19 August 2009
The local PC assembly segment has no potential for growth in the UAE because of a lack of government support and changes in customer purchasing patterns, say industry sources.
The segment's market share fell to 13 per cent in 2008 from the previous year's 19 per cent, according to research firm IDC.
A customer who orders a locally assembled PC can have the machine built to his or her specifications in terms of memory, hard disk capacity and graphics. The parts for the machines are supplied by international distributors and are put together at local plants.
The segment has been affected globally by the strong uptake of notebooks and the new netbook product segment. But some customers, especially gamers and businesses, still prefer to buy locally assembled PCs that are customised to meet their needs.
Daniel Saison, Sales Director for the Middle East, India and Africa at graphics card manufacturer NVIDIA, said there had been a gradual fall in the market share of smaller assemblers in the Middle East, as there had been in the rest of the world.
"In the face of such overwhelming demand for notebooks and small form factor computing in all markets, it's hard to see how the assembled PC segment in its present form can grow substantially," he added.
In the Middle East and Africa (MEA) region, Turkey, Egypt and South Africa have the highest number of local assemblers. The UAE population, with its higher purchasing capacity, values mobility and therefore invests largely in notebooks and netbooks.
"The local assemblers in Turkey rank among the top 10, and sometimes five, players in the market and compete with the multinational corporation brands," said Omar Shihab, IDC's MEA Research Manager for PCs. "They have invested in their facilities, provide excellent customer service and, most of all, have local government support. These assemblers also invest in aggressive marketing campaigns. The government buys only from the local market, unlike other countries - especially the UAE - that depend on MNC products."
Turkey's largest local assemblers are Casper and Exper while the leading companies in South Africa are Sahara and Mecer. Saudi Arabia has Zai and Nigeria has Zinox.
Dubai-based Kobian, known for the Mercury range of PCs and other IT products, is a local assembler but exports mainly to Africa. Assembled products do well outside the UAE mainly because of their competitive pricing, which is still a major concern in countries such as South Africa.
Kurian George, Deputy General Manager, said: "There is not much of a market in the UAE, therefore our output goes to South Africa, Egypt and Kuwait. Business was 25 per cent down last year in the GCC and Africa overall due to the notebook invasion and by 30 per cent in the GCC alone."
Pricing in the notebook segment has been aggressive over the past few years, which has also affected the local assembly segment.
Somkant Mishra, General Manager of Esys Technologies, said: "In the past three to four years notebook numbers have rose at a rapid pace. At the same time some notebook makers have been aggressive and therefore the purchasing pattern has shifted from the PC to the notebook. Previously a home would have only one desktop but now every family has more than one notebook."
Esys has an assembly plant at Jebel Ali and supplies assembled PCs to customers across the GCC and outside the region.
Mishra said: "In this segment a good chunk of the business comes from schools, government offices and some corporate sectors, where PCs are still preferred to notebooks. The major demand is from emerging markets, including North Africa, West Africa and the former Soviet states. Most of the machines we sell in the UAE are re-exported to other countries. There will be some re-exports to a few GCC countries as well, but that is very insignificant in numbers."
Component manufacturers still see a demand among high-end enthusiasts, especially gamers. Mishra said: "The volume of components such as HDDs, CPUs and memory that are sold has not seen a major drop on the regional level. Desktop PCs generally have come down in price, not just in the local assembly segment."
AMD, which makes processors and graphics cards for PCs and notebooks, has attracted many buyers for its high-end products, especially the new Black edition.
Raed Hijer, senior field application engineer, said: "The locally assembled market is still there as gamers believe in DIY and are looking at flexibility and GPUs that can be overclocked for greater performance.
"The new Black edition is unlocked therefore the CPU speed can be adjusted according to their preference. Branded PCs will never have these features. But contraction is expected in the PC assembly segment due to the global crisis."
Intel supplies processors to the local assembly segment, and Nassir Nauthoa, the chip giant's General Manager for the GCC, said: "The Middle East is a mobile market with more than 55 per cent of the PCs shipped to the region being mobile rather than desktops.
"This number, according to IDC rises to more than 80 per cent in countries such as the UAE and Saudi Arabia. The demand for netbooks, largely powered by the Intel Atom processor, has also grown exponentially since it appeared in the region in mid-2008. Netbook sales account for than 20 per cent of the notebook sales in the UAE and 10 per cent in Saudi Arabia in Q209. Globally Intel Atom revenue grew by 65 per cent in Q209."
