I will have to check with head office

More and more international companies are choosing Dubai as their Gulf and Middle East headquarters. Vincent White finds out why so many are businesses are flocking to the City of Gold.

During the dramatic development process of the past decades, Dubai has always foreseen that its future would rely on the entrepreneurial character of its citizens rather than a comfortable cushion of oil revenue.

Huge investments have been made in infrastructure projects such as the airport, the ports, the power and water systems, the road network and the industrial zones.

But the stimulus provided by the government could only go so far in the development of a dynamic, economically viable society. At a certain point the private sector has to assume its responsibilities if the process has any hope of generating its own steam. And indeed the entrepreneurial character of Dubai's population has risen to the occasion. The real estate boom is private sector financed and managed. Banking is thriving and commerce is bustling, attracting custom from the far corners of the region and the world. Even the large infrastructure projects are now beginning to be financed, built and managed by the private sector.

Dubai has developed into an dynamo, its perpetual motion generating the social and economic electricity which attracts ever more activity. The fact that the critical mass has been achieved in its status as the regional entrepot centre is being validated by scores of major international corporations which have designated the emirate as their regional headquarters. With this article, Al Shindagha launches a series which will focus on a variety of individual organisations which have chosen Dubai their regional home.

The Companies

Compaq Computer Corporation has been in the business news a lot during the last year. With annual sales passing the $20 billion mark around the world, the company has earned the laurels of being the largest global supplier of personal computers. Compaq started its rapid ascent through the crowded ranks of the $700 billion computer world back in the early 90s with an aggressive policy of slashing prices, not just once, but on a continual basis. Last year the market and the competition were put into a spin with the introduction of a Compaq home computer line which sold at less than $1000.

With its sights on climbing into the top echelon of the IT industry, Compaq has been pursuing a strategy of broadening its customer base. In June 1997 it acquired Tandem Computers, a Silicon Valley specialist in high-end computers, for $3 billion. On 26 January of this year Compaq announced an even bigger coup, the $9.6 billion purchase of Digital Equipment Corp., which when the deal is completed, will be the largest ever in the history of the computer industry. The result will be a giant corporation generating $37.5 billion in revenues, second only to IBM in computer sales.

Compaq products are sold and supported in more than 100 countries around the world through an extensive network of authorised resellers and marketing partners. In the Middle East the corporation has developed a network of resellers offering its full range of products and services in Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, UAE and Yemen. That is an ambitious scope of activity for a regional operation. Compaq at first sited its Middle East headquarters temporarily in Bahrain, and then shifted to a more permanent site in Jebel Ali Free Zone. From there it provides marketing, sales, technical and administrative support to its marketing partners and customers throughout the Middle East. Compaq is currently the leading supplier of personal computers in the Middle East, with a market share of 14% within the very competitive region.

What and why questions were posed by Al Shindagha to Dr. Walid Moneimne, the Managing Director of Compaq Computer Middle East:

AS: What is Compaq's agenda for the Middle East?
WM: Compaq's agenda for the Middle East has many elements - it would take up a whole magazine if I listed them all. The key objective is our commitment to growing and developing our market share for desktops, workstations, notebooks, servers and networking solutions. We want to take our campaign to reduce the total cost of ownership to an ever increasing number of corporations and media sources throughout the region, and to enhance our customer satisfaction and service levels through investment and resource management. Also, during 1998 we want to focus our attention more strongly than ever on Compaq's service providers.

AS: Why Dubai as your Middle East headquarters?
WM: Dubai's worth as a strategic hub is well recognised among governments and corporations worldwide. Although Compaq had been selling its products to the region for over 10 years, it wasn't until May 1994 that we established a regional operation in Bahrain. In October 1995 we relocated to the Jebel Ali Free Zone, and less than one year later, the US research firm International Data Corporation announced that we had become the number one supplier of PCs in the GCC and Egypt. I think this success reflects our customer's satisfaction with Compaq products and underlines the strength of our marketing and service levels within the region. Our decision to site ourselves here in Dubai has been a big plus for our regional strategy.

Halton is an international group of companies which specialises in the design, development and manufacture of ventilation systems for commercial, industrial and residential markets. The group operates from factories in Kausala & Lathi in Finland; Bethune & Ivry sur Seine in France; Scottsville, Kentucky in the United States; and Kuala Lumpur in Malaysia.

Since its founding 26 years ago, Halton has grown to operations in 13 countries. From the beginning, a key component of corporate strategy has been to invest at least 10% of annual turnover in research and product development. Laboratories in Finland and France recreate environments for the measurement of sound, air flow rates and the quality of indoor air.

It is this commitment to R&D that has enabled the Halton Group to become an industry leader. The company at first specialised in the production of ventilation system components, but with the results of the research investment, a steady programme of development of total ventilation systems has evolved during the last decade.

