Distribution remains a fundamental aspect of the Middle East IT market, but have you ever wondered how much money the top players are making, who they are selling to and what strategies they have in place to survive the difficult market conditions this year? Welcome to

The 2009 Power List…

In association with

// CHANNEL MIDDLE EAST_MARCH 2009 _www.itp.net_ (24)

C ircumstances can change very quickly in the IT market and nowhere is that more evident than in distribution.

Rewind the clock 12 months and wholesalers in the Middle East were speaking emphatically of double-digit growth and audacious expansion plans, reflecting the general mood of a sector that has only ever really been limited by the level of its own ambitions before.

But the situation today couldn’t be more contrasting. The swashbuckling — some may even argue reckless — methods employed during the buoyant times are now being replaced by an unprecedented display of diligence as wholesalers contend with a market that is visibly feeling the effects of the global economic crisis.

Distribution remains as squeezed by the financial downturn as any other sector. The reduction in loan facilities means resellers are placing fewer orders because consumer and corporate demand has subsided, while the overall lack of credit availability has disrupted the flow of day-to-day business that distributors had become accustomed to.

For the first time ever, this year’s Power List — an unrivalled guide to the largest Middle East IT distributors with offices in Dubai — contains interviews with senior executives from each of the 15 companies profiled. The result is a fascinating insight into the psyche of the regional distribution channel during this challenging time.

The aspirations that distributors have to expand their operations still come across in their outlooks for the year, but they are now accompanied by a substantial degree of prudence that can only be beneficial for the long-term health of the channel. Virtually all of the executives interviewed cited profitability and effective cashflow management as their main priorities this year, with several adamant they would now rather sacrifice revenues than take risky deals that could jeopardise their bottom line.

The 2009 Power List is designed to provide a more comprehensive breakdown of the region’s largest IT distribution houses than ever before. As well as publishing the contact and ownership details of each company, we

have indicated the primary brands they carry, giving you a summary of the core IT vendors responsible for generating their revenues. Distributors with the rights to sell fast-moving, finished goods from brands such as HP, Acer and Microsoft inevitably tend to be the ones reporting larger sales numbers due to the volumes associated with those businesses.

We have also documented the Middle East and Africa countries where distributors operate local sales offices or warehouses. Many wholesalers have proved it is possible

to develop a regional customer base from the confines of Jebel Ali, but this information also allows you to see which players boast points of presence throughout the region. Additionally, each profile includes updated figures on the number of active accounts and employees at each company. Distribution has always been a fairly labour-intensive business in the Middle East compared to other regions where a greater level of e-commerce and automation occurs, which explains why more than 2,700

people work for the 15 companies featured. The number of active accounts represents the approximate quantity of customers that distributors transact with on a quarterly basis and provides a snapshot of reseller breadth.

It is important not to draw too many conclusions from this, however. For instance, those appearing to serve fewer accounts don’t necessarily have a weaker customer base, but tend to either rely on an established VAR or sub-distribution network for repeat business or generate a high proportion of business from select retail accounts.

Given that inclusion to The Power List is dependent on scale — or revenue — we can reveal that the 15 distributors featured over the coming pages generated US$4.275 billion in sales last year, an increase of 24% on the US$3.440 billion recorded the previous year.

While this reflects the impressive rate at which the Middle East distribution sector has expanded, it has to be pointed out that much of the growth is likely to have come from the first nine months of the year — prior to the global downturn tightening its grip on the market.

Distributors are under no illusions that recording sales growth in 2009 will be an extremely difficult task, but for many the key objective is to safeguard the bottom line so that they are still present this time next year.

Distributors cite profitability and cashflow management

as their main priorities this year, with several adamant they would now rather sacrifice revenues than take risky deals that could jeopardise their bottom line

As The Power List seeks to indicate the largest Dubai-based distributors by scale we have a responsibility to ensure the accuracy and authenticity of any figures we publish. This year we have taken measures to verify annual revenues by requesting distributors to provide evidence of the sales figure they state.

Due to the publication date of this article, most distributors do not yet have copies of independently-audited financial accounts for the most recent calendar year.

However, all distributors in this year’s Power List have either shown us a copy of pre-audited results or provided a figure they claim to be accurate. To build in an extra layer of verification, we have

also asked each distributor to show us a copy of their audited accounts for 2007. You will therefore see a ‘VERIFIED’ stamp next to figures we are satisfied are genuine based on viewing independently-audited financial statements.

We intend to adopt the same policy next year by requesting evidence of the 2009 figure (where possible) as well as independently-audited accounts showing confirmed 2008 revenue. If for any reason the 2008 figure conflicts with the number provided to us this year by what we consider to be an unacceptable margin then we reserve the right to exclude the company from The Power List.

