Distree XXL - 2013 Monte-Carlo

February 19, 2013

DIRECTIONS: RUSSIA & CIS

IGOR SNYTKO

CONTENTS

•  Important reservations •  Key facts •  Opportunities

General Overview of CIS market

•  Overall product trends •  New segments •  Tablet focus

Key Product Trends

•  Distribution •  Retail •  Mono-brand retail

Key Channel Trends

1.  Individual opinion is presented, shouldn’t be considered as direct/indirect business advice, no one could be hold liable for consequences

2.  No overload with numbers, rather focused on “sharing of observations” => other speakers will present significant volume of numbers

3.  Mainly mean Russia (more experience and the biggest market in CIS)

4.  Mainly relevant for B2C segment

GENERAL RESERVATIONS

RU market is in TOP3 in EMEA in all major categories

Still good potential for growth as penetration level for ICT products is below mature markets level

Consumption shifts between product groups => Impacting channel power balance

GENERAL OVERVIEW OF CIS MARKETS

NO SINGLE CIS REGION CHANNEL STRATEGY

CO

UN

TRY

IND

IVID

UA

L S

ITU

ATIO

N

- enforcement of regulations - level of competitive powers - consumer buying power - infrastructure development - specific channels - general economic situation

INDIVIDUAL COUNTRY STRATEGY: - PRODUCT - CHANNEL - PROMOTION

HOWEVER, CUSTOMS UNION Establishment of Customs Union of Russia, Kazakhstan and Belorussia created additional opportunities for vendors and distributors: •  Easier cross-boarder expansion •  Simplified operations in multiple countries

Opportunity/Risk balance

One of the solutions – expansion through M&A to leverage power and local skills

OPPORTUNITIES IN CIS

MAJOR INTERNATIONAL

VENDORS

•  Increasing business transparency. Still far from ideal

•  Potential market size

•  Market perceptive for technologies and brand addictive

NICHE PRODUCT SEGMENT VENDORS

•  Still fragmented channel

•  New products segments emerge fast (Car DVRs, BT Products)

•  Smartphone and Tablet penetration Growth

DISTRIBUTORS

•  Expansion possibilities •  Transforming channel

requires new services

PRODUCT TRENDS: GENERAL 1.  Mobility focus supported by Infrastructure development

(3G & LTE networks) and efforts of Telecom operators 2.  Among fastest growing: Tablets, Smartphones and

Accessories, Connectivity and Data Sharing Devices (content consumption driven)

3.  Visible slow-down in the biggest products groups, such as notebooks PC

4.  Further segmentation of personal computing market: emerge of Convertibles can jeopardize Ultrabook position

TABLETS! TABLETS! TABLETS!

PRODUCT TRENDS: TABLETS 1.  Tablets are becoming No 1 solution for content

consumption: almost total replacement of netbooks 2.  Tablets get more popular also in B2B (supported by emerge

of Cloud Computing Solutions and applications development)

3.  Competition between tablet suppliers gets more fierce: •  Growing Android Appreciation •  Launch of Windows 8 •  Low entry barriers – vast OEM/ODM opportunities

4. Product group segmentation through screen-size

DISTRIBUTION TRENDS •  Shrinking business volumes due to vendors direct

supply to biggest accounts for major product groups •  Risk of key accounts business due to volumes

reduction

CONSOLIDATION?

Happened already in Consumer Electronics –

only few remain

Not so fast in IT – more complex product portfolio

(possibility to play in product niche), more

complex channel

DISTRIBUTION TRENDS

Survival and Growth Options for Broadband Distributors:

Value add distribution

Niche high-margin

distribution Focus on logistics

Product diversification

Downstream/Upstream

vertical integration

RETAIL TRENDS 1. A lot of plans for store number growth, but questionable

2. Further consolidation of the channel, major federal retailers winning share

3. Regional retail players stay only in smaller formats and in smaller cities, unfeasible for majors

4. Growth opportunities for Telco retailers, as consumer preferences shifts support their business

5. Further development of on-line retail: early to talk about consolidation, but major investments and focus on multi-channeling

6. Further development of franchise projects is questionable

OPPORTUNITIES?

1. BIG MARKET WITH GROWTH POTENTIAL 2. NOTICABLE SHIFTS IN CONSUMERS

PREFERENCES 3. NEW OPPORTUNITIES FOR MARKET

PLAYERS 4. COMPLEX MARKET, REQUIRES

PROFESSIONAL APPROACH

CONCLUSIONS

THANKS FOR YOUR ATTENTION

FEEL FREE TO CONTACT WITH INQUIRIES: IGOR.SNYTKO@OCEANSOLUTIONS.RU TEL: +7-495-221-71-81 WWW.OCEANSOLUTIONS.RU