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The Middle East projector and AV market continues to experience rapid unit growth, but many vendors are measuring their current channel alliances to identify which partners best suit the market’s evolution.
Image conscious
By Julian Pletts
Mon 15 Dec 2008 04:00 AM

The Middle East projector and AV market continues to experience rapid unit growth. It is now the case that the many vendors that patrol this territory are measuring the efforts and aptitude of their current channel alliances to make tough decisions about the type of partner that best suits the market’s evolution.

The projector business has had a buoyant time of things in the Middle East over the last few years with rising shipments and solid end-user attention in both the consumer and commercial sectors.

Vendors in this product area previously saw their equipment sitting in a niche frequented by home theatre enthusiasts and corporate buyers tasked to kit out a conference room. No longer though are projectors quietly humming in the background of the Middle East IT and consumer electronics markets.

We are starting to see some real volume in the projector market, but in addition we still need the value added channel.

According to the vendors that supply projectors, the shining box is now a more mainstream purchase.

With this proliferation also comes an undercurrent of channel evolution. Many projector manufacturers that ship to the Middle East are busy looking at the type of partners they work with and asking themselves whether they need to enlist the services of a new type of partner to answer the direction of the domain.

"With the projector business, as it has moved from being a niche to a little bit more mainstream, we have to look carefully at channels to market," said Adam Dent, MEA territory manager at Optoma.

Optoma - which does not yet have a regional office, but is planning to hire a sales representative - says it traditionally works with audio visual (AV) specialist partners in the region, but is now considering a more general IT partner as the market evolves.

"When you look at it, they [AV partners], have done a good job for us, they have got us up to 6.5% market share for the third quarter so we cannot complain. But they have been driven quite hard to do that and we have had to get some of them to do things they normally wouldn't accept because they like to work on higher margins," explained Dent.

Moving into the mass market though requires an acceptance by the partner of slimmer margins, says Dent, and it is for this reason that he is considering, at the distribution level, working with a broadline partner, naming Aptec as a possible option.

NEC, which recently restructured its business to include a display solutions arm encompassing projectors, panel TVs and PC monitors, has also re-evaluated its channel ecosystem to step into the mass market.

"We have broadened our channel base for projectors to include some channels that we have not traditionally targeted like IT dealers and retail," explained Ian Gobey, general manager at NEC display solutions Middle East. "Previously, our business was more focused on AV channels where our technical and quality advantages are best represented as part of a solution sale."

But to say that the market is expanding, and thus the channel previously serving it no longer relevant, is short-sighted and too simplistic an evaluation. The projector market has become a great deal more complex over the past few years.

There needs to be a clear segmentation of the market because just as the consumer sector has migrated towards the mainstream, the high-end projector segment has experienced a resurgence as commercial clients have demanded a higher level of integration from their conference facilities.

This means vendors serious about projector profits in the Middle East are ensuring they have a clear demarcation in their channel - a view shared by members of the channel as well. Director at Graphic International, Sanat Kulkarni, explains that as a distributor the firm aims  to cover both facets of the market.

"We focus on the mass market as well as the high-end AV integration market. There has to be a clear demarcation as it is a different market altogether. As far as the mass market is concerned the best reseller is an electronics store and for the high-end a good quality AV integrator is what you should be looking at," said Kulkarni. "The margins are obviously better in the high-end business."

Expanding those margins is a key element for the distributor and Graphic explains that it does this for itself, and for the reseller channel, by adding as many complementary non-IT based products as possible, ranging from ceiling mounts to remote controls and microphone equipment.

There are those that claim margin expansion in the projector business is something the channel in the Middle East has yet to fully explore. Of course there is a great deal that a systems integrator can do around installation and fitting to ensure margins are healthy. Partners can even play the teacher role.

"I know it is not something that the Middle East resellers are used to, but potentially there is an opportunity around how to make better presentations and better use of their AV technology," said Dent. "I would that say with some imagination there's all sorts of revenue streams to move people away from, ‘here's a box, plug it in and get on with it'."

It is certain that the projector channel needs to be segmented, as the two poles of the market have been highlighted, and it is unlikely, no matter how much vendors claim they would love to see a retail partner expanding it's value reach, that power retailers will be immersing themselves so much in the value-chain. But there is, however, a blurring of the channel player's role at the top end of the market.

Systems integrators that are working with the aforementioned broadline distributors are working hard to develop their value offering, taking advice handed down by vendors seriously and looking at turnkey solutions around projector technology.

