Systems integrators and dealers across the country are a worried lot. Will the narrowing price gap between branded and assembled machines mean that the channel will soon cease to exist in this space? No, says Rashi Peripherals, which is conducting a 40-city roadshow to take this message to their partners in A- and B-class cities.

Mumbai-based Rashi Peripherals is conducting a 40-city roadshow over the recent 75 days called the Channel Business Forum. The event covers several A- and B-class cities across India as well as Bangladesh and Nepal. The event is sponsored by AMD India, Netgear International Inc, Asus, Logitech and nVidia with The DQ Week as its media partner.

The objective of the event is to address the growing concern among IT partners about the rising customer inclination for branded PCs vis-a-vis assembled machines. Over the past few months, Rashi had been getting several calls from systems integrators (SIs) about whether the narrowing price gap between branded and assembled machines would put them out of business.

This gave the distributor house the impetus to go into smaller towns, where the channel was most perturbed, to assuage their fears and reiterate that the assembled business was here to stay.

Change with the times
The first thing that Rashi Peripherals talked about during the event was that change is constant and the channel has to move with this change, rather than resist it. That falling of product prices can't be avoided, just like it can't be denied that customers are willing to go for branded machines.

But there will always be a playing field for the assembled machines in the market. Rajesh Goenka, Divisional Head, Rashi Peripherals shared some industry figures to highlight this point. Currently the global market for PCs is 30 million units. Of these, 60% is branded, while 40% still continues to be integrated by partners. And this industry is growing at 10% YOY.

Even in a mature market like the US, which has 30 million PCs and 12 million laptops, 27% of the business comes from the assembled segment. Coming to the Indian market, in 2004, of the 3.7 million PCs sold, 50% of the business came from the assembled segment. In 2005, this contribution is likely to come down to 40%, but the volume of business will grow to 4.8 million units. This means that though the percentage share of the assembled segment has dropped, there is still no reason to fear, as the total base of PC sales will increase.

Also, there is a very active replacement or upgrade, which is estimated to be 20% of the current installed base. This is a great business area for SIs as most of these customers already make their purchases from them and will be more willing to
buy robust systems integrated by them.

Staying on top of things
While Rashi did assure SIs that they will not be run out of business due to the presence of MNCs and leading national brands, there is a need for partners to take a closer look at the way they do business. Especially if they intend to succeed in the SI business.

To start with, it is important that partners start learning to upsell their products. Netgear, which is one of the sponsors of the Channel Business Forum, used the event to get partners to think about getting into wireless networking. Said Kerman Rana, Regional Manager-South and West, Netgear International Inc, "Wireless offers tremendous opportunities to SIs and solution providers, but most of them have not started offering it, due to lack of awareness. It is a very simple and not highly expensive technology, as is presumed by partners. During this event, we want to evangelize this concept among partners and take them through the various wireless solutions they can offer to their customers."

Cross-selling is another facet of the business that partners should pay closer attention to. The objective should not be to merely close the deal, but to win the customer. And if this means promoting brands that are not part of the partner's kitty, then so be it.

Finally, partners should take the initiative to work out financing options for their home and SOHO customers. They can proactively talk with local banking institutions and offer attractive finance schemes, which will help customers to go for the latest technologies, without it being a drain on their pockets.

To wind up the event at all locations, Rashi configured two machines: one with standard features of a branded machine and an assembled one with the same features. It conducted benchmarking tests to find out which had better performance, and the assembled machine came up tops. And the underlined fact was that the assembled machine was priced relatively lower than its branded counterpart.

Partners can run similar benchmarking tests for their customers to overcome their hesitation about going for assembled machines. This is the best way to ensure that they can still stay a step ahead of the threat posed by branded machines, without compromising on the quality of the product and service offered.

VINITA BHATIA

Page(s)   1