Wednesday, Jul 11, 2012
Dubai: It’s all in the packaging. With the products remaining the same, UAE’s telecom majors are using their bundled data offers and branding to emerge as a key channel for smartphone and tablet sales to domestic users.
So much so, they are now giving stiff competition to the local tech and electronics retailers when it comes to iPhones, Blackberry and, increasingly, Samsung Galaxy models.
In this regard, du and etisalat are attempting what telecom operators in the US and Europe managed to do in recent years. By selling the smartphone handsets directly, they get an immediate connection with the user when it comes to offering the data packages. And they could even subsidise the cost of the handset as long as the user signs up for a fixed-term contract.
“We have seen an increase in the number of people coming to take handsets from our shops rather than retail,” said Yasser Al Yousuf, director - premium personal market at du, which operates as many as 44 retail outlets in the UAE. “A tech-savvy user will not go for a smartphone without the data packages associated with it or even a SMS bundle. Long term - we want the retail stores to be profitable in their own right.”
To get their messages across, the telecom majors are hitting the ad platforms in a big way. According to data from Pan Arab Research Centre (Parc), du is reckoned to have spent $12.36 million between January to May, while etisalat put out $14.94 million. Apart from the generic branding campaigns, a good portion of the ads speak about the offers on the smartphones.
Against this kind of spending prowess, how does the tech retail trade stack up? “Local telecom operators have realized the potential and this trend will strengthen further as more consumers move to data-bundled handsets which will be the more economical option,” said Niranjan Gidwani, deputy CEO, Eros Group, which has the distribution rights for Samsung products.
But Gidwani believes there is a key point that needs to be kept in mind. “Typically, UAE’s telecom operators tend to sell most of the data packages along with the smartphones bundles through dealers,” he said. “Therefore, we do not feel they will muscle their way into the retail sales of smartphones. Dealers will only improve the wide availability of the product and thereby accelerate demand.”
Yousuf can relate to the sentiment. “The UAE is still a retail-driven market and that’s why we are partnering retailers and offering our products through them as well,” Yousuf added. “It’s not about taking over their shares.”
But smaller gadget retailers who don’t have the network strengths or distribution rights are not as sanguine about prospects. “Handset pricing is the only way we can compete, but on the iPhone or the latest Samsung range there is limited flexibility to drop our prices,” said one such retailer. “With UAE based users increasingly preferring buying direct from the operator or major retailers where they get bundled packages, small retailers are left with only the tourist buyers to remain in the frame. And in this space, you are competing with the hundreds of stores that are out there.”
By Manoj NAir Associate Editor
Gulf News 2012. All rights reserved.
