With the advent of the New Year 2010, expectations would ordinarily be on the high side for all sectors of the economy, especially as the out-gone year was not really as profitable as many would have liked it to be. For various sectors in the Nigerian economy, 2009 will be remembered for all the wrong reasons, but for the technology (ICT) sector, it was really a year better forgotten. What with the plethora of financial crisis that dwindled and shrunk the business opportunities as well as the downturn in demand from the biggest consumers – government.
Generally speaking, the environment was bad for all players in the ICT market, both indigenous and international in 2009. But arguably the hardest hit would be the indigenous hardware (personal computers) sub-sector. So there are no mistakes, lets make it clear that this sub-sector in focus here features strong contenders in indigenous brands (Zinox, Speedstar, Omatek, Brian, Veda, Cosmos and Geniac) and international brands (HP, Dell, Sony, Acer, IBM/Lenovo, Toshiba, Packard Bell, Apple, etc).
By the beginning of 2009, expectations were high as usual among the ranks of PC brands slugging it out in Nigeria, especially as 2008 had just ended on a blistering note for the indigenous brands still basking in the euphoria of a massive government and public sector patronage. In fact it was so good for the likes of Zinox and Omatek in 2008 that some rating agencies were classifying them as the ‘Leading PC Brands in Nigeria’, with Zinox according itself the title of ‘Highest Selling PC Brand’ in Nigeria. Though the figures that gave them such fancy titles were never verified as it is done globally, the reason for such reference obviously came from the unprecedented level of patronage from the public sector for indigenous PCs between 2006 and 2008.
Riding on the crest of an emotional marketing concept that positioned the indigenous brands as loyalty and patriotic façades, Zinox, Omatek and Co became the toast of State and federal government parastatals. Purchase Orders (POs) originating from these quarters were on the rise, and indigenous brands were smiling to the banks. At the same time, the economic meltdown in the United States and most parts of the European Union and Asia was gathering storm. The more forward-looking PC brands in these areas were already making frantic efforts in channeling their attention to virgin, emerging and more lucrative markets. These moves made the likes of Dell, Acer, Lenovo and HP to fortify their Nigerian and other African outlets to compensate and shore-up their bottomline against the inevitable slump in sales in other markets.
Enter 2009, the year the economic meltdown made its entry into the Nigerian environment. Although many analysts will prefer not to refer to our experience as akin to what happened in the United States and other modern economies, what we still ended up with closely relates to our own economic realities. With the Sanusi tsunami effectively rearranging the equations in the financial sector, it inevitably dealt a massive blow on the borrowing abilities of the local PC brands thereby reducing their propensity to undertake the financial risk of doing big budget business with the public sector. Unfortunately for them as well, having made it very obvious to all that they only target government institutions and not the consumer market or even the private sector, the indigenous brands were unable to swing towards the only viable market available – the consumer market.
In a classic rendition of the law of demand and supply, 2009 became the year market forces determined who made what and how much. Having seen the turn of the market early enough, some of the major international PC brands had already positioned themselves to take advantage of the usual outcome of any economic crisis – price. With a huge production capacity looking for a marketing outlet, the likes of HP, Acer and Dell went on a feeding frenzy in the consumer market segment. With a price war in the offing, the indigenous brands were no match against the product war chest assembled for the Nigerian market. From an all time high figure of about N135, 000 for a conventional business Laptop PC with an above average performance configuration in 2007 and 2008, to an all time low cost of N75, 000 for a similar system in 2009, it was obvious that only the fittest could survive in the PC market.
As it was evident that the financial crisis in Nigeria is not going to abate anytime soon, the indigenous brands gradually went into a recession. With production (or is it purchase?) reduced to about 30%, the indigenous brands have so far been trying to their hands on other areas of business to stay afloat. A typical example of such innovation can be seen in Zinox, a company with the first indigenous PC brand in Nigeria. On the realization of dwindling marketshare, the owners of Zinox led by its enterprising chief executive officer, Dr. Stan Ekeh made some directional changes that would have bemused his contemporary Kevin Rollins at Dell.
By focusing on entirely different directions from PC business, Zinox first went from selling solar torchlights to wireless solutions. With the latter making in-roads to some State governments, the former turned out to be a complete failure. Not done, the sister company of Zinox that plays a leading role in PC distribution TD, in a bid not to be left behind in the successes of the global PC brands, quickly signed-up distribution agreements with the remaining brands not earlier in its fold, Dell and Acer. Touted by stakeholders in the industry as the perfect move, Stan Ekeh’s PC business interests can now be assured of good times no matter where the market swings: indigenous brands or international.