It goes without saying that revenue is only one indicator of a company’s size and should not be interpreted as a statement that one company is better or more significant than another.

However, Channel Middle East believes it is imperative that all data published in these pages is verified to the best of our ability. We hope the measures outlined here will contribute towards building a more accurate and transparent picture of the Middle East market, as well as creating a level playing field for each distributor included in the list.

_www.itp.net_ // CHANNEL MIDDLE EAST_MARCH 2009(25)

BY ANDREW SEYMOUR

In association with

REVENUE VERIFICATION

2008 SALES

$97m2007 SALES

$69m

Tel: +971 4 299 8860Website: www.westcongroup.com

Headcount: 85

Active Accounts: 450

Middle East Offices: Qatar, Saudi Arabia, UAE

Key Brands: 3Com, Avaya, Cisco, Juniper, Motorola, Nortel, Sonicwall, Trend Micro, Zebra

Ownership: Westcon is a subsidiary of listed South African networking services group Datatec

60 seconds with... Steve Lockie, Managing Director

What are your strategic priorities this year?One of our priorities is to focus on the key growth markets, and that’s both technologically and regional. We also intend to look at some new vendor opportunities, specifically around security and data centres. The final point is continuing to enable our resellers by providing more value-add services.

How do you differentiate from competitors?Our unique six-step selling model is where we really set our stall out. We have only introduced that model into Comstor during the last year, although we have brought one of the modules — ServiceVantage — into Westcon. We obviously couldn’t do anything until we had rebranded but now that has been done you can expect that whole model to begin rolling out to Westcon. On top of that we have global leverage, massive inventories and numerous programmes coupled with local knowledge.

What key indicators should distributors use to measure their performance? In terms of financials and metrics we look at gross profit, net profit and market share. The other thing we are really fussy about is customer and staff surveys. We do them twice a year and from those we look at how we perform against the previous period. We are trying to look at the overall health of our business, and that depends on internal and external factors.

WESTCON MIDDLE EAST GROUP

2008 SALES

$95m2007 SALES

$95m

Tel: +971 4 886 3300Website: www.goldensystems.ae

Headcount: 100


Middle East Offices: UAE

Key Brands: AMD, B-Tech, Gigabyte, Kingmax, Leadtek, Logitech, ATI, Nvidia

Ownership: Golden Systems is privately owned by a group of Middle East investors

ProfileGSE is renowned as the Middle East distributor for graphics accelerator specialist Gigabyte and has built a robust route-to-market for the company. As well as deals with PC resellers, GSE has increased its retail presence in recent times, assisted by vendor partners such as Logitech. GSE has undergone a series of restructuring measures over the past year, appointing Moazam Gazi as chief administrative officer to work alongside CEO Ali Sharifi in setting corporate strategy.

60 seconds with... Ehsan Hashemi, COO

What are your strategic priorities this year?Most organisations had different plans for 2009 but when the second half of 2008 started going downhill a lot of companies changed their goals. Everybody is trying to survive and make it through 2009 and we are no different. We are a healthy company that is doing very well and our goal is to make quality sales — as opposed to quantity sales because the volumes are not there anymore. The box-movers used to do very well in this region, although luckily for us we were never one of those so the slowdown is not going to affect us as much as volume-based distributors. Our move to Jebel Ali means our logistics, warehouse, sales and operations will be under the same roof, which is going to make it more efficient and allow us to offer a much better service to customers.

What key indicators should distributors use to measure their performance? We have taken measures in reducing a lot of unnecessary costs and I think that’s one factor that every company should look at given the global crisis. Our CEO has always said that every employee needs to be loaded — now he is focusing on everyone to be overloaded! I guess by that he means everybody should be totally efficient and there should be no wastage, whether it is time, money or office supplies. Efficiency is the most important key indicator for every distributor to measure because it is going to reflect on the profit margin and profitability.

GOLDEN SYSTEMS ELECTRONICS FZCO

2009 ProspectsGolden Systems is not a distributor that has ever proclaimed to be chasing the high volumes synonymous with broadliners, but the company has still managed to build an annual runrate business of almost US$100m a year, which is by no means insignificant. Challenging market conditions will make it difficult for the company to match that feat this year, but the restructuring it has carried out at least puts it in a position where it is able to tap new markets and expand its sales channels.

ProfileWestcon has cemented its brand name in the Middle East during the past year, leaving it in good shape to continue its momentum in 2009. Comprised of Cisco-oriented Comstor and sister firm Online Distribution — recently rebranded Westcon — the group boasts a formidable networking solutions portfolio. The former Online business still contributes more than two thirds of sales, but Comstor already generates close to US$30m a year in revenues.

