The fact that Xerox does not have lots of partners in every nook and corner of the country, is not giving Princy Bhatnagar any sleepless nights. On the contrary, he thinks this is good, because he would not like the brand to be over-distributed, atleast for another five years, thereby giving his existing channel an opportunity to earn decent margins

From concentrating on enterprises in metros and mini-metros, Xerox is now focusing on smaller offices in B and C-class cities. What is the objective behind this change in strategy?
The two are actually being done simultaneously and we are not moving away from enterprise strategy. It's very important to expand within the enterprise space, and we are coming up with new and better solutions for enterprise customers.

Most people have seen only the products side of Xerox, and very few customers and partners are aware of its software solutions, which improve productivity in the enterprise space considerably. Thus, enterprise vertical has by no means been left out, and is a high-growth segment for Xerox.

Princy Bhatnagar Director-New Office Group, Xerox India

Until four years back, Xerox was a direct selling organization and now we have made our transition from a direct sales model to a channel sales model. Today, 80 percent of our business comes from channel, while the rest comes from direct sales.

We still have a lot of room to grow in the low-end space, which includes A4 printers and A4 multi-functions. We still have not built a complete geographic penetration across the country. There is more and more engagement from Xerox in the small markets, where we have absolutely minimal presence.

How do you propose to tackle competition?
The market is open and growing fast, and every vendor has enough space to work here. I don't think we have to compete with them to grow. The growth will come only when we cross the threshold of the market- share.

HP is the market leader as far as the unit growth is concerned. But Xerox is different from other print product companies.

Every time you get your credit card statement or your mobile bill statement, there is a very high probability that it is printed on a Xerox machine, and you may never know it. But as a matter of fact, each of those machines will be printing 10-20 lakh pages per month. Because every mobile provider needs to ship that bill exactly on 18th or 20th of every month.

Wherever there are mission critical applications, they runs largely on Xerox. That is a different way of looking at printer market per se. And the understanding that comes from partners is obviously different.

What are the new initiatives you are planning, to make channel under­stand your brand positioning?
We are aligning with partners very clearly in four distinct areas. The first and the foremost is the reseller channel, where we are now on an expansion spree and will add a lot of sub-distributors. Essentially, we want to ensure that we have engaged at least around 4,000 resellers through these sub-distributors. The whole expansion is in terms of geographic reach and the number of touch points where Xerox can be made available to its customers.

In the SMB space, we will align with partners in computing, the IT SMB resellers, and the solution and networking resellers. In the corporate segment, it is essentially going to be a combination of SIs and institu­tional vendors who would address the key accounts that Xerox wants to address directly. So we will meet the customers but engage the business through partners.

Partners earn very low margins on HP printers and copiers, while Xerox resellers earn a margin of Rs 300 to 400. How have you managed to retain a relatively healthier margin structure?
Profit is a value proposition for Xerox, while HP or other vendor's products sell on its own and they do not have to make an effort to sell the product.

The Xerox value proposition to the channel partners is very different. We are the only vendor in this country who sell product in the bandwidth of Rs 3,500 to Rs 50 lakh. If I was to draw a competition product-availability map, we compete with different vendors in the respective spaces, then we are the only vendor who has products addressing each one of them.

Secondly, we are an under-distributed brand. We do not believe that we need to be over-distributed at least for next three to five years. I think that will bring in a very profitable channel proposition.

The third reason is obviously a very strong element of service and our ability to deliver solutions in the enterprise space. In that sense, one will find it very tough to get a vendor and a brand like Xerox where the customers can just come to us and say that they don't know how to manage documentation. We sit and design everything from scratch in such cases.

We don't sell merely machines but a printing experi­ence to customers. Therefore, I don't think value proposition in isolation is about earning a margin of Rs 20 or 300 at all. That's a very small component of it. We might be guilty of not advertising, and we don't have marketing muscle or advertising power. But that doesn't stop us from coming out with good products, which help reduce the customers' operational cost.

How do you propose to gain marketshare, if you don't engage in brand awareness activities?
One doesn't need to advertise a lot in the high-end space. Most of the advertising happens in the low-end space where the SI and corporate reseller engagement is very important.

Where do you see the future of printing headed?
The future is bright for everyone. The real test is how much faster can we grow. Even if we don't do anything and just sit with folded hands, we will still grow at least half the rate of the market growth rate, and even that will be faster than others.

The bullishness in all these forecasts is something that one has to be cautious about. And what we need to ask ourselves is-Is that much of bullishness fair? But the fact is that all the data points are pointing in that direction.

You have changed three companies in few years. This has made the channel a little skeptical of how long will you be with Xerox and whether
all your plans, therefore have a long-term tag attached to it. Comment.

A company's plans and strategies has got nothing to do with me. It is not a personal issue. Every company has a set of decision makers that also includes cross-functional people largely aligned with what is called as deve­lopment market organiza­tions. My being in a company or switching a company will not affect partners because these are not my strategies. I have been working with Xerox since the past three months and I am so far enjoying my stay.

POOJA SHARMA
poojas@cybermedia.co.in

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