AS: What is Halton's agenda for the Middle East?
Michael Ooink, Regional Manager: Halton has prospered by pursuing a global vision of serving customers world-wide. We have already established operations in Scandinavia, Central Europe, North America and Asia, so we had to add the Middle East into the mix. The region has some of the world's fastest growing economies. Countries such as the United Arab Emirates, the Sultanate of Oman, Saudi Arabia and Kuwait are industrialising very rapidly. With construction increasing, there is a significant need for high quality ventilation products. Halton has decided on an aggressive campaign to let this market learn that Halton products are the best solution for reliable, quality ventilation.

AS: Why Dubai as your Middle East headquarters?
MO: Dubai has become famous as the commercial gateway to the Middle East. In a way it serves the same function as Hong Kong does for China. So with Halton's ambitious marketing programme for the Middle East region, it was natural for us to open our regional office here. We want to be part of the local dynamic growth and to be able to service our customers locally. At the same time, we have gained a foothold in the region by siting our headquarters in its most exciting hub city. Perhaps I should add that it's not hard to persuade our employees to relocate here, because the lifestyle is definitely better here than the alternatives.

INTEL CORPORATION, established in 1968, is widely recognised as a pioneer and market leader in microprocessor innovation and development. Intel has steadily built its reputation as the leading manufacturer of microprocessors to a point where, according to independent studies, its technology drives over 80% of PCs world-wide.

This market leadership has many downstream advantages. Millions of software packages are now designed to be run specifically on Intel technology. A quasi-partnership with Microsoft's domination of the operating system software for PCs, an alliance dubbed Wintel, has further entrenched Intel's leading role in the information technology sector.

The post 1986 growth of the PC industry reoriented Intel's strategic focus from the manufacture of high tech semiconductor products in favour of the microprocessor market. Intel introduced the 486 microprocessor in 1989, followed by the Pentium processor in 1994, the Pentium Pro in 1996, and Pentium II and MMX in 1997. The company established marketing history of sorts when it launched its innovative Intel Inside advertising and branding campaign, in a step that many industry insiders were extremely sceptical about. The result is that three years later Intel is now ranked in the world's top ten most valuable brands.

The Middle East is grouped among Intel's emerging markets where success is targeted as one of the key factors to sustain growth in the long term for Intel brands and the company as a whole. "We're focusing on emerging markets for long-term growth," says Andy Grove, Intel Chairman. "They are all leapfrogging. They are all getting into computerisation of their businesses. They recognise what technology can do for them."

AS: What does the future have in store for Intel and computer users everywhere?
AG: In the immediate future Intel plans to simplify the choice for end users by concentrating on purely MMX and Pentium II products. MMX makes highly efficient use of CPU bandwidth, which can make personal video more accessible to more users at a lower cost.

Intel's vision for tomorrow's PC user is that of the visually connected PC. This next generation platform will comprise a desktop with video conferencing capabilities, Ethernet, Internet and intranet, plus 3D visual computing. All of these should be running, Intel hopes very much, on a Pentium II or MMX processor.

Another of the development interests of Intel that Middle East IT consumers can look forward to is the company's initiative to improve the manageability of every PC in order to lower the total cost of ownership. Intel proposes to achieve this by adding management features to its processors as well as its motherboards, along with software products like its management suite. This new specification provides manufacturers with a blueprint with which they can produce more economical PCs to be managed over corporate networks, which reduces both upfront and downstream support costs.

AS: What is Intel's agenda for the Middle East?
Gilbert Lacroix, General Manager Middle East: In general for the corporation, the technological advancement of the microprocessor will always remain at the core of Intel's agenda. In such a fluid industry which is full of surprises each year, we can't take our leadership for granted, so we must consistently help our customers to better their levels of performance and to increase their capacity for future expansion.

Our Middle East strategy is to understand the market developments happening across the region, which we consider to be quite dynamic and full of potential as it develops economically. We are here to support our equipment manufacturing partners, plus an increasing focus on our own consumer products, such as the Create & Share Camera Pack which brings video conferencing and digital imaging processes to the family. There is a rapidly growing small business market here in the Middle East, and Intel will be promoting its expanding family of networking products and network management software. So it looks like we've got a busy year ahead!

AS: Why Dubai as your Middle East headquarters?
GL: Intel Corporation Middle East has been located here in the Emirates for four years - not only is Dubai a very pleasant place to work in, it is well located for our regional management of the GCC, the Levant and Egypt.

Intel Middle East is also here to support our original equipment manufacturing partners such as Acer, AST, Compaq, HP, IBM, and Microsoft, who are all headquartered here in Dubai, as are our regional distributions. Last year we experienced 100% growth in both revenue and staff numbers, so I would say that we are well positioned to fulfil our mandate to support the region's major corporates and carry forward our strong commitment to the region.