2009 ProspectsWith resellers facing difficult times in the market, Westcon is well-placed to reinforce the availability of numerous in-house channel programmes it has introduced to the region. The VAD offers a comprehensive range of technical, marketing and sales resources that have benefited partners in other regions and it is during these trying times that Westcon should be able to reach out to integrators in need of a guiding arm from the distribution community.

// CHANNEL MIDDLE EAST_MARCH 2009 _www.itp.net_ (26)

In association with

2008 SALES

$118m2007 SALES

$98m

Tel: +971 4 393 6247Website: www.trigononline.com

Headcount: 90


Middle East Offices: Bahrain, UAE

Key Brands: BenQ, Creative, D-Link, Elo TouchSystems, Ergotron, Lacie, LG, Plustek, PQI, Samsung, ViewSonic

Ownership: Trigon is a division of the privately-held Al Ghurair Business Group

60 seconds with... Arun Chawla, COO

What are your strategic priorities this year?Our mission is to provide quality products and reliable services based on the latest technology and to win the long-term loyalty of customers and employees through continued satisfaction. Since we have built the company on a good foundation and business model, this is the ideal time to reach new potential markets. We recently opened our first branch office in Bahrain and we have plans to open at least three branch offices outside of the UAE in the next two years, with the major focus being on the Middle East, Africa and Indian sub-continent.

How do you differentiate from competitors?Support and services are often an overlooked area of channel development, but in this cut-throat competitive environment, high-quality support and services are vital to differentiating from competitors. Caring for our customers remains one of our most valuable tools for customer retention and long-term loyalty. This vision has helped us to become authorised service centres for ViewSonic, Samsung, D-Link, Elo TouchSystems, Creative, Mustek and other brands.

What key indicators should distributors use to measure their performance? What matters in the IT channel is gross profit margin and the bottom line. That should be the focus for every distributor if they are serious about their long-term ambitions to grow and exist in the market. That is also what makes Trigon different from others.

TRIGON LLC

ProfileTrigon remains one of the longest-serving distributors in the region, starting out life as an expert in Unisys mainframes before evolving into the multi-channel wholesaler it is today. The company, which maintains a location at the heart of Computer Street, makes the bulk of its sales from serving traditional dealer and integration channels, with the remainder from retail and export customers. This diversity has allowed the distributor to grow its revenues and increase headcount.

2009 ProspectsExpect Trigon to build on the progress that has seen it become the main distribution supply line for a number of IT and CE vendors in the region. The company’s retail customer base has expanded massively in recent years to include power retailers, hypermarkets and duty free clients, and it will look to capitalise on this broad installed base to maintain its growth. Mobility, smart devices and digital lifestyle products are all categories where Trigon foresees major opportunities.

2008 SALES

$123m2007 SALES

$106m

Tel: +971 4 803 9500Website: www.empa-me.com

Headcount: 85


Middle East Offices: Saudi Arabia, UAE

Key Brands: Biostar, Intel, Iomega, Kingston, Philips, Fujitsu Siemens, Toshiba, Transcend

Ownership: Empa Middle East is owned by private investors who purchased the company from the Turkish Empa Group seven years ago

60 seconds with... Shahood Khan, Sales & Marketing Director

What are your strategic priorities this year?We have mainly been a components distributor so the priority for us is to quickly diversify our focus towards netbooks and the networking business as well by signing new vendors. As far as the territories are concerned, we are going to be highly focused on the Saudi market this year. Investments have already been made in Saudi — we have taken a central warehouse, as well as smaller local warehouses, plus we have increased the size of our van fleet in Saudi. Now that we are holding a lot more inventory in-country we are trying to cover other nearby cities. On the credit front — and this is not yet finalised — we are trying to negotiate a blanket cover for approximately 250 customers in Saudi up to US$50,000, which will give us stronger breadth.

How do you differentiate from competitors?The major difference is that we have a long-term thinking in terms of our cost management and facilities, while another major strength is our sales power. Out of our portfolio, apart from Intel, the majority of the products we carry are ‘push’ products. Today, distributors are interested in selling the products that move — the HPs and the Acers — and when they take another brand they are not able to create demand for it. We have been approached by a lot of vendors who have seen that we have made some smaller vendors quite successful. The third thing is that we are highly compliant, which has to be a priority for all distributors these days.

EMPA MIDDLE EAST FZCO

ProfileEmpa has been a consistent fixture on The Power List since it started, generating sales of more than US$100m for the last two years. Intel still remains the major contributor to its top line, but the company should definitely not be labelled a one-trick pony as it has consciously moved to expand its portfolio over the years. Iomega is one of the more recent additions to a stable that also includes Kingston, Fujitsu Siemens and LaCie, as well as a host of components vendors.

