Are you looking at tapping the IT channel for gaming devices?
The gaming industry is expected to reach $4 billion in three years. Since
the launch of our gaming products we have been investing in retail by putting up
kiosks where people can get a proper touch and feel experience. This is the best
way we have to educate customers to buy our premium gaming products.
If we were to invest in IT retailers then the challenge we face is how much
and what kind of explanation will their sales people be able to give to
customers. This is why we are concentrating on large format retailers (LFRs)
rather than the smaller IT retailers. Also customers still prefer to go the LFRs
to buy premium products and there is a high attach rate of selling gaming
consoles with an expensive product like an LCD monitor. Most IT retailers sell
low-ticket products. Also most of the IT hubs are places where the buyers are
not the end-customers, but the channel partners themselves.
But having said that, we are aware that there is scope in the future for us
to showcase our gaming devices in the second tier IT retail outlets, but we are
going to go slow there.
What are the immediate things on your agenda?
Firstly we are expanding the category of products we have while still
retaining the core of our audience, like hard core gamers. This is because in
this business content is critical as people actually wait for titles to be
Secondly we will be working with more LFRs and consumer electronics
showrooms. The latter have the right ambience for showcasing our products. But
our expansion is going to be very conservative as we still need to reach out to
the right markets. Besides this, we will also be going for specialized devices
and accessories, mainly keyboards and mice.
But most new users are opting for laptops due to them becoming more
affordable. In this case, would you not be limiting the scope of your business
by continuing to concentrate on mice and keyboards alone, rather than expanding
the range to encompass other laptop accessories?
Despite the rise in the number of laptop users, there are certain segments
which still continue to invest in desktops like government, educational and
financial institutions. So the market for keyboards and mice is not stagnating.
Several partners believe that Microsoft’s hardware business is more an
afterthought than critical business area for the company. Is this the reason why
it has not added to its device portfolio?
That is not true. Entertainment device (EDD) is one of the three business
segments of Microsoft. We have been in this business for 25 years globally so we
are definitely in this business to stay. But this category suffers from low
involvement but the growth in this category has been fastest. Last year we
touched one million customers in the last year and we expect it to grow faster
this year as well. Had we not been serious would this milestone been reached?