IT Telecom Bhai Bhai
The growing pressure on margins, increasing commoditization of the products, cut-throat competition-all are gradually eating into the profits of the IT channel fraternity. Result: for the traditional IT channel partners, business is gradually becoming unviable and leading to many of them foraying into non-IT areas. The definition of IT, as a result, is gradually getting expanded and now includes telecom (mobile phones, mobile internet devices, etc.), consumer electronics (intelligent LCD TVs) and even niche areas like physical security and surveillance products. The convergence of the IT channel fraternity with the telecom channel, consumer electronics channel or more niche channels, as a consequence, are on the anvil.
The convergence of voice with video and data obviously means that the marriage of the IT and telecom channel fraternity is now a reality. However, whether the consummation will be free of hassles and glitches will depend on several factors. For one, the IT channel reputedly scores low on the discipline front as compared to its telecom counterpart. There is rampant cannibalization and violation of territorial integrity; telecom, on the other hand sees much clearer and precise territorial demarcation, and more importantly, it is next to impossible to violate its sanctity. At a time of technological convergence, when more and more telecom partners are looking at increasing association with IT partners this seems to be a serious apprehension they are harboring right now. And it should be the responsibility of the IT channel partners to alleviate some of these concerns.
Having said that, it’s not that everything is wrong or bad about the IT channel. Their expertise in technology (even its utilization to improve business productivity), knowledge of the industry could be best leveraged by the non-IT channels as they venture into what’s a virgin territory for them. Another advantage is unlike the telecom channel or other traditional channels like FMCG, the IT channel fraternity mostly consists of first-generation entrepreneurs who are more receptive towards newer ideas and also not averse to taking risks in exploring newer avenues. Major worry though is the aversion to any sort of change from the IT channel partners. IT companies still follow their old similar slow ways to reach the customers and think that it is the “best” method to tap the market. They should rather go like a box-moving industry.
The operational dynamics of the IT channel and telecom channels are also very different, easily evident from the fact that the mobile penetration in the Indian market is 30-40% while the IT penetration stands at about four percent. Selling of mobile is just like selling a box, unlike the one in IT sector which involves a layer of resellers and distributors for selling the IT products. In India, telecom channel is in an advantageous position because mobile is not just a tech device, it is rather considered a “lifestyle-utility” product, while IT market requires a structured and effective operation in terms of reaching to the end customers.
The best solution would be one where both the IT and telecom channels can converge their best practices. Only then can they achieve overall success. Using the marriage parlance, there are two consensual partners willing to consummate their relationship, but whether they are effectively compatible with each other to bring out the best offspring, only time can tell.