2009 ProspectsKSA already accounts for 30% of Empa’s sales, but the investments it has made in local infrastructure mean the growth of the business should be a formality this year. Empa president Rahb Hamidaddin is understood to be taking a hands-on role in driving the Saudi business forward, illustrating its importance to the company’s future. The ongoing quest to shrug off its reputation as a ‘components-only’ distributor should also keep Empa busy this year as it searches for new partnerships.


In association with

2008 SALES

$145m2007 SALES

$119m

Tel: +971 4 881 1191Website: www.despec.ae

Headcount: 45


Middle East Offices: Iran,Kenya, Jordan, Saudi Arabia, UAE

Key Brands: Canon, Epson, HP, Imation, Lexmark, Samsung

Ownership: Despec MERA is a division of Despec International, which is 70% owned by Dubai International Financial Centre

60 seconds with... Faisal Jamal, COO

What are your strategic priorities this year?We are focusing a lot on in-country distribution and as a company we have decided to open up warehouses and sales offices across the Middle East, including Riyadh, Amman, Nairobi and inside Dubai. These are all duty-paid warehouses and it means we are a lot closer to the market. Additionally, we have the warehouse, sales office and back-office in Jebel Ali. We are traditionally a company that deals with medium to large resellers so we really want to get feet on the ground and we are hiring a lot of junior sales staff to visit the customers. It is very much a policy of going back to basics — visiting the customers in the morning, processing the sales order in the afternoon and delivering the next day. We are not talking about US$50,000 orders — we want to get a customer buying US$500 or US$1,500 and we want our sales guys to go to the shelf and say, “okay, you are missing one cartridge here and two cartridges here, this is what we are recommending you buy.”

What key indicators should distributors use to measure their performance? For us, the key is looking at organic growth, but we look at liquidity and profitability quite intensively too. If you go deeper into the financial side then you also have return on working capital, return on investment, the rate at which you are turning your goods, inventory days and the number of days’ credit. Feedback from customers and vendors is also very important.

DESPEC MERA LTD

ProfileDespec is a deserved addition to this year’s Power List, illustrating the sort of operation that can be built from maintaining a sharp focus on a specialised sub-sector of the market. Ever since its formation, the company has not lost sight of the fact that retaining a clear emphasis on supplies and consumables is what creates value for customers. As a result, it boasts authorised distribution rights for almost all of the major ink cartridge and toner vendors.

2009 ProspectsThe imminent arrival of large chains such as Office Depot and Office 1 Superstore to the Middle East will undoubtedly fill Despec with glee as it looks to continue its good form in the region. The company is determined to increase its visibility throughout the region as investments in new sales managers and in-country facilities tesify. With its online ordering service ‘e-dolphin’ also slated for launch sometime in the near future, 2009 should be a good year for Despec.

2008 SALES

$160m2007 SALES

$147m

Tel: +971 4 881 7277Website: www.alyousufdigital.com

Headcount: 60


Middle East Offices: Egypt, UAE

Key Brands: Epson, NEC Displays, Netgear, ViewSonic

Ownership: Al Yousuf Digital is the IT distribution division of Al Yousuf Group

60 seconds with... Ahmad Qasem, General Manager

What are your strategic priorities this year?Al Yousuf is working on a series of strategies and plans, such as being involved in the solutions business. It doesn’t mean we will deliver a full solution to the customer, but it means we are into products that are part of the solution. Today, we have more focus on VARs than at any time before. We have been building our product portfolio for a long time to reach a level where we have a large proportion of the solution. On the hardware side we can offer 60% to 70% of the solution. We have displays, projectors, monitors, all types of printers, networking products and external storage. We have won some big tenders for commercial displays in the UAE through our VARs. We want to push towards the VARs and take our share of the corporate business, although we don’t want to do that directly because we believe in partnering.

How do you differentiate from competitors?We have been in the market with many companies that have disappeared and companies that have been established later on, but it is very clear that we have more stability and develop strategies that give us a much longer life than others. At the same time, we are flexible enough to move and adapt to new techniques, and we are no longer just a pure box-mover. The strong financial background and stability of Al Yousuf LLC, as well as being a local organisation in the Middle East, are also strengths.

AL YOUSUF DIGITAL LLC

ProfileAl Yousuf’s fiscal year runs from October to September, but the figure provided is for the calendar year. With sales offices and showrooms in Dubai, Jebel Ali and Abu Dhabi, plus operations in Egypt, Al Yousuf is one of the most established names on the distribution circuit. Best known as a major authorised regional distributor for both Epson and ViewSonic, Al Yousuf has maintained a focused approach on A-brand hardware solutions.

