthermore, it says that various ICT infrastructure projects are underway to further develop fibre optic and wireless network cables throughout the country, which should ensure increased access to advanced communications.

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sales director at D-Link, said: “This promotion helps us to address two of our main objectives, the first one being the enhancement of the perception of our environmentally-friendly line of products, and the second one being the betterment of our relationship with partners to raise their motivation through the help of an appropriate reward programme.”

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FRONT LINE (9)

REDINGTON VALUE LAUNCHES ONLINE PORTAL, GETS FLEXIBLE WITH CHANNEL CREDIT TERMS

SECURITY SIGNING FOR EMPA SAUDI

Distributor’s value added arm unveils innovative partner programme to provide VARs with project and technical support, while CEO vows to help partners overcome credit challenges

edington’s value division has launched an online portal that will allow resellers to keep tabs on the latest offers from its vendors and access a range of useful sales tools. The company believes the portal — christened ‘Partner Connect’ — will serve as a platform for “integrated vendor information”, including promotions, training and sales resources. Partner Connect is open to all employees working for reseller organisations in the MENA region who have previously transacted with Redington’s value unit. By registering on the programme, partners can look forward to receiving personalised information related to special offers, as well as cross-selling and up-selling opportunities. It will also serve as a vehicle

for resellers to seek support in developing quotations for end-user customers. “The Partner Connect Programme was conceived out of our goal to establish a close-knit ecosystem of partners and vendors across the MENA region,” explained Ramkumar Balakrishnan, boss of Redington’s value arm. Meanwhile, Redington has also pledged to assist resellers with structuring commercial terms for deals containing special credit needs, as the channel battles to overcome severe financing challenges. Writing in the company’s quarterly newsletter, Raj Shankar, CEO of Redington Gulf, said the distie would seek to understand resellers’ credit requirements. “The value added division at Redington Gulf over the

added security vendor

Arabia. Empa will promote the company’s NOD32 and Smart Security software products to both the consumer and commercial channels. Empa has recently established a ‘value’ division in KSA and says the appointment past year has worked on various scenarios to help structure commercial terms with partners. There has also been an increasing use of financial instruments such as Letters of Credit,” wrote Shankar. “Moving forward, our teams across the region would be looking to engage more closely with partners, not only for sales/technical enablement, but also assist in structuring commercial terms for deals with special credit needs,” he added.

Jebel Ali distributor hired for its expertise in the CIS region as display manufacturer looks to expand sales

T distributor Empa has

ESET to its portfolio in Saudi

NEW VENDOR FOR FIREBIRD ubai-based IT wholesaler Fire Bird Distribution has struck an agreement with expansive display vendor AOC to address a handful of CIS markets. Fire Bird operates out of Jebel Ali but is a specialist at serving the CIS markets. Since its formation seven years ago it has partnered with several IT and consumer electronics brands to target markets such as Kazakhstan and Uzbekistan.

The company also has stocking points throughout the CIS countries, which will help it support AOC’s business. “We are very pleased to partner with AOC, a prestigious global brand which has carved out a leading position in such a short time across the globe,” said Fire Bird’s boss, Kurban Seitnepesov. From AOC’s point of view, the deal builds on the channel development that it has carried

of ESET fits with its plans to

Raj Shankar says Redington will help VARs structure terms for deals that contain special credit needs

bring new vendors on board. “Empa has an extensive portfolio of products in the components, PC, notebook, networking, storage and power supply segments. The only missing part was a security solution, where ESET will be our first vendor to start with,” said Naeem Hamami, country manager for KSA at Empa. Hamami says Empa will support ESET locally and offer it access to the company’s in-country customer base. “We plan to promote ESET

out in the Middle East during the past year. Its products are now distributed through companies such as Asbis and Compunics, as well as I&M in Egypt. Fire Bird will carry Taiwanbased AOC’s complete range of display products in six markets: Azerbaijan, Uzbekistan, Kazakhstan, Turkmenistan, Tajikistan and Kyrgyzstan. “With the appointment of Fire Bird we are confident that we will be able to tap the huge potential that the CIS Central Asia’s vast and complex market offers,” commented Brian Liu, VP sales for MEA and CIS at AOC.

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in the corporate, SME and retail segments through our existing dealer channels in KSA, by appointing selected corporate resellers and through our well-established retail arm that will be responsible for promoting product through power retailers,” said Hamami.

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FRONT LINE (11)

ISIT SAYS REDUCTION IN DUBAI BUSINESS COMPENSATED BY ABU DHABI AND KSA SPIKE

GCT BUILDS EDIMAX CHANNEL IN EGYPT

Storage integrator reveals that a tough 2009 saw a substantial portion of its sales move to non-Dubai markets, but suggests there are now signs that key projects are coming back

he CEO of Dubai-based systems integrator ISIT has confirmed what many have long suspected — that Abu Dhabi has profited heavily from the drop in Dubai IT sales during the past two years. “The major impact we have had was in Dubai, but it was actually compensated by business from Abu Dhabi and Saudi Arabia,” said Mahesh Vaidya, the boss of ISIT, which has just launched a new ‘Virtual Network Shield’ security service in the Middle East. “2009 was a tough year for most of us. Even though we had capacity growth of 30% or more, the revenue growth was not much across the Middle East. Luckily for ISIT, we had revenue growth of more than 100%. In 2010, if you compare the Middle East growth with

worldwide numbers, I think we are quite well off — we are looking at something north of 50% growth when it comes to capacity and maybe more than 20% growth when it comes to revenue in 2010,” he said. He is quick to add, however, that the business forecast for Dubai continues to improve, although not enough to stem the tide of business flowing southward in the UAE. “If you look at this year, I wouldn’t say too much would shift because in Dubai we see a huge improvement happening now. Towards the end of last year it was a bit dull, but now we are seeing a big improvement in the Dubai market,” he commented. Vaidya also reveals that much of his current storage business comes from

Technology (GCT) has

products from Edimax into the Egyptian market via a subdistribution agreement with local outfit Partner Electronics. GCT, which is best known for carrying the Genius range of IT peripherals, has been working with Edimax in the Gulf for purchase decisions that were made a while ago — but which enterprises only now have the budget to actually execute. He said: “Last year people tried to delay their storage purchases. Most of the deals which we are getting now were in the pipeline since last year. You can delay purchases for some time, but unfortunately storage is something which keeps growing and eventually you’ll have to buy it.”

IT distributors move to enhance their security offerings for channel partners with addition of new vendor brands

enius Computer

begun selling networking

APTEC AND GSME GET ACTIVE istributors Aptec and Golden Systems Middle East (GSME) have both strengthened their security software offerings by striking separate deals over the course of the past month. Aptec signed an exclusive distribution agreement with Germany-based Applied Security (APSEC), while GSME inked a contract with BitDefender. Aptec’s deal sees it gain the rights to market APSEC’s products

in MENA, Turkey and Pakistan. The company believes its new vendor partner’s security solutions will carry weight in the SMB and enterprise markets, as it claims it can offer prices that make it a compelling proposition compared to other competitors. “In the current market conditions where the CIO and the IT manager are trying to extract the maximum value for money, APSEC is an ideal fit,” said

Mahesh Vaidya believes that market health is starting to improve

time was right to expand the relationship to Egypt. Jihad Youssef, general manager of GCT (below), insists the deal with Partner Electronics will allow the Edimax products to reach a broad network of local resellers: “We have been focusing on this market for a long time and with Partner Electronics we will be able to penetrate the market and establish Edimax as one of the leading brands in networking products. GCT will be increasing the pace of

Govind Haridas, business unit manager at Aptec Distribution. “This is testified by the various enterprise banks and government institutions in the Middle East region that have adopted and implemented APSEC solutions successfully,” he added. GSME, meanwhile, insists anti-malware software vendor BitDefender has a place in its line-up that already includes Kaspersky. “We are confident that with a brand like BitDefender we are providing our channel partners with the best security solutions and performance available,” said COO, Ehsan Hashemi.

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the last two years and felt the

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the activities and enlarge the market share with the support of Partner Electronics.” Taiwan-based Edimax, which generates sales of US$100m a year, makes a wide range of networking products, including wireless solutions, print servers and Ethernet switches.

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FRONT LINE (13)

NETGEAR BEGINS FIRST PHASE OF PARTNER INITIATIVE TO BOOST CHANNEL SALES IN KSA

COMPUME HIRES BRAND SPECIALIST

Networking hardware vendor overhauls channel offering and reveals partners will receive rebates for achieving quarterly targets as it looks to improve its fortunes in Saudi market

etworking and storage vendor Netgear has begun rolling out the first phase of a new channel initiative that it hopes will help its business to take off in Saudi Arabia. The company says the initiative will be undertaken by a dedicated team and will offer partners various tools, services, rewards and discounts. This includes sales engineer support, leads from its customer support centre, sales incentives, and special pricing for government and education customers. Resellers will be awarded rebates for achieving quarterly targets and gain access to a web portal where they can make use of marketing materials. Netgear plans to supplement the programme with local seminars that are

designed to update system integrators and resellers on the latest developments. “Our partnership with systems integrators and resellers continues to play a pivotal role in our goal to help SMBs maximise the latest advancements in information technology to boost their productivity, efficiency and security, and this is why we invest significantly towards ensuring that our partners are fully equipped to address the customers’ requirements,” said Khaled Alosman, technical manager for Netgear Middle East. “On the other hand, our focus towards the Saudi market is driven by the Kingdom’s sizeable investment in IT and constant leading position in the Gulf’s technology race, and we are confident that

Satvik to serve as its

provider’ as it sets about reinforcing its brand name in the market following a recent management buy-out. The company has branded itself a ‘digital IT solution enabler’ following the MBO, and stressed that it plans the new channel initiative as well as the new products we have just unveiled in the country will be in high demand among SMBs in this opportunity-laden market,” he added. The announcement of the partner initiative is timed to coincide with the launch of new networking, security and storage solutions, including the ReadyNAS 4200 and Quad WAN Gigabit SSL VPN Firewall. Netgear hopes to grow KSA sales by 10% this year.