The local PC assembly segment has no potential for growth in the UAE because of a lack of government support and changes in customer purchasing patterns, say industry sources.
The segment's market share fell to 13 per cent in 2008 from the previous year's 19 per cent, according to research firm IDC.
A customer who orders a locally assembled PC can have the machine built to his or her specifications in terms of memory, hard disk capacity and graphics. The parts for the machines are supplied by international distributors and are put together at local plants.
The segment has been affected globally by the strong uptake of notebooks and the new netbook product segment. But some customers, especially gamers and businesses, still prefer to buy locally assembled PCs that are customised to meet their needs.
Daniel Saison, Sales Director for the Middle East, India and Africa at graphics card manufacturer NVIDIA, said there had been a gradual fall in the market share of smaller assemblers in the Middle East, as there had been in the rest of the world.
"In the face of such overwhelming demand for notebooks and small form factor computing in all markets, it's hard to see how the assembled PC segment in its present form can grow substantially," he added.
In the Middle East and Africa (MEA) region, Turkey, Egypt and South Africa have the highest number of local assemblers. The UAE population, with its higher purchasing capacity, values mobility and therefore invests largely in notebooks and netbooks.
"The local assemblers in Turkey rank among the top 10, and sometimes five, players in the market and compete with the multinational corporation brands," said Omar Shihab, IDC's MEA Research Manager for PCs. "They have invested in their facilities, provide excellent customer service and, most of all, have local government support. These assemblers also invest in aggressive marketing campaigns. The government buys only from the local market, unlike other countries - especially the UAE - that depend on MNC products."
Turkey's largest local assemblers are Casper and Exper while the leading companies in South Africa are Sahara and Mecer. Saudi Arabia has Zai and Nigeria has Zinox.
Dubai-based Kobian, known for the Mercury range of PCs and other IT products, is a local assembler but exports mainly to Africa. Assembled products do well outside the UAE mainly because of their competitive pricing, which is still a major concern in countries such as South Africa.
Kurian George, Deputy General Manager, said: "There is not much of a market in the UAE, therefore our output goes to South Africa, Egypt and Kuwait. Business was 25 per cent down last year in the GCC and Africa overall due to the notebook invasion and by 30 per cent in the GCC alone."
Pricing in the notebook segment has been aggressive over the past few years, which has also affected the local assembly segment.
Somkant Mishra, General Manager of Esys Technologies, said: "In the past three to four years notebook numbers have rose at a rapid pace. At the same time some notebook makers have been aggressive and therefore the purchasing pattern has shifted from the PC to the notebook. Previously a home would have only one desktop but now every family has more than one notebook."
Esys has an assembly plant at Jebel Ali and supplies assembled PCs to customers across the GCC and outside the region.
Mishra said: "In this segment a good chunk of the business comes from schools, government offices and some corporate sectors, where PCs are still preferred to notebooks. The major demand is from emerging markets, including North Africa, West Africa and the former Soviet states. Most of the machines we sell in the UAE are re-exported to other countries. There will be some re-exports to a few GCC countries as well, but that is very insignificant in numbers."
Component manufacturers still see a demand among high-end enthusiasts, especially gamers. Mishra said: "The volume of components such as HDDs, CPUs and memory that are sold has not seen a major drop on the regional level. Desktop PCs generally have come down in price, not just in the local assembly segment."
AMD, which makes processors and graphics cards for PCs and notebooks, has attracted many buyers for its high-end products, especially the new Black edition.
Raed Hijer, senior field application engineer, said: "The locally assembled market is still there as gamers believe in DIY and are looking at flexibility and GPUs that can be overclocked for greater performance.
"The new Black edition is unlocked therefore the CPU speed can be adjusted according to their preference. Branded PCs will never have these features. But contraction is expected in the PC assembly segment due to the global crisis."
Intel supplies processors to the local assembly segment, and Nassir Nauthoa, the chip giant's General Manager for the GCC, said: "The Middle East is a mobile market with more than 55 per cent of the PCs shipped to the region being mobile rather than desktops.
"This number, according to IDC rises to more than 80 per cent in countries such as the UAE and Saudi Arabia. The demand for netbooks, largely powered by the Intel Atom processor, has also grown exponentially since it appeared in the region in mid-2008. Netbook sales account for than 20 per cent of the notebook sales in the UAE and 10 per cent in Saudi Arabia in Q209. Globally Intel Atom revenue grew by 65 per cent in Q209."
By Nancy Sudheer
© Emirates Business 24/7 2009