2009 ProspectsAl Yousuf Digital added a number of new VAR accounts last year and it will be hoping for more of the same this year as it looks to expand its business. Like most distributors of printing and display equipment, Al Yousuf will be conscious of making its numbers, but it is also aware that running a tight ship focused on profitability is what counts at the moment. Being part of an established group gives Al Yousuf Digital a sense of assurance that some of its rivals will envy.


In association with

2008 SALES

$169m2007 SALES

$112m

Tel: +971 4 883 5929Website: www.asbisme.ae

Headcount: 75


Middle East Offices: Algeria, Egypt, Morocco, Qatar, Saudi Arabia, Tunisia, UAE

Key Brands: AMD, Dell, Intel (North Africa), Kingston, Pioneer, PQI, Seagate, Toshiba

Ownership: Asbis Middle East is a subsidiary of Asbis Group, listed on the Cyprus Stock Exchange

60 seconds with... Hesham Tantawi, VP MEA

What are your strategic priorities this year?We are going to focus on developing more markets with local presence, particularly when it comes to Saudi Arabia, Iraq and other emerging countries where we think we will be able to find growth. We will see growth, it will not be a flat year. Asbis is investing in the Middle East and putting more focus here on the operation. The strategy is to add more products as well and this is something we have already started from the beginning of the year when we added D-Link.

How do you differentiate from competitors?We differentiate ourselves through our close relationships with customers and the service we provide to them. For example, in Saudi Arabia last year we started operating through a forwarder and contracted a third party warehouse, the same as other distributors. However, we found that didn’t result in a fast delivery so we opened our own logistics centre in KSA. That is an example of the investment we have made and this year we will push it further.

What key indicators should distributors use to measure their performance? There are multiple ways. We can measure our performance online because our ERP system allows us to analyse return on investments, and we can do that per customer, per unit, per country, per SKU — any variable you want. Distributors should be looking at the return on investment, not the GP and NP.

ASBIS MIDDLE EAST FZCO

ProfileAsbis has become one of the most powerful players in the regional components distribution sector during recent years and last year purchased a warehouse in Jebel Ali to support the growth it anticipates, as well as strengthened its activities in KSA. It is important to note that Asbis has also taken steps to diversify its offering with the addition of finished products. Local deals with Dell and Toshiba have both given its top line a considerable boost.

2009 ProspectsAsbis’ headquarters will be looking to its Middle East operation to excel as Central and Eastern Europe feels the pinch, but after registering such prominent growth over recent years 2009 will be a true test of its ability to get results from a market that may no longer be as buoyant as it once was. The company’s customer breadth should help it succeed where other components distributors may fail, while efforts to ramp up activities in Saudi could prove significant to its growth.

2008 SALES

$210m2007 SALES

$182m

Tel: +971 4 391 3333Website: www.mindware.ae

Headcount: 135

Active Accounts: 1,000

Middle East Offices: Egypt, Lebanon, Saudi Arabia, UAE

Key Brands: Alcatel-Lucent, CA, Citrix, Dell, Foundry, Intel, Juniper, McAfee, Microsoft, Symantec

Ownership: Mindware is an affiliate of US$1 billion n a year IT group MDS Holdings

60 seconds with...Jacques Chammas, Managing Director

What are your strategic priorities this year?It will be a year of consolidation. We are going to sustain the growth and look at the opportunities from our product portfolio to see which products are generating money. We might look for one or two additional products that could be very strategic for us, but we are not actively shopping for new vendors. We are also trying to upgrade the level of our people with management training, which we have started already, and we need to consolidate our back-office and logistics between the companies that we have in the distribution group. Being able to improve and increase the visibility and relationship with vendors also remains an important measurement.

How do you differentiate from competitors?I believe Mindware’s biggest asset is that we are ready to change our way of business if the market requirement demands it. We are not stuck by a certain way of management, we have restructured the company to be more efficient. Some companies with a style of business can say, “okay, this is the way we do business and we are not going to change that”, but I think we are very sensible to what the future requires. What we did three or four years ago might have been very good for that period, but what we might need to do now is think up a new strategy based on what the next few years will bring. We have the flexibility in the company to make those changes.

MINDWARE FZ LLC

ProfileMindware continues to be the ultimate example of a distributor that has been able to sustain a volume and value portfolio. The company still takes a large portion of its sales from Intel, but it has also built up a notable offering of enterprise vendors, particularly in the networking arena. Mindware continues to work hard at driving efficiencies in its business — an objective aided by the recent hiring of former Intel EMEA finance executive Mario Gay as COO.

2009 ProspectsAn emphasis on working more closely with solution-oriented products is likely to take up most of Mindware’s energy this year although that doesn’t mean it will reduce focus on volume sales. Changes made to its back-office operations should prove fruitful this year given the importance of running a profitable business in light of slowing demand. Mindware also has plans to strengthen in KSA after appointing ex-Almasa chief Radwan Basheer as country boss.