LCD display and projector vendor modifies local channel rebate policy to compensate partners for their sales efforts

ompuMe & i2 has hired

‘market intelligence solutions

VIEWSONIC REWARDS DISTIES isplay vendor Viewsonic has started paying distributors for meeting quarterly targets and increased the rebate amounts on offer to resellers as part of new measures to improve the performance of channel partners. The move to give distributors added incentive to drive sales-in behaviour has been introduced by the company’s regional sales chief Junaid Gul, who joined the company at the end of last year.

According to Gul, distributors have typically survived on a combination of transactional margins and a 1% marketing development fund (MDF) payment until now. “This is the first time they are getting paid on targets and it is an incentive for them to do more,” he revealed. Although he didn’t break out target thresholds, he said distributors would now receive a fixed percentage on the sales

to only focus on retail

Resellers that join Netgear’s new partner programme will receive access to sales tools and support

activities despite i2’s previous distribution background. The contract with Satvik will run for three years, allowing CompuMe & i2 to call on the firm’s expertise to strengthen its market status and position its retail offering. “We are looking for a real partner to assist us in regaining our leading market position and in reintroducing the brand building on our history and long experience in the region,” said Dikran Tchablakian, the owner of CompuMe.

they make for hitting a pre-agreed target and a further amount if they exceeded it. Gul, who previously worked as regional services channel manager at Lenovo, admits the company also has plenty of work to do to improve its level of engagement with the reseller channel, but he remains confident that recent tweaks to its Finch Club partner programme will have an impact. He says the rebate aspect of the programme “was not lucrative enough” for resellers initially, but Viewsonic has now doubled the top target bracket to 2% of sales. Read the full interview on page 25.

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KS Vasudevan, boss at Satvik (below), said: “Our proven market intelligence and customer intelligence solutions are developed on high-end statistical analytics and this will facilitate i2 in efficient and faster fact-based decision making processes.”

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EDITOR’S NOTES (14) // by Andrew Seymour

FOLLOWING THE MARKETING TRAIL The resources and collateral now available to the channel means Middle East resellers shouldn’t have any excuses when it comes to getting their marketing messages right.

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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In last month’s issue of Channel Middle East we explored how good a job the Middle East IT channel does of marketing. What quickly became clear from looking into that subject was that there are two different aspects to it. If you’re talking about the ability of resellers to market the vendor brands they represent then the verdict tends to be pretty positive. But if you’re referring to how well resellers market their own brand and their own services to customers then it is not so clear-cut. One of the major ironies of the channel business is that while resellers are the masters of promoting third party brands, they often fail to pay enough attention to the importance of creating a focused marketing model for their own organisations. Fujitsu’s product chief Chandan Mehta suggests that just 30% of resellers give proper consideration to their own marketing strategy or follow a detailed marketing plan. Judging by some resellers’ websites I have visited, that estimation might not be far wrong! Of all the criteria out there, a website might sound like a dubious thing on which to

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base an assumption, but in this online age — when the first step any prospective customer will take to learn more about a company is to access its web page — it is the most basic marketing tool at any company’s disposal. Unfortunately that still seems to be lost on plenty of channel organisations. Painful consequences The market is, of course, full of many transactional resellers which don’t really need to worry about their brand visibility quite so much because the price and availability of their products does the talking for them. For everybody else though, dismissing marketing as an unnecessary device can have painful consequences. The good news for the Middle East channel is that the resources available to them are more comprehensive than ever before. Pick any A-brand vendor from any market segment and the chances are they will possess a bank of materials that resellers can access to drive awareness of their own brands, not just the brand of the vendor.The biggest problem for most resellers is that they are constrained by budgets, which is why

these resources — which can include anything from being given the opportunity to be referenced on case studies to logo inclusion on e-mail shots — have to be exploited. It is not unreasonable to say vendors don’t always do a great job of articulating the sort of collateral that is sitting there waiting to be used. That said though, the channel can have no complaints that it is starved of support. Dynamic approach What does remain clear is that there are wildly different attitudes towards how resellers can make marketing work for them. Make no mistake about it, there are many VARs out there which are adopting a very dynamic approach to marketing, and the visibility of their brand in the market place is better for it. These companies understand the need to build their marketing position around the wider corporate strategies of their organisations, rather than viewing it as an autonomous and sporadic function. Given the cut-throat nature of the business, it’s something that channel firms which have so far given marketing a wide berth might want to start thinking seriously about too.

DIRECT ATTACK

Growing talk that PC vendors plan to bypass distribution to serve power retailers directly is poised to change the Middle East channel landscape as we know it.

arlier this year, HP risked the wrath of its Saudi distribution partners by beginning a direct relationship for PC hardware sales with power retailer Extra, the second largest consumer IT supplier in KSA. Noises being made elsewhere in the market suggest it is only a matter of time before others follow suit. Notebook specialist Toshiba, for instance, is planning to work directly with key retail accounts in the region and, like HP, intends to initially start with Saudi Arabia. Other major brands in the region, such as Acer, are watching developments carefully as they assess the merits of an approach that promises certain advantages, but which ultimately threatens to leave channel opinion divided. Toshiba’s head of sales for the Gulf region, Binu Thomas, believes moves by vendors to engage in direct relationships with power retailers is quickly becoming a “trend” that is only going to gain momentum.

Although he declines to reveal which retailers Toshiba is currently negotiating with, he admits the company aims to begin transacting directly with select retail partners before the year is out. “We’ll basically have 10 named accounts in the region and we will manage them directly,” he confirms. “Right now they are managed semi-directly and the fulfilment happens through the distributors, but at a future stage we will go directly with the power retailers.” Those words will no doubt strike fear into the hearts of distributors that generate a significant chunk of their business from selling to the retail channel. As one UAE-based distributor lamented: “Distributors spend a lot of time and effort building relationships with these retail outlets and providing support to bring the business up to speed. If a vendor comes along and takes that business direct, it is very difficult to make up what you have lost.”

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It’s not just the reduction in revenue that threatens to hit distributors where it hurts — they also face the prospect of being left with a higher cost structure than the market opportunity now affords them if investments they have already made internally to manage a specific retailer are no longer warranted. What’s more, buying power is also at risk of being negatively impacted because if a distributor purchases large quantities of products to sell into the market on the strength of a particular retailer’s orders, its ability to buy and stock becomes compromised if the vendor then takes that account direct. Saudi distributor AIM has had to cut down its laptop orders since HP started working directly with Extra to avoid over-stocking. “Extra was an important customer because it bought 70% to 80% of HP’s notebooks from us,” says Suhail Al Tawil, business manager at AIM. “After going directly we requested the vendor to reduce our quota, and they did that.”

> Binu Thomas, Toshiba

> Jacob Varghese, Acer

REMOVING THE MIDDLEMAN So after years of selling through the distribution channel, why are vendors toying with the idea of going it alone in the Middle East? For the most part, it seems they simply feel they can achieve stronger results by removing the middleman and doing it themselves. Reflecting on HP’s decision to work directly with Extra, the boss of one regional distributor said: “One of the points worrying HP was that they felt their brand ought to be doing much better in the retail space. Their perspective was that retail was where they were losing market share and since distributors carry multiple brands, perhaps they were not giving the right kind of focus to HP.” That said, there are strong suggestions from the market that the arrangement was actually driven more from Extra’s end, having witnessed the lead that arch rival Jarir Bookstore has built up from dealing directly with PC vendors over the years. Elena Danici, retail sales and marketing manager for HP Middle East’s Personal Systems Group, points out that the deal with Extra is purely about logistics and fulfilment, as it already provides direct account management for key retailers. She confirms HP is in discussions with other retailers about the feasibility of a direct relationship, but says the outcome of those talks depends on a variety of issues.

“For some retailers it makes sense to work indirectly via distributors, while for others it makes sense to work directly with a vendor due to their volumes or what chain they belong to. In my opinion, the most optimal model is actually to have a hybrid of these two depending on orders, offers, seasonality factors and so on.” Over at Acer, meanwhile, Middle East and Pakistan country manager, Jacob Varghese, agrees there is some logic to the argument that distributors might not be able to offer vendors the focus they crave. “A distributor today cannot have 10 brands and say that it is going to service all 10 brands for the retailer. There are question marks over that, which is probably one of the reasons why you are finding certain vendors are going directly to the retailer,” he says. Varghese insists Acer’s channel policy is one of “total indirect channel management”, although it does have a direct engagement with Jarir in Saudi Arabia. “We are looking at some other options also, but the distribution interest is always going to be kept intact and we would definitely be encouraging the distributors to service it unless there were some challenges with that,” he says. Jarir has a central role to play in this whole debate because until recently it was the only IT retailer in the region that enjoyed direct relationships with certain vendors — a product

Jarir is the one that has made everybody believe that if you manage the retailers directly there is a big business opportunity of being the Saudi market’s primary IT supplier long before the likes of Carrefour, HyperPanda and Geant came on the scene. The Riyadh-listed outfit controls anywhere between 20% and 25% of the KSA PC market, according to local estimates, with some channel players claiming it sells as many as 350,000 notebooks a year — around a thousand units a day. “Jarir is the one that has probably made everybody believe that if you manage the retailers directly there is a big business opportunity that is possible,” notes one rival. TRANSACTIONAL CHALLENGES If direct buying relationships between vendors and retailers do increase then one question that remains unanswered is where it all leaves distributors that are heavily focused on retail. Thomas insists that despite Toshiba’s aspirations of handling power retailers directly, it has no intention of freezing distributors out of the picture, but he does foresee it relying on them to address other parts of the indirect business instead. “They

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> Elena Danici, HP

have the channel breadth,” says Thomas. “We don’t want to diminish their role but we do want to develop more tier-two partners.” If you look to more developed markets then the scenario that Thomas alludes to is certainly prevalent, with vendor strategies driving distribution partners to serve the second and third tiers instead. Perhaps in future we will begin to see more models like the one Nokia employs in the Middle East, where Axiom supplies tier-two and tier-three customers as well as its own retail stores, while the larger retailers buy through Emirates Computers. JARIR, EXTRA…WHO NEXT? There are those, however, who are adamant that attempts by some vendors to serve power retailers directly will be short-lived, simply because it will be difficult to manage from a transactional perspective. Aside from Sony’s VAIO business, which is handled exclusively by Sony Gulf, few vendors have experience of a completely direct relationship with retailers. “What these vendors do not realise is that there is something called economy of scale,” says one distributor. “There are certain things that a distributor can do with its local presence and local support which practically-speaking would be very difficult for a vendor to do. The direct model worked in the case of Jarir, but few people understand and acknowledge that Jarir has around 25 outlets in KSA alone.”

