Channel is not happy with Samsung’s HDD pricing strategy

Some members of the channel community in Delhi have expressed discontentment
over the discrepancies, which according to them exist, in the Samsung HDD prices
in Singapore and India. While Samsung officials refuted the charges, channel
community is divided over the issue.

Said Somesh Narang, Director, Elcom Computers, "Samsung is charging high
in the name of India warranty. They charge Rs 400 to 500 extra from customers
and dealers despite the fact that there is no duty structure involved. If we
compare the prices of Samsung HDDs in India to Samsung HDDs in Singapore, we
find that prices in Singapore are much cheaper. This is without any value
addition in the product."

Giving the reason, he added, "The possible reason for this could be that
Samsung does not have adequate stocks and therefore is not showing any
aggression in the Indian market. Their market share in terms of sales has gone
down from 60 to 40-45 percent in the last quarter. On the other hand, Seagate’s
market share has increased. Seagate, though not officially announced, gives an
extended three-year warranty for just Rs 199. Moreover, Seagate has a uniform
pricing and warranty structure. We can buy Seagate HDDs in Singapore and can
claim the warranty here in India."

When contacted, Raman Khosla, Country Product Manager (HDD Business), Samsung
India, refuted the contention. "There is absolutely no discrepancy
whatsoever in our India and Singapore prices of HDDs. The duty cuts that are
being spoken about were on the cost price and not on the selling price. The
reduction amounted to 20 percent of the cost price, which translates to 15
percent reduction in the end user price. Samsung is offering that benefit to the
customers."

He, however, did agree on the fact that there is a price differential
"but not to the extent of four to five hundred rupees. It may be to the
tune of Rs 50 to 75," which he attributed to the value-added services.
"We have a nationwide service network and we provide maintenance and repair
services to our customers. If we charge a premium of Rs 400 to 500 on a product
like HDD, we won’t be able to survive in the market."

Rajesh Gogia, Director, Sun Systems, a leading reseller of Ghaziabad,
admitted that discrepancy exists in the HDD prices even though the sales tax on
it has been reduced to zero percent. He depicted another problem. "If we
buy the HDDs from any other than Samsung, we are not given the warranty as the
company says that it’s not genuine. There is no way we can differentiate
between the genuine and the fake hdds and the company too is not doing anything
in this regard."

On the issue of India warranty, Khosla said, "Samsung does provide an
India warranty but that’s only for products sold through Samsung. Customers
may not know the difference between a genuine Samsung HDD and a refurbished one.
There is no denial to the fact that a significant gray market is operating in
this area."

Kapil Wadhwa, Director, Champion Computers, ano-ther major partner of
Samsung, however, expressed ignorance on the whole issue. He said that he had no
idea about it and rather asked The DQ Week to give him the details of the issue.

On the other hand, Rajesh Aggarwal, Director, Micromax Technologies,
commented, "When the duty cuts had come, we were given benefits and the
prices of HDDs had come down but lately we have witnessed that the prices have
again soared up by five to six percent." He attributed the rise in price to
shortage of supplies.

Khosla retorted, "As far as the issue of shortage of supply is
concerned, Samsung India has registered its highest ever sales in the entire
7200 RPM category for the month of March this year. Yes, I agree to the fact
that there was a slight rise in prices but that was in the month of February and
that too because there was an inflation in HDD prices internationally which had
a slight spillover effect on the Indian market too. However, the prices have
been more or less uniform since then."

Karma Negi & Kusum Makhija

New Delhi