In association with

2008 SALES

$250m2007 SALES

$204m

Tel: +971 4 507 8888Website: www.logicom.ae

Headcount: 150


Middle East Offices: Jordan, Lebanon, Kuwait, Saudi Arabia, UAE

Key Brands: Intel, Cisco, Microsoft, Kingston, Linksys, Trend Micro, Seagate, Lenovo, IBM

Ownership: Logicom Dubai is the UAE-based subsidiary of the Cyprus-listed Logicom Group

60 seconds with... Nicholas Argyrides, General Manager

What are your strategic priorities this year?The Middle East, just like the rest of the world, is now feeling the pinch from the global financial crisis, which is apparently becoming even more intense as the year progresses. On a group level, one of Logicom’s main priorities is to safely and profitably come out of this recessionary phase and to protect all stakeholders along the way. Prudence and caution are crucial, but at the same time we are definitely grabbing any opportunity that we deem valuable to our business. This strategic approach reflects our 2009 priority for Logicom. You have to keep the business going, but remain careful at the same time.

How do you differentiate from competitors?As a publicly-listed organisation, corporate governance is a given within the group. We are equipped with the right tools to manage markets in both good and bad days, and we feel that our solid balance sheet and strong financials, along with our qualified professionals, are definite advantages. Corporate governance is indeed vital, especially these days. It is in times like these that you see the fruits of being prudent during the good days. On the commercial side, our wide portfolio of first-class products, from components to software to enterprise equipment, gives us an edge as a one-stop destination for our customers. Finally, we are one of very few distributors with credit insurance in place to cover our receivables.

LOGICOM DUBAI LLC

ProfileLogicom maintains a strong presence in the Middle East, where it has forged a reputation for showing that it can balance a volume and value portfolio. Contracts with Cisco, Intel and Microsoft provide the backbone of an offering that also encompasses several other leading hardware and software vendors. The firm has strengthened its coverage in Saudi during the past year, with a new Jeddah warehouse planned to augment a facility in Riyadh.

2009 ProspectsEstablished offices in Jordan and Lebanon, coupled with increased exposure in Saudi Arabia and Kuwait, should help Logicom to weather the storm more comfortably than some of its counterparts. Like most distributors, Logicom is unlikely to go chasing aggressive sales growth this year, preferring to maintain a stronger emphasis on reducing risk and protecting profitability. Changes to its product portfolio in terms of further additions are also likely in 2009.

2008 SALES

$285m2007 SALES

$173m

Tel: +971 4 3555 365Website: www.bdlgulf.com www.bdlsa.com

Headcount: 197


Middle East Offices: Bahrain,Egypt, Kuwait, Saudi Arabia, UAE

Key Brands: Asus, BenQ, Creative, Dell, Lexmark, LG, Lite-On, Microsoft, MSI, Swiss Travel, US Robotics

Ownership: BDL Gulf is a subsidiary of BDL in Saudi Arabia

60 seconds with... Sunil Nair, General Manager

What are your strategic priorities this year?Our priority is to achieve revenue growth of between 25% and 30% a year, particularly as there is substantial scope for enhancing revenues in the UAE operation while still maintaining good profitability. We believe that can be accomplished by focusing on enhancing business with customers that have a good track record. We will also be working even more closely with those vendors that understand the current economic environment and are willing to adapt to it.

How do you differentiate from competitors?BDL follows a cost leadership strategy and we constantly review our operational costs to take adequate measures to achieve optimum levels. This helps us deliver goods to our partners at competitive price points. In addition, we focus a lot on the ‘revenue per head count’ parameter, which results in higher productivity. BDL enjoys a solid relationship with its partners and has excellent market reach.

What key indicators should distributors use to measure their performance? There are a range you can use, including cash flow management expertise, the ability to manage healthy and adequate inventory, faster turnaround of stock and portfolio management skills. The maintenance of a consistent and healthy bottom line, as well as customer breadth and depth, are also indicators.

BDL GULF FZCO

ProfileWith revenues approaching the US$300m mark, Saudi Arabia-based BDL features among the region’s broadline elite and appears in The Power List by virtue of the fact it now operates a subsidiary in Dubai. BDL Gulf has come a long way in the year or so since its launch under ex-Acer channel chief Sunil Nair, signing a slew of partnerships, enamouring itself to the both the commercial and retail channels, and unveiling in-country operations in Kuwait.

2009 ProspectsNow that it boasts a pan-regional infrastructure, BDL will expect to push on this year and make a name for itself in the region, especially if distributors with a higher reliance on the embattled UAE market find conditions particularly tough going. BDL’s US$30m Egyptian operation is also likely to play a starring role in its growth and profitability during the next 12 months if assertions that business in North Africa’s primary market will continue to remain buoyant prove correct.