One only has to cast a glance towards Europe or the US, where the likes of DSGi, Wal-Mart, Best Buy and even Carrefour have had direct relationships for years, to wonder if wider adoption of the model here is inevitable. What is certain for the moment, however, is that the concept of vendors managing Middle East computer retailers directly is heavily restricted to particular product lines and particular retail accounts. HP, for instance, still pushes all its printers and supplies through distribution, and there is no sign of that changing. There is also a limit to the number of retailers capable of delivering the sort of consistent volumes which would justify direct logistics management. The likes of Sharaf DG and Jacky’s stand out in the UAE, although perhaps the most obvious one outside of Saudi Arabia is Alghanim in Kuwait, which is said to control more than 70% of its market. These constraints, however, are unlikely to be of much consolation to distributors who fear their biggest-spending customers could be prised away from them. “This is a development which can only be detrimental to the larger interests of the eco-system,” moaned the boss of one large computer distributor. If the nature of channel relationships in the retail distribution space wasn’t already fragile enough, it is going to be severely tested in the months ahead as vendors continue to examine their go-to-market strategies in detail.

RETAIL CHIEF: WHY THE DIRECT MODEL DOESN’T MAKE SENSE A senior source at one leading IT retailer in the Middle East, which has been approached by PC vendors to go direct on numerous occasions, explains why it is an offer it has always declined. “There are several reasons why we have never agreed to work directly with a vendor. Firstly, most vendors have two or three distributors, which means there are never really any supply shortages. If you take a vendor like HP, then you often see one or two distributors doing well for a couple of quarters, then they’ll get stuck, and somebody else does well. So it tends to be pretty cyclical from a distribution point of view and as a retailer you can benefit from that because there are times when these guys are desperate to sell. You get to take advantage of dealing with multiple distributors by leveraging off each other’s pricing and putting them up against each other. Distributors actually offer a lot of other services as well and they tend to be multi-brand, so from a procurement point of view it is actually fairly

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easy for us because we deal with one point of contact and everything is sorted out in one go, whether it’s logistics, finance or something else. Additionally, if we were to buy direct from the vendor, we would have to commit to forecasts and talk about a sell-in well before a sell-out. Over here we have the advantage in that we are buying locally, so if we are doing a promotion and it does well we can always get more stock. And if the promotion doesn’t do well then we can usually send the stocks back to the distributor or not collect the entire quantity, which wouldn’t be the case with a direct relationship. The final thing is that by working with the vendor directly, you could end up in a situation where you are competing with a distributor carrying that brand. As you will never have stocks of everything you need, you are quickly going to find yourself needing to buy from them and then it is a case of whether they see you as a competitor or a customer. It is for these reasons that the idea of working directly with a vendor is something we have never been comfortable with.”

10 TIPS FOR MANAGING YOUR CA$H FLOW It’s said that cash flow problems cause more businesses to fail than anything else, which is a sobering thought when you consider the sorts of challenges that IT channel companies are facing to get their money in the current climate. Guy Whitcroft, principal consultant at CapitalSteps and an expert on regional channel issues, ran a cash flow management workshop at the Digital Consumer Channel event in the UAE earlier this year. Here are his top 10 tips for keeping on top of cash flow.

10.

ACCURATE FORECASTING HOLDS THE KEY

Qite simply, cash fl ow forecasting remains the single u most important business intelligence tool for any channel company as it forms the platform on which all other decisions are made. Analyse the payment history of your customers and factor that into your forecasting. ook at which customers are regular payers, which L ones are slow players and which ones will accelerate payments based on incentives. “N ever be optimistic on a cash flow forecast because that way you are going to make promises about payments t[hat you owe to your suppliers],” advises Guy Whitcroft. “It could be embarrassing if you miss a payment to a supplier or ask for a discount to pay upfront and then find you don’t have the cash to do it because your cash forecast was so wrong. aMke sure your cash fl ow forecast is accurate. That way you predict where the problems are and you can be proactive by trying to get cash in early.”

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KNOW YOUR SALES CYCLES

Understanding how product d t sales l cycles l work k can mean the difference between staying aﬂoat and getting dragged under. vEaluate sales data on a weekly basis –not monthly –and pay attention to shipping cycles. If you are a distributor then establish the duration between placing an order and getting the stocks into your warehouse –and then build that into your forecast. “What a lot of people do is get lazy,” says Whitcroft. “They take averages and build buffers onto each average, and it is the buffers that often kill you. You end up with far too much inventory because you have built in a week’s buffer on the order cycle, a week’s buffer on the shipping cycle and a week’s buffer on the clearance cycle. That can cost you dearly because if you then try and dump excess inventory in a hurry it becomes expensive.”

KEEP TABS ON MARKET DYNAMICS

Good price management is all about market intelligence. You need to know what your competition is doing and what deals are going on in the market because customers will negotiate. That is not to say you always have to be the cheapest though. Sometimes there is a good reason for a particular deal taking place, such as a company clearing excess inventory in a hurry to bring in cash. “At that point you have to make a rational decision as to whether you want to match the deal or let them take the deal and the hit, waiting until you have the inventory a week later when they will probably have run out at the normal price,’ says Whitcroft. “Those are things you need to understand and they are all down to market intelligence. There is no substitute for having your people in contact with the street and understanding what’s going on.”

BUILD BRIDGES WITH YOUR VENDORS

Vendors naturally want you to sell as much of their product as possible, but it is also in their interests that you are profitable. Have a relationship with them that is open and honest so that they understand the issues you face in your market. “Their first loyalty is to their own bottom line, but their bottom line will be severely impacted if you are not making a profit because you are not going to be able to pay and you are not going to enjoy the business,” says Whitcroft. “If you can develop a strong multi-level relationship where you understand their business processes, order cycles and product lifecycles — and you foster a strong working relationship at all levels of your organisation with all levels of their organisation — you are going to maximise the opportunities and minimise the problems.”

UNDERSTAND WHERE DELAYS CAN OCCUR

Delays in the business cycle are inevitable. You get delays in the order cycle if the customer demand is there but your supplier hasn’t got stock or a shipment is re-routed unexpectedly. You get delays in sales because you don’t have the stock to sell to customers. And until you have made the sales you can’t get the cash in so you get a delay in collections. All of these factors impact cash ﬂow, but that doesn’t mean they should be used as an excuse. “You need to understand those factors and where the delays can occur, and you need to have contingency plans for them,” argues Whitcroft. “Unfortunately a lot of people are very reactive and only tend to look at short-term ﬁxes. But in reality you need to be proactive within your business plan and cater for different scenarios.”

BEWARE THE DANGERS OF SLASHING PRICES

The first thing most companies attempt to do to solve a cash flow problem is boost sales. Bundle deals, special incentives or just straight price reductions are all methods that can be used to bring in cash quickly if the demand is there. But you need to exercise caution, warns Whitcroft, because success boils down to understanding the trade-offs you are making: “Your cash flow crisis may be so bad that you have to lose a lot of money to turn it into cash and then hope you can make the profits back later to stay in business. But you have really got to drill down and ask yourself, ‘what can I afford to lose, how much can I afford to drop the price to get the cash, and what are the problems if I don’t get the cash in?’”

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GET THE MONEY YOU ARE OWED

One area that many companies fail to consider when they face a cash ﬂow issue is accelerating collections for sales already made. Whitcroft says ﬁrms shouldn’t be afraid of upsetting customers if there is not a valid reason why payments are delayed. “Go and get your money because that is money you are owed!” he says. “You then have to ask yourself if that customer is somebody you want to continue doing business with because if they don’t have a good reason for delaying payment then they shouldn’t be doing it.” He suggests it can also be worthwhile to get senior executives from your organisation involved as well. “If you have got a creditors clerk talking to a debtors clerk, they are dealing from opposite ends of the pack in so much as one is paid to delay payments and the other is paid to accelerate them,” says Whitcroft. “Sometimes what you need to do is get the senior executives of your business talking to the senior executives of your creditors.”

HONESTY IS THE BEST POLICY

If you are struggling to get cash in from customers then see if you can extend payments to your own suppliers or get a short-term loan from the bank. Just make sure it is carefully managed though because repeated delays or a failure to make any payments at all will very quickly destroy your company’s credibility. Whitcroft insists it is far better to be transparent with stakeholders and come clean about your cash ﬂow challenges. “Be honest and work with your suppliers because it is in their interests that you stay in business,” he says. “What is more likely to break the relationship is you being dishonest about when and what you can pay. Far too often here I have seen people muddying the waters by not wanting to admit they have a cash ﬂow problem, and that just causes breaks in relationships.”

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ADDRESS THE EXCUSES BEFORE THEY ARISE

If there are hold-ups in payments then you need to get the reasons for delay off the table as quickly as possible. Whitcroft says a common problem in the Middle East is that sales are done on an invoice basis rather than a statement basis (such as 30 days from invoice paid weekly) and this often means companies don’t begin chasing their money until the payment is due. That, however, is when the customer excuses usually start. He advises credit controllers to get in touch with customers at least two weeks before due date to build in time for any queries. Alternatively, incorporate cash discounts into your pricing structure cash to encourage prompt payment. “You have to make that discount more attractive than what your customer would get from the bank, but if you look at the opportunity cost of accelerating your cash-to-cash cycle then you should more than make up for it. You should try to push for a good percentage of your business to be on either very short payment terms or cash,” suggests Whitcroft.

