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Wed 11 Oct 2006 04:00 AM

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Vendors commit to the Middle East market

With 1500-plus exhibitors representing thousands of vendors, this year’s Gitex will once again underline the importance of the Middle East region in the context of the wider global ICT market.

|~||~||~|Some companies still refuse to put down meaningful roots in the Middle East, preferring instead to work on an opportunistic basis and investing as little as possible in the region. These players are doing a disservice to the committed long-term players in the market, decelerating the process of ICT development and also hindering the development of sustainable long-term margins for everyone involved in the sector.

At the vendor level, the degree of genuine commitment made to the Middle East market varies massively. There are some that have opened offices throughout the region and now have hundreds of employees. At the same time we also have some major vendors that have nothing more than a skeleton staff in the region — a token presence when all is said and done.

It would be too easy to oversimplify this situation, lauding the vendors that have developed an extensive presence and meaningful operations in the Middle East and criticising those that have so far shied away from making a real commitment to the region. Events such as Gitex offer a tangible glimpse into the seriousness with which each and every exhibitor is developing their business in the region.

Vendors with no real presence on the ground are, if anything, more reliant on their channel partners to drive business in the Middle East. If the vendor is not around, the distributors and resellers actually have to take on a much greater role in terms of demand generation, training, certification and end-user education. In some cases, we still see authorised distribution partners taking on the role of a virtual subsidiary for certain vendors.

On the face of it, this may seem like a solid model, but it is not without its risks. If the vendor eventually decides to take the plunge and build up its own presence in the region, the relationship with the partner acting as a virtual subsidiary can quickly turn sour. We have actually witnessed this several times in recent years in the Middle East and it can be a painful process for all concerned.

The problem tends to stem from the fact that the virtual subsidiary is often aghast at the prospect of losing its special status. Many of these deals that were set up in the Middle East were based around an element of exclusivity, which protected the partner, guaranteed their business and made it extremely easy for them to make handsome profits.

This type of partnership is now on its way out in the Middle East IT market — and rightly so. We’re moving beyond it and vendors, distributors, integrators and resellers need to look at every one of their business partners involved in the ICT supply chain and ask themselves just how committed they really are to this market.

Strong business relationships are built up over time — they cannot be manufactured instantaneously. It is the vendors, distributors and resellers that have real staying power and are committed to the Middle East market for the long haul that will drive this market towards greater maturity and the provision of stronger solutions for customers.

There is a great deal that needs to be done to drive the Middle East ICT sector towards greater maturity and accountability. Companies not truly committed to the market will not achieve any of this. It is the vendors, distributors, integrators and resellers with staying power that will win out as the market matures and continues on its stellar growth path.

This year’s Gitex will once again highlight the incredible progress that the Middle East ICT community has made, allowing customers to see real business benefits from their investment in technology and communications solutions. We’ve come a long way but there is still even further to go.||**||

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