In association with

2008 SALES

$433m2007 SALES

$420m

Tel: +971 4 3063 100Website: www.almasa.com

Headcount: 200


Middle East Offices: Kuwait, Saudi Arabia, UAE

Key Brands: AMD, ASRock, Asus, Avaya, Blue Coat, Extreme Networks, HGST, HP, Seagate

Ownership: Almasa IT Distribution is a member company of privately-held Almasa Holdings

60 seconds with... Mehdi Amjad, Chairman & CEO

What are your strategic priorities this year?Our focus in 2009 will be about how we adjust ourselves to the market place — how do we come up with very clear and defined strategies to give us a winning formula in the current environment, and how can we make sure we maintain a very healthy bottom line? Our intention is to run the business on the basis of the bottom line, rather than the top line, so that means there will be greater emphasis on profitability and risk management. At the same time as this, it is about making sure we have the right dynamics and are fit for the future growth strategy that we have in mind. I think that if the situation is played well then 2009 can definitely be a successful year from an opportunity-grabbing perspective.

How do you differentiate from competitors?Almasa has always been referred to as a very dynamic company that can respond to customer needs and behaviour much faster than others, while also retaining its rigid corporate structure. This balanced combination is what has made Almasa a unique proposition to the vendor community as well as the reseller community, creating our competitive advantages compared to other companies in the industry. I think that is going to be the way moving forward as well — tailor-made solutions by market, by sector and by vendor, while at the same time maintaining a very corporate structure.

ALMASA IT DISTRIBUTION FZCO

ProfileAlmasa remains an established name in the distribution landscape and despite departures from its portfolio in recent times the company maintains a strong blend of volume and higher-end products. After investing US$13m in a giant logistics hub in Jebel Ali, and recently creating a more direct regional reporting structure, Almasa will be confident that it can exhibit the kind of operational efficiencies that all distributors are currently seeking to achieve.

2009 ProspectsIt is clear that profitability and risk management are the two areas that Almasa’s management team will be keeping a firm eye on this year as it looks to attain the stability that will set the company up for a bright future. That said, expect Almasa to display the attacking behaviour that we have come to expect from large Middle East IT distribution houses. Plans to treble the amount of accounts it reaches and open a sales office in Iraq both feature highly on the agenda this year.

2008 SALES

$465m2007 SALES

$340m

Tel: +971 4 397 8765Website: www.metracomputer.com

Headcount: 850


Middle East Offices: Bahrain, Egypt, Kuwait, Jordan, Iraq, Qatar, Saudi Arabia, UAE

Key Brands: Acer, Cisco, Dell, HP, IBM, Intel, Lenovo, Microsoft, Samsung, Seagate, Western Digital

Ownership: Metra Group is a privately-owned company

60 seconds with... Tarek Eissa, CEO & Chairman

What are your strategic priorities this year?Our main priority is to sustain profitable growth and to complete the change management and restructuring initiative that we started two years ago, which will prepare us for rapid growth in the future. An ongoing part of the change management is that we are still hiring so we have key positions in the organisation to fill to complete the restructuring. We are also completing an ERP transition from our legacy system to SAP. This will make the processes more efficient and standardised, bringing best practices into Metra which will enable us to grow very quickly without any IT hassles. Finally, we are going to invest heavily in building up our manufacturing capability this year.

How do you differentiate from competitors?I think the biggest differentiator is our in-country presence. Our model is based on independent, best-in-class sales, logistics and service operations that target the final tier of the channel, cutting off all the sub-distribution in between. Today we have in-country operations in eight markets, and this includes full offices, warehousing and service centres. We target the final channel tier directly, we don’t like selling to sub-distributors because they eat up the channel margin and it is our job to reach our customers. I think our relationship with resellers is mainly built on the availability and support services we offer, plus the long length of the relationship.

METRA COMPUTER GROUP FZCO

ProfileMetra makes its first appearance in The Power List having moved its regional HQ to Dubai last year. Its financial accounts are consolidated in Dubai, while all vendor contracts, even for Egypt, are signed in the UAE. Metra’s revenues only include distribution — not PC assembly — but it does not break out sales by geography. Although Egypt still accounts for a large portion of Metra’s business, more than two-thirds of transactions take place in Jebel Ali.

2009 ProspectsHaving grown the business by more than 30% last year, Metra will be keen to maintain the run of form that has turned it into one of the largest IT distributors in the region. The company has kept a relatively low profile over recent years — although not necessarily within the vendor community. Relationships with industry bellwethers such as Cisco, HP, Microsoft and Intel across various MENA territories prove that it is considered a major partner by the top vendors.