MAKE STAFF AWARE THAT CASH FLOW IS KING

Have people at all levels in all departments of your business tied to incentives that reward the right behaviour. Don’t just pay sales people for revenue, make sure you are paying them on the profitability of your business and the payment terms they are realising. Make sure product managers are being paid on inventory levels and credit controllers on keeping DSO down. Even consider things like paying your drivers for on-time deliveries because if that makes your customers happy then they will be more inclined to pay you. “You should be paying for performance from the receptionist to credit control to product managers to sales - all the way up the line,” says Whitcroft. “Remember that turnover is ego, profit is real, but cash flow is king.”

// CHANNEL MIDDLE EAST_AUGUST 2010

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INSIDE INFORMATION (25) // EXPERTS IN THEIR OWN WORDS

EX-LENOVO HEAD GIVES VIEWSONIC NEW LEASE OF LIFE After the departure of regional manager Aaron Fright in June last year, ViewSonic has not had too much to say for itself in the Middle East market. But with former Lenovo channel manager Junaid Gul now settled into the hotseat it’s a case of ‘all systems go’ again. Regional expansion, new staff and negotiations with distributors all figure highly on his plans.

CHANNEL MIDDLE EAST: You joined ViewSonic from Lenovo six months ago. What are the major priorities for you at the moment? JUNAID GUL: We have historically been branded only as an LCD vendor, but there is currently a major focus on diversification into other products as well, such as projectors and digital signage. Now, when I say that, ViewSonic has been selling projectors for the last 15 years, it’s just that the focus was never there. CME: So what are you doing differently now? JG: We are hiring new partners — audio-visual distributors — focused on projectors in the UAE. We are in talks with Almoe right now. We are working on huge tenders in Saudi Arabia with them and we are in the process of signing them up as our distributor for audio-visual products. CME: How much of your business comes from display products? JG: Right now, about 90% comes from LCDs and we want to change that to 60% — so 60% from LCDs and 40% from projectors and digital signage. We want to grow those further because the margin on the LCD business is very low and getting slimmer every day. CME: What time frame have you set yourself for achieving that? JG: By mid of next year. The way I look at it is that we have to have the right partners, which I want to complete by the end of this year. You have to get the new partners on board and let them settle down, which takes a quarter. CME: So channel restructuring is a key thing for you right now then...

JG: Yes, 90% of my time is spent doing that right now. Having the right channel is the key focus to getting the right kind of reach in the market. We are hiring new partners in Egypt because we see this as a very focused market. We have signed Better Business as a partner and it will be selling our complete range, and obviously focusing a lot on projectors and digital signage. Nothing was happening in Saudi Arabia so we are now focusing on that market because it is one area where a lot of growth is taking place. I am in Saudi Arabia every 15 days and we will be hiring a couple of people there too. They will operate from home initially and then we will set up an office later on — maybe next year. We will hire two sales guys there to serve the market. CME: Did you have partners in Egypt and Saudi Arabia previously? JG: We had Metra in Egypt and in Saudi Arabia, but we are looking to add two more distributors in Saudi for our LCD and projector business. CME: Has the relationship with Metra ended then? JG: Both the agreements with Metra are still there, but we are looking to expand because we are not covering the market as per its potential. Metra also has other brands as well. It does a lot of Samsung in Egypt and a lot of BenQ and LG in KSA. We need to have more partners rather than share our business. CME: You mentioned you are looking to sign two more distributors in KSA. Have you identified candidates? JG: I have. I am looking at BDL and Asbis, and I am in talks with

Redington as well, but it will most probably be either BDL or Asbis. With Asbis the best part is that they don’t have anybody other than AOC, so they have the capacity to carry another monitor brand. BDL does LG and Samsung. We want to finalise it this quarter because we want somebody there who can start working with us immediately. CME: What are the main demands distributors have of you as a vendor? JG: Credit terms, price protection and some kind of confidence level that if they get stuck with stock we will help them. CME: There has been some personnel change at Viewsonic Middle East in the past year. Who are the people leading your channel business in the UAE now? JG: We had two people join us two and a half months back. One is Rizwan Ulhaq, our corporate sales manager, who came from CAD Emirates, and the other is Lalit Chainani, our reseller manager who takes care of the resellers in Khalid Bin Waleed Street. He came from Bluebell Computers. They both have 10-plus years’ experience in the IT market so they know the business. CME: Viewsonic also has a netbook and notebook portfolio. Any plans to introduce those products here? JG: In this region I am focusing on projectors, digital signage and monitors. We have a lot of other products, such as TVs and eBooks, but I don’t want to introduce everything at the same time here. My top priority would be to bring the notebooks and netbooks here, but I want to stabilise the channel first.

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INSIDE INFORMATION (26) // EXPERTS IN THEIR OWN WORDS

BROCADE SPRUCES UP APN CHANNEL PROGRAMME Brocade has just added new technology specialisations to its Alliance Partner Network (APN) Programme in what it claims represents a major boost for its channel business. Channel Middle East spoke with the company’s EMEA channel director, Amanda Giddins, to find out what it all means for Middle East partners.

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CHANNEL MIDDLE EAST: You have added technology specialisations to the APN programme. How is that going to benefit the channel? AMANDA GIDDINS: What this really means is that we can differentiate our partners even further based on their technology competencies, but also the skills or areas they are looking to develop. It adds a lot more value into the programme because we will recognise partners whether they are strong from the fibre channel SAN side – we are calling that partnership virtualised fabrics – or on the networking infrastructure side or more recently on the application delivery side. CME: So there are three specialisations in total then? AG: Yes. I do see that expanding, but for the time being we are focusing on the three, and this plays really well into Brocade’s strategy where we target the campus networks for enterprise LANs, into the data centre for virtualisation and converged architecture, and then into application delivery with our layer four to layer seven portfolio. CME: So why have you decided to launch these specialisations at this particular time? AG: Firstly, because we want to recognise the competencies of our existing partners, but also to aid those partners which are looking to get into the converged architecture. It allows them to take specific accreditations and certifications and they will get additional benefits on the back of that as well — so additional discounts, rebates and margin opportunities. One of the

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key things is that our go-to-market is very selective. We are not going out to recruit hundreds of partners, it is about working with the partners that are committed to Brocade. But we are putting a lot on the table to make them profitable around selling our portfolio. CME: Can any partner benefit from access to the specialisations? AG: We are making this very selective. It is for those partners that are already committed to us on the Elite and Premier level of our Alliance Partner Network. CME: How many partners are likely to achieve the specialisations? AG: As we introduce the programme over the next couple of months we will be looking for a very small number of partners that fall into these specialisations. Within the UAE, where we have a number of partners, we would probably choose two or three for each of the specialisations. No more than that. CME: When you talk about converged architecture opportunities, is Brocade’s channel offering just about selling product sets? AG: No, it is not just about selling product, it is more about the services and support that the partner can offer through to the end-user. We will recognise those partners, not just for their own pre-sales and technical skills, but also the support services that they can add to their own portfolio on the back of selling our products as well. Unlike some vendors, we are very much reliant on the partners delivering services and support in-country to the customer. We will offer the back-line support

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to the partner but we enable them to make a business out of selling product, support and services. CME: You joined the company with a remit to build the channel business. How much investment is Brocade making in the channel? AG: The investment going into channel is huge overall in Brocade. We are currently recruiting another 80 sales people across EMEA and particularly in the UAE and the Gulf area — and Saudi Arabia as well — we are adding larger teams, so there is a lot of recruitment going on at the moment in this region. Traditionally, a large amount of the Foundry business was done in the Middle East on the IP side. We have got some excellent customer wins and reference sites in government, universities and service providers out here and we see a huge opportunity to develop further in the Gulf region. CME: How far away would you say your Middle East channel structure is from being complete? AG: There is still quite a bit of work to be done, but we have evolved it. First of all we introduced a twotier channel strategy, which neither Brocade or Foundry had previously. I see that evolving much more as well, working very closely with our distributor Mindware. The other area that we are now investing in is working with larger systems integrators because they have the traditional server and storage business. Where they see the opportunity now is the convergence of the technology with networking infrastructure and they are the partners we are investing in heavily.

PRINTERS WITH PUNCH Analysts are forecasting that the Middle East printing market will see growth again this year as the industry begins to recover. With that in mind, we pinned down six of the regionâ&#x20AC;&#x2122;s top printing hardware providers and asked them to shine the spotlight on a big-hitting printer model that will make the channel money.

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AMIN MORTAZAVI, GENERAL MANAGER IPG MIDDLE EAST, HP TARGET MARKET u Or new range of ePrint printers, including the HP Photosmart Wireless e-All-in-O ne, Premium e-All-in-O ne, Plus e-All-in-O ne and the Premium Fax e-All-in-O ne, is targeted at all customers, since this range of printers incorporates new technology that will benefit users across all markets. PRINTER MODEL: Photosmart Wireless e-All-in-O ne printer WORD ON MARGIN: P ‘ rinting flexibility offers differentiator to competing products’

INFO TO INCLUDE IN SALES PITCH With the new HP ePrint range, users have an incredible degree of flexibility to print from the web, their mobile phone and even remotely when away on business, for instance. This is a big point of difference when compared to competing products here in the UAE. Consumers have the freedom to access content and print without a PC. This can be achieved through HP ePrint

from any mobile device or by touching a variety of customisable apps and printing options on the printer’s intuitive HP TouchSmart screen. Every HP ePrint printer has a unique simple e-mail address that allows the sender to deliver a print the same way they would send an e-mail message. Users are able to store documents or files in the cloud and print direct when needed. ESSENTIAL SALES SKILLS n Kowledge of HP printers and ePrint technology would help to sell the products. A customer may require further explanation of the benefits of ePrint. HP resellers enjoy high levels of product training, support and online resources so that they are knowledgeable in all features and benefits relating to the product range.

