What have been the focus areas for the company’s IT business?
Al Otaiba Communications started in 1996 with wholesale business of mobile phones throughout the Middle East. Gradually, we moved into IT distribution and retail. We brought in new brands. In retail, we started in association with convenience stores in petrol stations.
We later split our operations into various business units selling into C-store, superstore IT retailers and hypermarkets. The retail division manages our own stores in Dubai and Abu Dhabi which we are looking at growing into a network of ten stores by 2010. The distribution division is responsible for assigning authorised resellers throughout the region wherein there are contracts and we provide support. The trading division sells strictly on cash basis with no contracts, no credit and no support.
What is the next phase of growth for the company?
We are looking at restructuring to bring more focus. The new initiative is to split these divisions into separate companies. Al Otaiba retail will be a new company that will handle the five stores we have and look at expansion with a new management team. Distribution and trading businesses will move to Jebel Ali where we have taken 90,000 sq ft of space for building warehousing facilities. We have already registered a company under the name of Al Otaiba Distribution and will use that base to procure all products under the brands for which we have exclusive distribution rights such as Sitecom, Hawking and more. They will be distributed on exclusive basis to Middle East markets. For products that we don’t have exclusive rights would be sold into the North Africa, CIS and Indian sub-continent. Al Otaiba Distribution will not sell those brands in the UAE. AL Otaiba will assign Al Otaiba Communications to sell within the UAE which in turn will only sell into the convenience stores and the superstores and hypermarkets and will be responsible for replenishing the stocks in the local market.
How do you think this helps your further plans?
We believe this restructuring will help us focus and define roles for each company. Each company within the group will thus focus on one business model. Al Otaiba Distribution will try and meet a target of 50 million Dirhams annual turnover in the first year and then grow it year on year. Al Otaiba Communications will be the authorised supplier for Al Otaiba Distribution inside the UAE. On the other hand, the challenge for Al Otaiba Retail will be to grow their profitability, introduce new point of sales and scale up.
Which are the flagship brands that you sell and how do you look at their strengths in the market?
As far as the brands are concerned, we have Sitecom which is a leading manufacturer in Europe in developing industry standard networking products for home and Soho. Their products are all Green and have certifications from all leading industry associations. The brand has made great strides in the UAE, delivering maximum wireless performance in terms of speed and coverage and is perhaps only second to Linksys in popularity in the local market. It is also unique because all its products offer a ten year warranty whereas most other competitors offer only one year warranty. This reflects the quality of the products and we take pride in that.
We distribute Sweex – a Dutch brand, which is a value for money range of accessories from mouse to keyboards and more. There is no rationale for paying unreasonable premiums for products such a mouse. We offer these products with all features for very reasonable prices with three years warranty, which is not the case for some of the leading brands.
We also have signed up with Hawking, an extremely well known American range of wireless products which include a huge range of antennas and range extenders. These products can be used to enhance the range of routers.
You also have some home grown brands. Please elaborate.
We have SAMA which offers a range of consumer electronics products from LCD Televisions, Plasma screens and so on. Our go to market strategy for this would essentially be based around large projects because we cannot compete with top tier brands with their costs efficiencies. Go will be for computer accessories and we already have GSM Pro for mobile phone accessories.
Are you looking at introducing any new brand?
We are planning to add a range of NAS solutions, targeting SMB and home users. We are looking at launching a brand called Synology very soon in Dubai. This is a popular brand in the US and covers the needs of customers running from 1 bay hard drives solution to 5 bay drive solutions for home and soho. We have done the negotiations already and are looking at launching soon.
Khalaf Al Otaiba, CEO of Al Otaiba Communications shares insights into the group?s business directions