The rest of his contemporaries in the indigenous PC brand market are not so lucky, though some of them are still barely able to keep their heads above water. In the midst of its acclaimed inroads into the traditional market of Zinox, the next big indigenous PC brand Omatex, made history in 2008 by being the first PC maker in Nigeria to go public. So much was the buzz around this feat that many actually thought that it is the beginning of its dominance in the local market. Not only did that permutation not yield the desired results, the brand actually experienced massive financial difficulties in the year gone by owing to the relationship the company had with one of the most troubled banks according to the CBN under Lamido Sanusi.
With Intercontinental Bank Plc as one of its major backers, Omatek’s fortunes plunged as well as its stock value on the floor of the Nigerian Stock Exchange. Ironically the company led by Engr. Florence Seriki could not tow the line of Stan Ekeh and diversify or even jump ship and go back to its traditional major PC brand distribution. This is because the reseller business of the old Omatek Ventures, which was a reseller mostly for the high-end Apple PC brand, has been submerged into the new publicly quoted PC manufacturer. Things actually came to a head when the company’s chief executive was listed by the CBN as a non-performing debtor, a revelation that is still being contested by the management of Omatek.
This leaves Speedstar, Geniac, Brian and of recent, Veda and the PC brand of ubiquitous Coscharis Technologies called Cosmos. On the part of Speedstar, arguably the oldest indigenous PC brand in the country from the stables of Beta Computers, things can never be too bad. This is because from 2007 that the company commissioned its ultra modern assembly plant in their Surulere Lagos premises, the target market for this brand has always remained within the small and medium enterprises (SME), education sector and the ever-generous public sector. With the first two always eager to go for low cost and rugged systems which Beta is known for, the brand which can never be described as over-ambitious, has continued to maintain a passable market rating all through 2009.
Geniac, a fringe PC brand that made its debut in 2004 from the stables of Juniper Solutions Limited, is actually best known as a non-contender. Though basing its marketing edge on rugged and low power consumption as well as low pricing, the brand has never really gotten off its production line to challenge the market leaders. The Brian PC brand, a product of Balogtek Systems can best be described as a has-been brand. Without as much as a whisper, Brian came out at the peak of the patriotism clarion call for indigenous PC brand patronage in 2001 and after the initial benefaction from the government then in power, Brian since taken the back seat for good.
But against all odds, the late 2008 and throughout 2009 recorded the entrance of two very proactive indigenous PC brands in the country – Veda and Cosmos. The former, a brainchild of Bode Pedro (of the Femi Pedro dynasty), made an entry into the crowded PC market with a range of innovative products that have so far, captured the imagination of most industry watchers. Employing a sophisticated brand positioning strategy that tends to place the brand within the upper echelon of the consumer market, the Veda PC brand has gradually warmed itself into the hearts of even the private sector consumer markets with its range of value added embedded applications and design. Mr. Pedro is also a product of Omatek having had his first taste of PC business in the company years ago. However the best of the lot and the PC brand with the best prospects in the market still remains Cosmos from the Coscharis Technologies stable.
When Coscharis technologies made the decision to shift from its traditional PC distribution business as far back as 2006, which has seen it taking a leading role in the distribution of computers and imaging brands over the years, little did the market know it will live up to its promise to launch its own brand in 2008. With the launch of the Cosmos brand, Coscharis has been able to use its unmatched distribution network in the open consumer market, which gave them an edge in their original business of major PC reselling, to position their brand as a solid contender in the consumer market. Employing the tactics of using price-friendly products to make an entry, Cosmos is seen as not trying to rub shoulders with major international PC brands, but still maintaining its hold on a large chunk of the market especially the SME and educational sectors as well as the everyday individual consumer market.
With the Nigerian political climate of 2010 definitely going to shut out any major public sector PC buying spree as recorded between the years 2000 to 2008, it is obvious that the only chance of survival for the indigenous PC brands remains the over 100 million individual potential consumers in the country. The way this huge market is approached, a scintillating prospect seen by the likes of Dell, HP, Acer and Co, yet oblivious to our indigenous PC pushers, will determine which PC brand we are going to celebrate come 2011.
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