JOHN ROSS, GENERAL MANAGER, OKI PRINTING SOLUTIONS

PRINTER MODEL: C51 0dn desktop colour printer WORD ON MARGIN: P ‘ artners are always well-compensated and well-trained’

TARGET MARKET It’s targeted at people who are looking for an affordable desktop colour printer that is fast enough to share with a team and tough enough to take on heavy workloads. It’s perfect for SMBs since this versatile, compact printer comes with a range of advanced productivity features including double-sided printing and built-in networking, plus a full threeyear warranty at no extra cost. INFO TO INCLUDE IN SALES PITCH The fact that the C51 0dn includes a unique set of software designed to help users get the most from their product and investment. These advanced utilities come as standard in the box and deliver increased printing power and management control. Also, the Template Manager allows users to create a wide range of specialist

documents including business cards, CD labels and a whole range of office stationary. The Print Control and Colour Access Policy Manager software generates detailed reports for assigning costs to individuals and work groups as well as manages access permission and volume limits by user, PC, file type and more. ESSENTIAL SALES SKILLS eRsellers need to be able to communicate the features of the C51 0dn accurately and focus on the fact that it meets consumers’ needs since this machine practically sells itself if it’s aimed at the right target. It offers users true versatility because of its high-definition toner that produces vibrant, saturated colour with a stylish glossy finish and an ability to print a huge range of high quality single and double-sided documents.

(29) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

DAN SMITH, GM, INTEGRATED MARKETING MEA, XEROX

PRINTER MODEL: WorkCentre 71 02 colour laser MFP WORD ON MARGIN: S ‘ trong opportunity for incremental profit and superior value proposition’

TARGET MARKET The eXrox WorkCentre 71 02 is an entry-level A3colour multifunction device. It is an ideal product for all customers, from SMBs to enterprises, and for all vertical sectors. The colour multifunction printer can let you print high-impact colour documents for presentations or budget charts. The product is targeted at a growing market space and offers low capital acquisition costs coupled with excellent total cost of ownership (TCO ) opportunities. INFO TO INCLUDE IN SALES PITCH Features are varied and run from the standard imaging and printing to more process integration, cost management and device handling. The value in enrolling in the eXrox Engage Partner Programme is that resellers gain access to a suite of tools through our PartnerNet Portal. This includes a

proposal generator allowing resellers to build and customise documents to focus on customer requirements and a W ‘ hy eXrox?’ tool allowing sales people to build their eXrox pitch. The WorkCentre 71 02 uses eXrox’s emulsion aggregate high gloss (EAHG) toner, not the usual laser toner that you can find at the nearest store. ESSENTIAL SALES SKILLS The skills required are no more complicated than when selling any other IT equipment or software offering. The important thing in working with eXrox is access to our online training tools and also the faceto-face training, such as the eXrox Academy. This is a comprehensive programme to ensure that skills reside in the partners to sell independently, but assuring those partners receive constant support where required.

VISHAL GOHEL, LFP PRODUCT MANAGER B2B, CANON

PRINTER MODEL: iPF8 030 large format printer WORD ON MARGIN: P ‘ rofitability is attractive and channel support is flexible’

TARGET MARKET This product is targeted towards the high-end photographic or fine-art customer. It is also exceptional for proofing so anyone that wants the best quality available should look at what the iPF8 300 can offer. It adds to an already extensive range of CAD, production and general use products that Canon can offer to LFP users. INFO TO INCLUDE IN SALES PITCH The biggest part of our new product is the print quality. However, there are also improvements in the handling and software aspect. n Oe example is our Adobe Photoshop plug-in. With this tool, and the new LUCIA EXink system, Canon is the only vendor that allows for -21bit printing. In other words, the iPF8 030 can handle over 04

times more colour tones, simultaneously, than any other brand. The iPF8 030 also offers a H ‘ ot Swap’ feature for the ink tanks. This means that if the machine runs out of a particular colour, the iPF8 030 can continue printing. oYu can remove the old cartridge and replace it with a new one and there will be no pause from the machine. This is especially useful in busy environments. ESSENTIAL SALES SKILLS Canon offers full product training for the imagePR G OA RF models and for the third party suppliers that we work with. All we ask is our resellers show commitment, enthusiasm and hard work. If they possess these qualities, then we can create a partnership that generates profitable sales.

(31) // CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

MEHDI HEIDARI, BUSINESS HEAD PRINTERS, SAMSUNG GULF

PRINTER MODEL: MultiX press CLX 583ND MFP WORD ON MARGIN: eR ‘ asonable margins and continuous sales of consumables, maintenance kits and after-sales services’

TARGET MARKET Samsung has revamped all entry lineups with a new product range loaded with superb features that will ease the life of the consumers. The CLX 583ND printer is targeted at SMB enterprise customers. It is a compact MFP, which combines high productivity with great efficiency to replace multiple desktop printers and MFPs. INFO TO INCLUDE IN SALES PITCH The three key points that resellers should focus on in their sales pitch are the CLX -583ND’s performance, userfriendliness and environmentallyfriendly features. The MultiX press CLX -583ND printer is the fastest colour laser A4MFP in its class. Along with its impressive speed performance, it provides a robust and efficient copying solution. This printer’s duty

cycle of up to 010,000 pages per month means it is ideal for those that need to copy and print higher volumes. The CLX -583ND is fully loaded with wonderful solutions, such as built-in job accounting and print management, absolutely free of cost. The cost saving and productiveness of these solutions are the basic needs of any mid-sized or enterprise organisation, which is a great sales tool for any salesman. ESSENTIAL SALES SKILLS The features and specifications of this product are easily understandable by the salesman as well as his customer. The only skill required by the reseller is a basic knowledge of the printing and copying industry, so that it can easily feel the difference in user-friendliness and added value features of our product compared to competitors’.

KHALIL EL-DALU, GENERAL MANAGER MIDDLE EAST, EPSON TARGET MARKET This printer is the right product for all those who need high-quality printing at a lower cost than laser. It is a heavy duty printer featuring simplex and duplex printing with network connectivity as standard. The black cartridge can produce 08,000 pages, making it highly cost-efficient. PRINTER MODEL: B-51 0DN business colour ink jet printer WORD ON MARGIN: H ‘ ealthy, two-digit margins depending on after-sales support services offered’

(32) // CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

INFO TO INCLUDE IN SALES PITCH First of all, we have to mention that this product is a green product - it has a lower power consumption than laser printers. In addition, the B-51 0DN has a lower number of supplies and will give users a very low cost per page. Users can print on glossy or photo papers with high quality results, not forgetting the fast printing speed of up to 73 pages per minute.

ESSENTIAL SALES SKILLS eRsellers need to know the competitive advantage of this printer and what output it can produce to be able to sell it. eRsellers should target customers with high print volumes and also those looking for a green product. We recently launched a special programme for resellers whereby they will get rebates and other incentives from selling any Epson product, not just the B-51 0DN. eRsellers interested in enjoying the benefits of this programme can just fill in an application form and become a Bronze, Silver, Gold or Platinum partner depending on their quarterly purchases. In addition to the upfront margins, all our channel partners enjoy good rebates directly from Epson at the end of each quarter.

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SEARCH AND SEIZE

The trading of fake products has always been a problem for the Middle East IT channel, particularly as counterfeiters use more sophisticated techniques to make their imitations seem like the real thing. But vendors are doing their best to fight back and they are enlisting the help of the channel in their crusade.

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

Feature Sponsor

ake branded goods tend to bring out the mercenary in people. Bargain hunters will turn a blind eye to a product’s dubious origins if the price is right. And dealers sometimes see counterfeit items as the easiest way to overcome hefty duties on genuine imports or basic lack of availability of the hottest new kit. No wonder then that the most conservative estimate values the global counterfeit goods market at US$750 billion. Counterfeit brands are a global challenge for vendors and despite the mountain they face in attempting to stem the flow — and its impact on revenues, not to mention customer experience — there is now a huge international effort to combat the problem. In the Middle East, essentially a microcosm of the world counterfeit market, the challenge is acute. Throughout the region, demand for cheaper electronics and consumables — particularly ink cartridges and toner — is so intense that vendors are having to look very closely at the integrity of their supply chain to minimise infiltration by fake offerings. Some customers are also rebelling against the prevailing trend. In one recent case, the suspicious purchaser of a Sony PlayStation lodged a complaint with the police against a Dubai retailer, which eventually exposed the systematic trading of fake PlayStations, memory cards and controllers — often, according with the acco rdi ding to one ssalesperson, alesperson, l wi ith h th he complicity of customers themselves — and led to prosecution. Cases like this suggest a shift in attitude in the region, which is pushing up the rate of counterfeit seizures, to vendors’ delight. “The reason for the increased number of seizures in the Middle East versus

> Sidney Pereira, Canon

> Ashish Panjabi, Jacky’s Electronics

Europe and Africa is due to the increased vigilance of authorities in the region who are stepping up their crackdown on counterfeit supplies,” says Amin Mortazavi, general manager of HP’s Middle East Imaging and Printing Group. “Firstly, the results are down to important work done by HP Middle East, which includes anti-counterfeit awareness campaign, iits ts anti-counterfei working together with the UAE authorities to issue of counterfeiting and to highlight the issu create awareness about this important topic. results are due to an increased Secondly, the resu by the UAE authorities to emphasis placed b methods and manpower in employ superior m the fight against iit.” Mohammed Ali Addarrat, general manager East at Lexmark (main picture), for the Middle Ea raising awareness of believes that by ra vendors will be able to get on counterfeiting, ve problem, especially if government top of the problem authorities in the region continue to put enforcement policies in place. stronger enforcem “We are trying to interact more with the end-users directly rather than relying on mass communications,” he explains. “Where we are problems is in areas where we still finding proble physical channel presence on a don’t have a phys regular basis, but then that is to be expected.” Ashish Panjabi, chief operating officer at one of Dubai’s biggest retailers, Jacky’s Electronics, says counterfeit products flourish

in environments where demand exists and where dealers don’t feel the threat of the consequences if they supply counterfeit goods. The relatively high price of printer consumables is one major driver. Another is the customer’s genuine inability to spot a fake. In both cases, says Panjabi, the solution lies in education — of sales staff and customers — and in building relationships with trusted suppliers. But there are other issues that are more difficult for the channel to counter. “The Middle East region, particularly the UAE, is also a re-export hub and demand for counterfeit doesn’t only restrict itself to demand in the local market but more so to demand that is there from countries or regions that the UAE re-exports to, such as Africa, Iran and the CIS,” says Panjabi. “If in these markets the demand exists, the supply will go on and many times be routed through ports like those in the UAE. From a supply point of view, if there is no fear or there is a lack of stringent controls on entry points into the country, counterfeit will thrive. While the major ports may be subject to scrutiny, there are many other points of entry where goods are likely to flow in more porously. “Even if a company is blacklisted, it doesn’t stop an individual entrepreneur as all they have to do is register another trade licence and it is business as usual. If we have found a supplier selling us anything that’s not genuine,

