A market in danger of kidding itself?

The Middle East is hardly a trailblazer when it comes to sharing conclusive data on the market. But if the market is not careful then over-forecasting and lack of transparency will cause the region to trade on false growth
A market in danger of kidding itself?
By Staff writer
Wed 01 Nov 2006 12:00 AM

Channel players might privately know who sells what and how much of it they sell, but the vast majority are loathe to discuss numbers on the record.

In vendor land, one issue crops up time and again: statements are released alerting the market to impressive percentage growth, but contain no insight whatsoever into the specific volumes concerned.

This really doesn’t help anybody because percentage figures are meaningless without context.

Take a manufacturer which boasts that sales ‘have doubled’ in the last year.

Sounds impressive, but not if it has only managed to sell 10 PCs instead of five, or the value of the overall market has tripled.

This issue becomes even more blurred once more than one party becomes involved.

I’ve read statements from smaller vendors that draw attention to the high levels of growth they have achieved, but only because they started from an exceptionally low base rate in the comparative period.

In contrast, the leader of that market might have suffered a decline in sales over the same timeframe, but only because its sales have levelled out.

It doesn’t necessarily mean it is on the verge of being out-muscled by the smaller vendor.

Admittedly, the press must take some blame.

We recently received a press release from Acer championing a 70% rise in second quarter MEA shipments, but devoid of any meaningful numbers to put that growth into perspective.

To its credit, Acer disclosed the relevant numbers upon our request, but the story appeared on several other websites in its original guise.

Quite understandably, Acer and other vendors will gladly withhold the really meaty information if such correspondence is always left unchallenged.

The problem this creates, however, is that it means the foundations of the market end up being built on hearsay, which is not beneficial to anybody because it merely creates an environment where perception becomes completely dislocated from reality.

Take the region’s desktop monitor channel.

Various local sources say they are seeing sky-high market growth of more than 30% a year, and I’m sure they are honest verdicts.

Yet analysts — with access to credible sell-in data from multiple sources — offer a far more conservative, and frankly realistic, outlook.

That begs the question: how can everybody be growing 30% a year in an overall market expanding at half that rate?

One theory is that people are generous with their projections because they don’t want to be seen as inferior to their contemporaries.

If one company alludes to growth rates of 10%, it is natural for another to cite 15%.

I have discussed this predicament with several local sources and all simply accept it as a facet of doing business in this region.

Interestingly, in other markets around the globe — particularly the mature ones — companies speak more freely about specific unit figures, rather than trading on hazy percentage increases.

I appreciate that divulging financial accounts is another matter entirely, but not shipment sales data.

It is up to vendors to take a lead by becoming more transparent so that the development of the market can be properly assessed.

I have heard the argument that releasing more comprehensive data could compromise competitive edge, particularly this time of the year when Gitext is held.

But I remain unconvinced.

Competitive advantages are eroded by bad products, inconsistent channel strategies and lack of focus.

There is nothing wrong with companies keeping a tight lid on their affairs, or even declining the opportunity to specify numbers when asked.

But if a vendor is going to publicly boast about percentage growth then it must have the courage to provide a more comprehensive breakdown of numbers.

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