By Andrew Seymour
Few could have predicted how dramatically last year's stock market crash, coupled with unusually high levels of inventory due to over-ambitious growth forecasts, would impact the Saudi market. 12 months on, should we be feeling a sense of anxiety or excitement as this month's Gitex Saudi exhibition looms large on the horizon?
This time last year members of the Saudi channel community attending Gitex Saudi Arabia were oblivious to the events that were shortly about to unfold.
Few could have predicted how negatively the stock market crash, coupled with unusually high levels of inventory due to over-ambitious growth forecasts, would impact the market. So, 12 months on, should we be feeling a sense of anxiety or excitement as this month's Gitex Saudi exhibition looms large on the horizon?
Last year's mid-season woes were a major blip for the Saudi market, but fortunately that's all they have proven to be. Although many companies were still feeling the effects of the slump right up until the end of the year, the dawn of 2007 offered the market an opportunity to wipe the slate clean.
As devastating as it was, the crisis may have done some companies a favour by delivering a timely reminder that the Saudi market carries a degree of risk and danger regardless of its impressive potential.
There were too many vendors, in particular, which got carried away with the seemingly never-ending rate of double-digit growth and made the mistake of throwing caution to the wind in the second quarter of last year. Those who shamefully abandoned their normal strategic policies in an effort to capture unrealistic levels of growth found themselves punished for their recklessness.
Yet the overall enthusiasm and drive for the Saudi market remains unwavering. And Gitex Saudi, held in Riyadh later this month, is set to provide the ideal forum for companies truly committed to the Saudi market to illustrate the strength of their devotion.
Gitex Saudi still represents the only major event which draws together organisations from the ICT community intent on furthering their position in the Saudi channel. For vendors it is the perfect opportunity to flaunt what they have to offer and identify capable partners; for resellers it is an equally attractive platform from which to address the vendors head on and discuss the issues that matter most to their business.
Vendors and resellers with pan-regional aspirations continue to highlight Saudi as the one market in the Middle East that companies cannot afford to take lightly. These same proponents now have to back that sentiment up with concrete investment and a willingness to develop their business beyond a token office presence in Riyadh and a handful of staff.
According to IDC, Saudi accounts for a staggering 45% of a Gulf IT market worth more than US$6.8 billion a year, underscoring its significance to the wider Middle East IT channel. With foreign direct investment rising at a rapid pace and the government committed to developing internet-based processes and services, the prospect of sustainable growth in the IT sector looks extremely solid. Don't forget this is a market that on one hand is buoyed by the stability of a huge oil-based economy and on the other is enjoying all the fruits of economic diversification.
As the market moves from a predominately hardware-focused environment to an arena where more value is placed on software and services, vendors and distributors must be prepared to scale their investment accordingly. Serving customers remotely is becoming harder to justify and resellers are looking to manufacturers and distribution partners that can offer comprehensive in-country sales, technical and account management support.
Having spoken to a number of Saudi distributors and IT traders over the past few months, it is clear that the local channel is putting increasing emphasis on the type of investments made by vendors in the market.
Many manufacturers already have blanket coverage across Saudi and employ in excess of 100 staff, but for those which have been held back by their hesitancy, 2007 is shaping up to be a vital year. Where better for companies to shed their inhibitions and put their Saudi strategies firmly on the table than at the Riyadh Exhibition Centre in just over a week's time.