(35) BY PIERS FORD

// CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

we’ve immediately blacklisted them and if need be, informed other retailers of the same, so they’re also aware. It’s a matter of conscience. As partners for the Dubai Services Excellence Scheme, we’ve got a mandate to only supply genuine products — which is what we do.” Taxation is another important influencer, according to Jussi Hinkkanen, head of government affairs at Nokia Middle East and Africa, which faces the constant challenge of counterfeit mobile phones. “In some countries, high taxation on imported products is one of the reasons for the proliferation of counterfeit products entering the market, certainly in terms of mobile phones,” says Hinkkanen. “Also, there is a general increase in the availability of fake goods which makes them easier to come by, and the Middle East is geographically well positioned between the source of many counterfeit products and one of the biggest trading hubs in Dubai. This makes the distribution network for counterfeit syndicates very effective in the region.” The scale of the problem is reflected in the resources required to monitor counterfeiting throughout the sales cycle. Hinkkanen explains that this is an ongoing task. China is

> Ranjit Gurkar, Brother

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the main source of fake mobiles, so close collaboration with the Chinese authorities is an important element of Nokia’s strategy. “In destination countries, Nokia is also working with local authorities and customs

officials to more effectively manage the flow of these goods,” he says. “In some instances, this involves the training of the customs officers to more effectively recognise counterfeit goods. At the point of sale, Nokia also cooperates with

HP CRACKS DOWN ON INK CARTRIDGE ROGUES As the market leader in the printing and consumables space, HP has more to lose than anybody when it comes to rogue manufacturers illegally producing cartridges and toners that infringe its intellectual property rights. It is no surprise then that the vendor continues to mount an aggressive campaign designed to highlight the issue of counterfeiting and educate customers on the pitfalls of using fake products. According to data recently shared by HP, the Middle East accounted for 95% of all seizures of counterfeit HP printer consumables in the EMEA region between November 2008 and the end of January this year. Between February and April 2010, meanwhile, some 295,642 counterfeit consumables were seized in the UAE alone, compared to 630,756 from November 2008 to the end of January this year. Amin Mortazavi, general manager for HP Middle East’s imaging and printing group (IPG) insists that better enforcement of anti-counterfeiting policies by government entities in the region has played a major part in achieving higher rates of detection and more seizures

of fake kit. “We are enjoying a positive resonance, onance, not only from the customer and partner side, e, but also because this is a topic that is getting increased ncreased attention from governments in the region,” he said. HP’s ongoing bid to raise awareness of the risk of counterfeit goods focuses on issues such ass the poor quality and value of counterfeits, possible damage to equipment caused by fakes, low environmental ntal standards of production and the possibility that profits from counterfeits benefit organised crime. When it comes to counterfeit goods permeating ating the channel, Mortazavi insists most of the difficulties culties that HP faces are with companies that it is not in an official relationship with. In contrast, authorised partners artners are keen to demonstrate that they only carry the e genuine article. “We frequently exercise something that we call a channel partner anti-counterfeit audit,” he said. “Sometimes our partners even request this so that they have written proof from HP that there was no counterfeit found in their stock. ck. They can then advertise that to customers.” ”

> Amin Mortazavi, HP

(37) // CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

> Jussi Hinkkanen, Nokia

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local authorities who conduct many raids to confiscate fake goods and, in some instances, prosecute offenders.” Many other vendors take Nokia’s rigorous approach, although understandably, not all of them want to share the details. For some,

educating the customer about the perils of buying sub-standard consumables is key. “Counterfeiting is an illegal act and we want to protect our brand, but also our partners and most importantly our customers,” says HP’s Mortazavi. “Customers rely on the quality of HP printers and print-outs and we don’t want them to be disappointed.” Ranjit Gurkar, general manager at Brother Gulf, admits that counterfeiting techniques have become so sophisticated that it can be hard for a casual buyer to detect the difference. “This is why we are also investing in educating customers on why using counterfeit toners, drums and ink cartridges is a bad deal for them despite the lower price,” he said. “We tell them how counterfeit toners contain inexpensive amorphous resins instead of crystalline resins and thereby are unable to print at resolutions above 300 x 300 dpi — much lower than the 1200 x 1200 dpi resolution their device was designed for.” While vendors say that they are incorporating increasingly sophisticated anticounterfeiting features in their products as well as running trenchant marketing campaigns on the perils of buying fake goods, channel partners are clearly best positioned to keep a close eye on the market and expose

HOW TO SPOT COUNTERFEIT GOODS • Packaging can be an important clue. It might look authentic at a glance, but check the bar codes and numeric codes. Know your warranties, and check that any reference on the packaging is accurate. • Make sure that the brand name is correct. It is not uncommon to find Noka or Nokla masquerading as Nokia on counterfeit packaging, for example. • Know the technological parameters of the genuine product, especially at the higher end of the market where there is increased incidence of counterfeits. Many fake goods devices are actually feature-rich and may even include aspects not included in the real product. •If a vendor uses a hologram on the packaging, look at it closely. Canon, for example, has devised a colour-changing feature, as well as a viewer through which you can check authenticity. • Check accessories. Sometimes these make easy targets and can be swapped for fakes.

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

counterfeit sources. Which means they must stay whiter than white themselves. Vendors are reluctant to offer specific examples but insist that they will take action against dealers who are found to be trading in counterfeit goods, and will always work closely with the local authorities to identify culprits while recognising the efforts of partners in stamping out fakes. Nokia plans to establish a programme that will reward distributors and retailers who only trade in genuine products. Canon has a twopronged approach: educating its second-tier channel and consumers on how to identify fakes and the negative effects of using counterfeits; and enforcing its policy by conducting investigations on suspicious dealers and taking legal action. “We encourage our partners and the channel in general to report any counterfeiters or suspicious dealers that they may come across,” says Sidney Pereira, inkjet product manager B2C at Canon Middle East. “We all know that counterfeit cartridges that are made of substandard material have a damaging effect on machines — and this affects the reputation of the dealers, partner and brand, which is not healthy for any of us in the long run.” Lexmark also urges the channel to play its part in helping manufacturers combat piracy by passing on any tips they have about counterfeiting in the market. “We work very closely with our channel — both resellers and distributors — to be able to gather counterfeit products,” says Mohammed Ali Addarrat. “And if resellers come across any counterfeits then we actually encourage them to buy samples or give us as much information about the sourcing of those products so that we can take action based on those leads.” Dan Smith, general manager for integrated marketing at Xerox in the Middle East, says vendors must work closely with distributors to educate them on the complete cycle of counterfeit production: the origin and supply chain, how fakes are being distributed, where they are being distributed and the pricing strategy behind them. He also urges suspicious wholesalers, dealers and consumers to submit questionable printing goods to the Imaging Supplies Coalition for authentication. “All products are vulnerable,” says Smith. “Wherever money has been spent to create a product or offering, someone will be prepared to capitalise on that investment. Every vendor must be vigilant.”

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NET VALUE

The netbook market is largely responsible for driving much of the growth that the mobile PC sector has seen during the recession, but there are still question marks over how sustainable the ultra-small form factor business actually is. Channel Middle East invited a selection of the sectorâ&#x20AC;&#x2122;s leading names to talk shop.

We spoke to the following netbook channel experts: Peter Oganesean, PSG product manager at HP Middle East; Mark Prosser, product marketing manager at Acer; Alan Chu, regional VP MEA at MSI; Madhav Narayan, general manager of IT at Samsung Gulf; and George Su, regional director MEA & Turkey at Asus (main picture).

Netbooks are renowned for being attractively priced. How important is pricing to your sales strategy? GEORGE SU: Pricing is important in this product segment because this is a solution that often fits between a fully-fledged notebook and a mobility or desktop replacement. End-users usually have a very clear understanding of

(40) // CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

what they need, a very specific budget in mind and often a very specific timeframe in which to purchase. So if your products are not positioned at that sweet price point it is very difficult to appeal to those buyers. PETER OGANESEAN: HP values and prioritises customer experience beyond pricing. We research and develop products

> Mark Prosser, Acer

> Alan Chu, MSI

within the netbook category in order to bring value and accessibility to customers. MADHAV NARAYAN: As the netbook segment is very price-sensitive, pricing is one of the key strategic approaches when it comes to netbook models. Samsung provides consumers and businesses with a more affordable, value-for-money range. Samsung also offers a comprehensive netbook line-up with innovative designs and advanced technology. These netbooks are designed specifically for mobility and are sold at a competitive price as they contain all the necessary features for data access. What incentives do you offer the channel to sell your netbooks?

that the consumer will want to invest in. Added value features are appreciated by the customer and people merit the experience, look, feel and quality of a product over price. Although pricing is an important factor, because we are a business after all, HP strives to offer a balance of affordability, functionality and premium customer experience. We offer three basic products to cover the range of price points

has already won eGrmanyâ&#x20AC;&#x2122;s high-profile iF product design award for its unique design. The Wind 1U60 is less than one-inch thick and weighs just 1kg. MADHAV NARAYAN: With the netbook segment being very price sensitive, margins are limited in comparison to notebooks. However, as the segment has a 26% share, the volumes are huge and the absolute margin for the channel is very interesting. Given the low margins associated with PC hardware, how can the channel make money from selling your netbooks?

MARK PROSSER: Acer is a channel-only organisation and therefore support for our channels on all our products is what has helped drive Acer to become the number one mobility vendor in EMEA. We have channel programmes in place that offer incentives on all our products. p Udated point of sale, rebate programmes and ongoing training are just some of the incentives offered to the channel.