In this way, these systems integrators are moving into the ground that is traditionally occupied by AV specialist partners. One such systems integrator is Abu Dhabi-based Alpha Data. The firm counts enterprise computing and networking, as well as audio and visual integration, among its business divisions.Despite this larger industry focus, Alpha Data is able to provide comprehensive projector-based AV systems to the end-user.

"We do a lot of things like video conferencing and auditoriums which need high-end projectors," explained Fadi Ramadan, division manager for ELV multimedia and security at Alpha Data. "We also do a lot of hospitality projects which involve projectors and audio systems, interactive TVs and room management systems," he added.

These examples of the avenues that SIs such as Alpha Data have been busy exploring as the projector and AV business continues to grow are cases of the channel heeding the call for developing their selling efforts.

Typically, the traditional IT channels are not sufficiently equipped with the right blend of skill-sets to address the more technically competent and often more demanding end-user.

"We have a team which designs the systems and helps the customer gain the right solution for their requirements. In addition, we also do consultancy for the AV part, implementation and project management," said Ramadan.

The traditional AV partners are not taking this encroachment by systems integrators lying down. Harold Fernandes, general manager at Hitachi AV specialist Abcom Solutions says the mass nature of the market means that end-users would be best served by seeking out specialists in the projector field.

"Since the category falls more into IT, the IT and electronics-based partners do the job well. But partners like AV integrators play a major role in the genuine projector market," asserted Fernandes. He suggests that the projector channel that is emerging is lacking in skills and this leads to unsophisticated cross-channel fighting. "If one [partner] does not have enough sales skills, they tend to trash each other's technology."

Epson is one vendor that values the worth of its traditional AV partners, according to its general manager for the Middle East, Khalil El-Dalu. "We are starting to see some real volume in the projector market, but in addition we still need the value added channel," he said.

"The AV is not a new reseller and they have been there and are the partners for the special solution. For example, if a customer requires a specific home cinema or audio system, seating or ceiling mounts, it is very complex and that is why the AV distributor is there and we support them because they really understand the product and they know how to fulfill the customer's needs."

Viewsonic considers the careful structuring of its channel business paramount to success in the projector market. "Typically, the traditional IT channels are not sufficiently equipped with the right blend of skill-sets to address the more technically competent and often more demanding end-user, this will be the core function of our dedicated AV partners who will in many cases provide other value add services and solutions," explained Aaron Fright, regional director at Viewsonic.

Despite Fernandes at Abcom's warning about resellers "trashing" each other's portfolios, it is clear from developments in the projector business that the channel has been growing up rapidly. The high-end AV partners, and of course the integrators that have begun to make ground on them, have been busy strengthening their proposition to the end-user, working with distributors and vendors to make the most of every opportunity.

In fact, there are suggestions that the projector has become an incidental aspect of the sale at the high end of the market, with some players admitting it may even be given away free by the channel as part of a larger integration.

"When a reseller is pitching for a project, it is not just projectors they talk about. The projector is only perhaps 2% of the entire cost, it has become immaterial," suggested Graphic International's Kulkarni.

But when it comes to the low end of the category, vendors seem to harbour the view that although the market is growing, the channel is not yet showing signs of full maturity. Fright at Viewsonic observes that projectors are being sold in store in the same way as lower-end IT products.

"Firstly, some vendors will allow their respective channels to sell some models of projectors like a commodity product, as if it were a hard disk drive for example," he said. "The issue here is that it will erode any natural value in the product for the channel, plus it will under-value the unit in the eyes of the customer."

This is not the only insufficiency in selling methods levelled at the channel. NEC's Gobey says that not enough questions are asked of the end-users when they step foot in the store. "It is really a case of offering the customer the best recommendation based on their application and letting them make the choice," argued Gobey.

There is also a discrepancy about how informed the end-user is and to what extent the channel should be educating them. Sam Oomen, product manager for projectors at Canon Middle East, upholds that the shift from the supposedly outdated SVGA projector technology to the more contemporary SXGA projectors will hit the Middle East, but also judges that the projector channel has to put more effort into evangelising this to customers.

"The dealers need to educate the customers because even the regular laptop or monitors feature SXGA and some people in the projectors are going for SVGA," proclaimed Oomen. "It is the technology and how the shift has been happening so your projector might be outdated in a short while."

Projector makers are keen to point out that the Middle East market has yet to see the full shift from SVGA models to SXGA, something that has happened in the major global markets. This, along with developments like mini-projectors, tablet projectors, short-throw lenses and even 3D projection, are likely to be a shot of adrenaline into the industry.

It may even allow mass market partners to take a step back from their-price point battling and in the high-end AV and SI segment give channel players the room to craft an even more unique offering that will drive their profit margins and overall market worth.

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