By Andy Tillett
Japanese electronics vendor Alps has set targets to double the amount of 3.5” disk drive units it is selling through the Middle East distribution channel from 600,000 to 1.2m in 2006.
Japanese electronics vendor Alps has set targets to double the amount of 3.5” disk drive units it is selling through the Middle East distribution channel from 600,000 to 1.2m in 2006. The vendor is keen to drive home the message that floppy disks aren’t dead and that Alps is committed to growth and development in this region.
“In two years we have more than doubled our business through the distribution channel in the Middle East and Africa (MEA). This area represents 10% of our total drive sales in the EMEA region. Since 1998 analysts like IDC and Gartner have predicted the collapse of floppy disk drives, but it has never happened, the market continues to grow at around 15% to 20% a year,” said Frank Steinrücken, senior manager sales, marketing, market development and distribution at Alps Electronic Europa.
“We still see a lot of growth in the emerging markets. These areas, including the Middle East, have an installation rate of 100% for floppy disk drives, whereas in Western Europe this rate has dropped to around 60% to 65%,” added Stephan Wirkner, manager sales, marketing, market development and distribution at Alps Electronic Europa.
Alps has three distributors for the Middle East and Africa: Aptec, e-Sys and Asbis. The vendor sells all overflow product it has from its OEM business through distribution, and says it is committed to working this as a proper channel. Rather than dumping stock, or clearing it as quickly as possible at discount rates, Alps claims to keep a tight control of pricing, ensuring that each distributor sells at the same set price, so there is no fighting between distributors on price. Anil Kumar Sharma, regional product group manager, storage and components at Aptec Gulf, which accounted for nearly half of Alps’ Middle East sales in 2005, explained.
“Alps gives us a lot of clarity and understands the market very well. Sometimes if we face competition on price they will compromise. The vendor transparency is very good, and there is no fighting between the distributors, because there is a fixed price for everyone,” said Sharma.
Over the next year Aptec pointed to continued strong growth in Africa and Iraq through its reseller base for Alps disk drives of around one hundred regular buyers regionally. The vendor added that it would also like to crack the Iranian market and is vying for a 40% market share in all of the markets it operates in, which covers the whole Middle East including Turkey and Africa.
“Iran is a massive market for us. Currently we are only selling a few units into the country, but it has a total addressable market of around one million drives per year. Overall globally, the 3.5” floppy disk market is pretty stable, although some vendors have chosen to leave this sector, for example Panasonic, leaving a bigger slice of the cake for us,” said Steinrücken.
Although research and development into floppy disk drives has been stopped, Alps has OEM commitments from A-brand vendors such as IBM/Lenovo, Dell and Fujitsu-Siemens running until 2008.
“A-brand vendors tell us that floppy disk drives are a cash cow for them. We were surprised, but the vendors say they have very good margin as they sell them quite cheaply and they can sell them on at a much higher price, generating cash that they can then use to support buying other components,” concludes Steinrücken.