MADHAV NARAYAN: Samsung has a strong relationship with the channel and we plan to maintain the relationship by continuing to make the latest technologies within the PC industry available to them. Our new branch of netbooks has seen a large demand due to its small, portable design. As mentioned earlier, the channel relies on volume margins rather than transactional margins. Also, the channel margins on our notebooks are high and this compensates for any losses on netbooks.

ALAN CHU: Incentives vary from country to country, however we communicate the unique features that differentiate our award-winning solutions. For example, the MSI Wind 1U60

MARK PROSSER: Product mix is key. Our netbook product development follows the Acer guidelines of customer segmentation. Every customer is different and we make a range of

(41) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

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netbook products that cater to the entire market available. New colours, designs and patterns are assisting in up-sell opportunities for our channels. The 11.6-inch Ferrari One 200 is a premium netbook that offers the customer a stylish performer with additional margins for the channel.

How can the channel prevent netbooks from cannibalising sales of higher margin laptop models? ALAN CHU: MSI offers a complete range of notebooks to customers, not only netbooks. We provides marketing materials and training programmes in order to assist channel partners with more tools and knowledge when helping customers to make the best choice. Currently, quite Cu e t y, netbooks etboo s aare e qu te popular as they are convenient and light compared to laptops. GEORGE SU: There are always overlapping areas, however if you look at the overall picture then you will see that the size of the notebook market is

> Madhav Narayan, Samsung

> Peter Oganesean, HP

PETER OGANESEAN: Customers look for outstanding performance, but what they appreciate even more is the experience a product can offer them. We offer an experience that extends beyond the hardware components that comprise a notebook or netbook system. Price truly becomes secondary to customer experience, and profitability will quickly change if profit becomes the priority. HP cares about customer experience and offers products with the right features, the right look and the right function. growing. In MEA and Turkey, statistics show that we have the highest growth rate among all the big regions — more than 20%. Notebooks are the main driving force and netbooks contribute a lot to that, so overall the IT industry is benefitting from the growth of the two categories together. The cannibalisation exists, but it is a very small portion. What has happened is that the market segment has expanded to include a part that the previous notebook solution able oteboo so ut o was as not ot ab e to address. MARK PROSSER: A netbook is a secondary positioning when we device. Acer pushed this positio we still push this launched the Aspire One and w today with ongoing training for all our includes customer channels. Our training also incl technology and segmentation by form factor, te been in the pricing. Netbooks have now bee market to market long enough for the ma understand what they offer. We did not see cannibilasation when netbooks were seeing this now. We introduced, and we are not seei to continue to work with our channel chan and understand the customer requirements requir for the ensure we have a range of netbooks netb netbook customers and a range of notebooks for the notebook customers. Recent researc research shows that Apple’s iPad is already gr grabbing share from the netbook cate category. Does this mean the netbo netbook boom could be coming to an end?

ALAN CHU: The iPad is indeed handy, but while it features a completely different operating system the argument is whether it can really replace the netbook. Microsoft applications are still significantly dominating the market, and consumers will continue to demand the most convenient, full-functioned portable computers with them. GEORGE SU: There will always be a new device that satisfies some sort of customer demand or needs. The iPad, or similar tablet solutions, fulfil some part of the unsatisfied demand from the past, such as the touchscreen functionality. Many vendors tried that in the past, but the timing or the technology was maybe not mature enough. The iPad has matched the timing with other good points so this could be a very successful story in a short time. It definitely satisfies some of the points that previous devices couldn’t, but at the same time it can’t replace or satisfy some of the fundamental requirements of a netbook. MADHAV NARAYAN: We believe there will always be a market demand for netbook PCs. With high compatibility with the Windows operating system, and a plug-and-play interface compatible with various external devices, sales of netbooks will continue to thrive. Demand for mini-notebooks is being by driven by their small size, light weight, ease of use, basic but sufficient PC functionality and low cost. The netbook boom is just beginning.

(43) // CHANNEL MIDDLE EAST_AUGUST 2010 _www.itp.net_

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// CHANNEL MIDDLE EAST_AUGUST 2010

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FACT FILE (45) // THE MARKET BY NUMBERS

BACK IN BUSINESS EMEA PC market showing signs of old self

.... .. ...

The PC market in Europe, Middle East and Africa continued to return to better health during the second quarter, recording solid growth of 21% year-on-year with close to 24 million PCs shipped across the region. Despite fears of a slowdown, the PC market delivered a robust performance, even exceeding expectations overall across both commercial and consumer segments. In the Middle East and Africa specifically, the market saw strong double-digit growth led by continued demand for mobile PCs. “Growth in the Middle East and Africa performed in line with forecasts of 16 .4%, with the African continent outperforming the Middle East by reporting annual growth of 34%,” said Stefania Lorenz, systems and infrastructure solutions research director at IDC. The overall EMEA PC market benefitted from a gradual uptake in the business space as companies started to re-engage on refresh cycles in Western Europe, while also picking up across the CEE region. Although spending will remain cautious, IDC believes that better-than-expected commercial PC market growth is an encouraging sign and says accelerating demand will continue to support the market during the second half of the year. On the consumer side, meanwhile, demand remained strong, driven by mainstream notebook renewals and increasing uptake of all-in-one PCs. The market also profited from a more balanced product mix, with increasing share of mainstream notebooks versus mini-notebooks, as well as higher priced all-in-ones in the desktop market, which contributed to increasing average selling prices and supported stronger revenue growth. “The first half of the year confirmed a strong recovery in the EMEA PC market, and while global economic conditions will remain challenging, the outlook for 2H 10 remains positive, and will be driven by the continued rebound in business and consumer renewals,” said Karine Paoli, associate P V for EMEA systems and infrastructure solutions at IDC. The biggest winner during the quarter was Asus. It almost doubled unit shipments and now sits u j st one percentage point behind third-placed Dell in the EMEA rankings. P H grew sales 16 % but the fact that it wasn’t able to keep up with the market average meant that it lost market share. It now has a lead of just 0.3% over Acer, which boosted volumes 20.5 %.

ACER BEARS DOWN ON HP IN EMEA Number two vendor almost draws level with market leader

_EMEA PC MARKET SHARE BY VENDOR SHIPMENTS DURING Q2 2010

HP 20% Acer 20% Dell 10% Asus 8% Toshiba 6% Others 36%

SOURCE: IDC

ASUS UPSTAGES RIVAL PC VENDORS Taiwanese manufacturer almost doubles shipments during Q2

_EMEA PC SECTOR BY VENDOR SHIPMENT GROWTH DURING Q2 2010

+93%

+21% +24% +17%

+16% +10%

Acer

Dell

Asus

Toshiba

Others SOURCE: IDC

.... .. ...

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// CHANNEL MIDDLE EAST_AUGUST 2010

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BUSINESS INSIGHT (47) // INDUSTRY-WIDE NEWS

WESTCON OWNER SAYS CONSTRAINTS IN PRODUCT SUPPLY ARE STARTING TO EASE South Africa-based Datatec insists that product lead times are improving as it tells market that performance during the past four months has improved on last year estcon’s parent company Datatec has said that supply constraints which impacted its business last year have been alleviated amid a general upturn in trading conditions. The networking services group, which has interests in corporate resell and IT consulting, as well as distribution, said “supply constraints, existing at the previous financial year-end, have eased and product lead times are improving.” Westcon makes the bulk of its revenues from Cisco, although it also carries brands such as APC, Avaya and Trend Micro. In what also raises hopes that the market in general is beginning to stabilise, Datatec said that extended credit terms from suppliers the year before had been reduced to normal levels,

resulting in a consumption of working capital. Separately, it added that Westcon was looking at earnings-enhancing re-financing activities by taking advantage of vendor-supplier prompt pay arrangements. These activities will reduce Westcon’s net cash position over time, it said. Datatec revealed the developments in its latest interim management statement for the four months to the end of June, which also stated that revenues and operating profits had shown a stronger performance than the same period the year before. Westcon’s Emerging Markets business, which covers MEA and India, continued to trade well with an “improved performance” compared with a year ago.

etworking equipment maker Allied Telesis has

Sabbahuddin Khan as its first regional manager for the Middle East and Pakistan region. Khan — who is well-known to the channel from his time spent running distributor Aptec’s networking division — will spearhead the vendor’s efforts to “We are delighted to report that the improvement in trading and profitability reported at our recent full-year results has continued in all of the group’s divisions,” said Jens Montanana, CEO at Datatec. “We remain cautiously optimistic for the year, in line with our previously published forecasts.” Earlier this year, Datatec forecast revenues of between US$4.1 billion and US$4.4 billion for the year ending February 2011.

Handset wholesaler targets growth in the accessories sector after signing distribution contract with audio device vendor he accessories division of 20:20 Mobile has added Anywhere Speaker to its stable and will distribute the vendor’s kit to channel customers in the UAE and other Middle East markets. 20:20 Mobile has exclusive Middle East rights for the vendor’s line-up, which includes its flagship ‘WOWee One’ audio device. The product is already available in the UAE market, where it is sold through a number of retailers

confirmed the appointment of

20:20 MOBILE EYES UAE T

ALLIED TELESIS ON A MISSION

including Jackys, Emax, E4U and Abu Dhabi Co-operative Society. 20:20 Mobile claims its accessories division grew 17% last year, which it says was “well above normal market rates”. Its portfolio includes speakers, cases, battery packs and screen protectors. “20:20 Mobile has continued to grow year-on-year and our accessories division remains at the forefront of the industry,” stated Trevor Price, managing director of

expand its brand in the region

Datatec’s Jens Montanana says the firm remains optimistic that it will meet its financial targets this year

and build a channel network. Khan admits one of his first tasks will be to size the market correctly and develop an appropriate strategy. “We have not been an aggressive marketing company in the past. Slowly but surely, people will realise the advantages of selling and using Allied Telesis products. My goal is to position the company as a vendor of choice by creating a set of highly-trained partners, great services and support model, an attractive distribution

the distributor. “We are constantly exploring new technologies and innovative ideas and as such we look forward to working alongside WOWee One,” he added. UK-based 20:20 Mobile Group says it has been serving the UAE for more than five years and has long-term partnerships with brands such as Etisalat, Blackberry, LG, Samsung and Sonim. It claims to have three offices in the UAE, including two warehouses. The firm calls itself Europe’s “leading” mobile handset distributor. It employs more than 1,300 staff and claims to have resources in 14 countries.

