By Stuart Wilson
For any true IT channel aficionado there is something particularly alluring about emerging markets. In the Middle East, countries such as Yemen — although still at an early stage in IT development — offer a tremendous opportunity for vendors and distributors alike to make their mark early on a developing channel landscape.
For any true IT channel aficionado there is something particularly alluring about emerging markets. In the Middle East, countries such as Yemen — although still at an early stage in their IT development — offer a tremendous opportunity for vendors and distributors alike to make their mark early on a developing channel landscape.
There are some IT companies out there that will be quick to claim that Yemen, with a total addressable PC market of just 30,000 units a year, nascent internet adoption levels and limited spending power, is not really worth the time and effort involved in building up sales channels and cementing business relationships.
It is a view that I disagree with and I believe that some major vendors also realise the importance of making a mark early in countries such as Yemen. Talking to channel players within Yemen, it is clear that they already appreciate the push and pull marketing efforts that major players such as HP and Intel have already devoted to the country. And they want to see even more.
Without doubt, understanding the size and structure of the Yemeni IT channel remains a difficult task based on an element of guesswork due to the amount of product flowing into the country through unauthorised channels to circumvent import duties. While this situation produces some uncertainty regarding the total market size, it is also a primary factor in the tendency for many vendors and distributors to underestimate the total addressable market (TAM) for PC sales per annum.
The official statistics from vendors and major distributors claim that the Yemen TAM for PCs is around the 30,000 mark per annum. Talk to the in-country channel players — those that are truly aware of the authorised and unauthorised product flow into the market — and you are much more likely to hear a figure around the 50,000 unit mark.
A vast proportion of these units remain locally assembled machines, but with average selling prices hovering around the US$600 mark, related sales of peripherals and additional corporate spend on software and services, the overall IT market in Yemen is probably already above the US$50m mark.
With some 20m people in Yemen, it remains a market with massive untapped potential. Yes, spending power is limited and the country does not possess the economic power or scale of natural resources that other Arab states have at their disposal. Nevertheless, the sheer size of the population, coupled with programmes from organisations such as the World Bank designed to stimulate economic development in Yemen, could well usher in a period of sustained growth. Local channel players reckon that growth rates of 25% will be achievable during the next two years.
The Yemeni channel is ready to service this growth and help build up the in-country IT market, but to do this well, they need the full support of vendor partners. However, they need this support delivered in a way that is appropriate to the local market conditions.
Yemen has a vibrant IT sector showing great potential for growth. In the capital city of Sana’a, dealers, resellers and retailers congregate around two main thoroughfares — Hadda Street and Mogadishu Street. Projects to promote home PC ownership have already started up with government employees able to participate in a monthly instalment ownership scheme. Internet penetration is rising — admittedly from a small base — and the government has unveiled ambitious plans to promote the development of the entire ICT sector during the next few years.
Look out for our comprehensive overview of the Yemen IT channel in the July issue of Channel Middle East, including interviews with the leading in-country distributors and resellers. If you have any views on the development of the channel in Yemen, its current structure and the potential for growth, please do not hesitate to get in touch.