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2008 SALES

$1bn2007 SALES

$795m

Tel: +971 4 359 0555Website: www.redingtongulf.com

Headcount: 355


Middle East Offices: Bahrain, Egypt, Kenya, Kuwait, Nigeria, Oman, Qatar, Saudi Arabia, UAE

Key Brands: Acer, HP, Samsung, Toshiba, Western Digital

Ownership: Redington Gulf is a subsidiary of Bombay-listed Redington (India) Limited

60 seconds with... Raj Shankar, CEO

What are your strategic priorities this year?We would like to execute an acquisition opportunity and we wish to grow our value added distribution business, which is currently still in its infancy. Sometime when you are not in a particular space the vendors are not quick to recognise the competencies you may or may not have. It has therefore taken us a little bit of time to sign on brands, but we plan to focus on two or three main areas, such as security, convergence, networking, storage and servers. We already have a few brands — probably about eight or nine — but we have ambitions to grow that number almost twice over this year. The third priority is that we plan to look at expanding our Africa operations.

How do you differentiate from competitors?I would like to believe that we are the only truly multi-regional distributor and service player locally. We are not only addressing the Middle East and Africa, but two specific spaces — distribution and support services — and from that we have managed to create a model where we can ensure products are available on demand in some of these countries by taking local risk and billing customers locally. I would also like to believe that we are better capitalised, partly because we are a listed company and further accentuated by the fact that we have recently got private equityinvestment. Distribution tends to be highly working capital-intensive so to that extent I think we are one of the few companies which is better capitalised.

REDINGTON GULF FZE

ProfileRedington made MEA sales of US$1.004 billion in 2008 to be precise, underscoring its status as the region’s largest distie. The revenue figure stated here only includes sales of IT products, not telecoms kit. As well as the Middle East, Redington has made significant inroads into Africa, drawing around US$140m from the region last year. The company has seen exceptionally strong growth in all areas, most notably its HP PSG consumer business.

2009 ProspectsWith a recent cash injection from Bahraini investment firm Investcorp to boost its coffers, Redington is ready to hit the acquisition trail this year, and with conditions as they are it could be the ideal time to net some bargains. Reaching the US$1 billion revenue mark is going to be a tall order this time around so the company might have to settle for achieving a more modest figure against a backdrop of weakening demand. Expect more spotlight to shine on its value division this year.

THE 2009 POWER LIST

Distributor 2008 2007 Auditor Headcount Active Accounts Focus

1 Redington Gulf $1bn $795m Deloitte Haskins & Sells 355 2,185 Multi-brand Broadliner

2 Metra Computer $465m $340m Ernst & Young 850 2,700 Multi-brand Broadliner

3 Almasa IT Distribution $433m $420m Deloitte 200 1,000 Multi-brand Broadliner

4 Emitac Distribution $401m $330m KPMG 210 1,000 HP & Acer

5 Jumbo IT Distribution $324m $250m Grant Thornton 70 350 Acer, HP & LG

6 BDL Gulf $285m $173m Usamah Ali Tabbarah & Co 197 1,000 Multi-brand Broadliner

7 Logicom $250m $204m KPMG 150 2,000 Networking & Components

8 Mindware $210m $182m Deloitte 135 1,000 Networking & Components

9 Asbis $169m $112m Deloitte & Touche 75 850 PC Components

10 Al Yousuf Digital $160m $147m Grant Thornton 60 450 Printers & Displays

11 Despec $145m $119m KPMG 45 500 Supplies & Consumables

12 Empa $123m $106m BDO Patel & Al Saleh 85 720 PC Components

13 Trigon $118m $98m Mohamed El Ayouty & Co 90 300 CE & Peripherals

14 Westcon Group Middle East $97m $69m Deloitte & Touche 85 450 Networking, Security & Convergence

15 Golden Systems Electronics $95m $95m Salim Rajkotwala 100 450 PC Components

so if you feel there are any glaring omissions then please let us know and we will consider those companies for the future.It is probable that both Aptec and FDC merit a place on this year’s list based on our estimation of their 2008 revenues. However, Aptec declined to provide any guidance of its sales figure as directed by its board. Based on

the performance of disties with comparable portfolios, we would estimate Aptec’s sales to be in the range of US$200m to US$250m. FDC had not got back to us with the required information before our deadline. Again, based on the company’s portfolio and coverage we would estimate FDC’s distribution revenues to be in the range of US$150m to US$200m.

EDITOR’S NOTE: We believe The Power List contains the largest IT distributors with Dubai offices operating in the market based on the data available to us at the time of research. However, we acknowledge that there may be other IT distributors which would qualify for inclusion


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Channel Middle East - March 2009

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Transcript of Channel Middle East - March 2009