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lay-out and a consultative selling approach,” he said. In addition to managing the business, Khan’s role will involve establishing a network of partners to deliver Allied Telesis’ range of switches, routers and network management kit.

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// CHANNEL MIDDLE EAST_AUGUST 2010

_www.itp.net_

PRODUCTS (49) // MARGIN-MAKING OPPORTUNITIES

[] MONITORS

[] USB HUBS

WELL-CONNECTED

CONSERVING ENERGY

Mobile Promate device offers up to 10 USB ports

AOC says US$179 monitor delivers massive power savings

Accessories vendor Promate’s latest family of high-performance USB hub products are now out in the market and offer a ‘plugand-play’ experience that the company insists will make them a hit with customers. The proHub.7 and proHub.10 are ready for action as soon as they are connected to a PC, allowing users to link to their camera, printer, mobile, scanner, mouse and external hard drive through multiple ports. According to Promate, the proHub can connect more than 100 devices at the same time by daisy chain. The proHub.10 (pictured) features 10 USB ports, including two 90-degree rotatable ports for versatile USB application.

If a stylish LED monitor with eco-friendly qualities is what you’re after then AOC claims it has the answer in the shape of the e2240Vw, which has just been launched in the Middle East through distributors Asbis, Compunics and Fire Bird. The monitor incorporates functions such as eSaver and eSensor, which deliver a 50% reduction in energy consumption compared to conventional panels, according to AOC. “The e2240Vw is the most celebrated monitor in its category and is powered to give the best results to its users,” said Suchit Kumar, regional deputy general manager at AOC. The e2240Vw is priced at US$179. _WEBSITE: www.aoc.com

WEBSITE: www.promate.net

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[] BLADES NOTEBOOKS

BLADE RUNNER Storage gains aplenty with new HP system HP has launched its P4800 BladeSystem SAN, which provides scalable, shared storage for a converged server, storage and networking environment. The P4800, which delivers 63TB of storage capacity with four storage blades connected to 140 disk drives, is compatible with all leading virtualisation providers, including Microsoft and VMWare. It is designed to offer organisations greater productivity by distributing storage resources across multiple sites to ensure business continuity. _WEBSITE: www.hp.com

GAMING ON THE GO Latest notebook model features high-end 3D content LG Electronics has unveiled its first quad-core processor notebook, the WIDEBOOK R590. The company claims that the device - available in the Middle East from this month - packs the performance of a high-end desktop PC into a mobile chassis and includes a 1.73GHz Intel Core i7 processor with a PM55 chipset. It also features a Nvidia GeForce GT230M graphics card with 1GB of dedicated DDR4 video memory, making it ideal for gamers on the move. “Notebooks are e narrowing the performance gap a ap to desktops thanks to improvements in mobility and performance. However, rendering high-end 3D content on a notebook has been challenging until now,” said HS Paik, boss of LGE Gulf. u ulf. _WEBSITE: www.lge.com.ae

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// CHANNEL MIDDLE EAST_AUGUST 2010

_www.itp.net_

EXPERT’S VIEW (51) // TOP TIPS FROM MASTERS OF THE CHANNEL

ROI REIGNS SUPREME IN THE REGIONAL SOLUTIONS DOMAIN These are tough times for IT providers, but they needn’t be if you focus on providing customers with a clear and measurable return on their technology expenditure. Manjeet Singh, managing director at Microsoft specialist Columbus IT Middle East, argues the case for keeping ROI at the heart of your sales pitch. Manjeet Singh says success in the solutions space is all about managing the sales cycle

In solution sales, return on investment (ROI) still remains the king. When times are good, you have the luxury of doing things your own way and whatever you touch tends to turn to gold. Unfortunately, however, times can quickly change. If you have heard any of the following lines in your sales meetings then you can be sure that the hangover from the good times is still not over: - “They just won’t decide” - “They want more for less” - “They don’t have cash to pay” - “It’s not a priority for them” Like the Chinese say, ‘everything is an opportunity’ and we have a great opportunity on hand to be a little introspective. Why is it that some solution sales organisations enjoy steady growth, while others are subjected to the market volatility? A possible answer lies in the way they manage the sales cycle. A lot of channel partners have developed bad habits over the last few years and they look for

a short-cut in the sales cycle. We see these partners in the market constantly because these are the companies complaining about the poor market conditions. On the other hand, the ones that have stuck to the basics and can show and prove a return on investment to their clients are never short of business.

Five tips for success Going back to basics and spending quality time working the ROI is a sure-fire way of winning business in today’s market. It goes without saying that clients won’t follow the ‘me too’ approach anymore. If the investment is significant, the decision-maker will sign only when the returns are clearly defined. ROI can actually be very simple and versatile. Here are my five easy steps for ROI dummies: 1. Get to the pain areas of your prospect and get their agreement on the issues. 2. Translate everything into numbers. This could mean the

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cost of duplicated effort, the cost of delayed decisions, the cost of stock outs or the cost of doubtful debt, for example. 3. Address the pain with the new process, tools, automation or best practice and quantify the customer benefits. 4. Get the right audience and talk ROI numbers. There might be ROI calculators built by your principals that you can use. If not, develop a simple macro version yourself. 5. Finally, pick your order (and hopefully the cheque!).

Results business The bad habits of not doing the numbers will die hard, but there is no harm in giving it a try. The results might just astonish you and it is certainly going to differentiate you from many of your competitors. There is a well-known saying that a picture is worth a thousand words. In the IT solutions business, an ROI number is worth a 100-page proposal.

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OFFICIAL SHOW CATALOGUE 18 - 22 October 2009 Dubai International Convention and Exhibition Centre Dubai, United Arab Emirates

POWER UP YOUR BUSINESS

OFFICIAL SHOW CATALOGUE 17-24 OCTOBER 2009 www.gitexshopperdubai.com

ORGANISED BY

www.gitex.com

VENUE

PLATINUM SPONSOR

GOLD SPONSOR

TELECOMMUNICATIONS PARTNER

// CHANNEL MIDDLE EAST_AUGUST 2010

_www.itp.net_

DAY IN THE LIFE (53) // INSIDE THE CHANNEL WORKPLACE

SUPER SALES In this new section of Channel Middle East, we pack our bags and head to work with a member of the channel community to find out what a typical day on the job entails.

Name: Anshum Anand Company: Kobian Gulf Job title: Business Development Manager Years in the role: 1 Years at the company: 1 Previous companies: London Academy of Professional Training Ltd

> How would you summarise your role? My prime responsibility is to supervise the growth of the retail business and build energised sales channels while creating new revenues from widening product lines. The job includes the strengthening and expansion of our retail distribution

network through power retailers, supermarkets, hypermarkets, IT retailers and channels dealing with a portfolio of IT accessories, laptop bags and other trading products. The job also demands that I keep a close check on competitors’ market practices and therefore develop action plans to counter challenges, which helps to define and control the objectives of the sales team.

> What’s the first thing you do when you get in the office each day? I start by going through the checklist of ‘follow-ups’ to refresh the memory. I then take a long look at my task list, which keeps me on my toes for the whole day.

> What does a typ typical you? day entail for you There is no such thing aas a typical day and that’s what I love lov about it. If I were to let every turn or every drop define me, I’d neve never enjoy the ride. I like doing a lo lot of things. Some days are awful and an some are great. You must strive to achieve a balance - a balance insi inside yourself, that is. You can hardly predict p which days will be which which.

> What qualities d do you job? need to do your jo There are a numbe number of skills and qualities whic which are

most important for me to be successful: inspiring a shared vision, good communication, integrity, enthusiasm, empathy, competence, and an ability to delegate tasks. You also need to be cool under pressure and possess team-building and problem-solving skills.

> What’s your favourite part of the job? l love when I get to use my ‘super powers’. Observational skills really impress people; remembering a name or interest, knowing what customers need before they speak up and reading minds. Making people happy makes me happy.

> What is the hardest part of your job? I love my job, but the hardest part of it is letting go. I am a perfectionist. Give me 24 hours to work on a cake and I would spend every last second ensuring it was flawless. Sometimes my colleagues may not share the same sentiment and I’m pretty sure that at times they think I’m crazy.

> What criteria do you measure your performance on? If you can’t measure a goal then don’t set that goal. Performance must be measured on an objective basis. You can’t just go on gut feel. Feedback needs to be objective, specific and accurate - something you’ve seen, read or heard.

> What’s been your most memorable moment in your current role?

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One of the most memorable moments was when our company got listed as the first IT product supplier for Spinneys Supermarket.

> Where do you see yourself in five years? In terms of my future career path, I’m confident that if I do my work with excellence, opportunities will inevitably open up for me. It’s always been that way in my career, and I’m confident I’ll have similar opportunities here.

> What do you get up to during your lunch hour? I go for a quick dosa or idli sambhar, or sometimes chola. Would you like your channel job to be featured in our ‘Day in the Life’ section? If so, e-mail: andrew.seymour@itp.com

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// CHANNEL MIDDLE EAST_AUGUST 2010

NEXT MONTH (54) // INSIDE THE NEXT ISSUE

The online home of 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

EDITOR’S CHOICES

EDITORIAL

NEWS

Senior Group Editor Mark Sutton Tel: +971 4 210 8225 e-mail: mark.sutton@itp.com Group Editor, Channel titles, ACN, NME, Comms MEA Andrew Seymour Tel: +971 4 210 8320 e-mail: andrew.seymour@itp.com

IBM IN MAJOR TECH UPDATE

ADVERTISING Advertising Manager Kausar Syed Tel: +971 4 2108 361 e-mail: kausar.syed@itp.com

New system integrates mainframe with Power7 and System x servers

STUDIO Group Art Editor Daniel Prescott Senior Designer Michel Al Asmar

NEWS