The changing focus of sub-distribution

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The

economy of India has laid down clear cut concerns in the IT channel

business with key focus on investment trends and distribution patterns.

With some leading vendors opting for regional sub-distribution

exclusive models recently, the models and its concerns have thus

changed and needs to be probed into.


Speaking over the trends and informing channel partners about the same,

PS

Neogi, CEO, Redington India said, “We need to pick up growth

numbers and targets in a way that we meet those easily and do not

strain ourselves in the process.”


Referring to the onset of the slowdown, Neogi pointed out that the

government investments, in that era, have kept the IT hardware as well

as the software industry going on, as the corporate and SMB segments

were going low in their IT budgets. Besides, the consumer demand in the

market has also not slacked too much and investments were in the low

key. “Dependency on the government for its IT budget remains one of the

future trends with a slow investment recovery module. Also, the global

uncertainty that has once again stepped in Europe is going to affect

local business in India, which is backed by the nature of imports,”

Neogi added while elucidating about the trends this year.


However, the primary focus for sub-distributors this year will be based

on the dollar fluctuation as IT hardware industry in India is

import-centric. “The ongoing dollar exchange rate fluctuation is going

to affect the IT business direly as we still remain import

dependent,”  opined Neogi.


Talking about the options that can be explored by sub-distributors in

terms of markets and consumer verticals, he added, “In India, IT

purchases for the commercial houses is a deferred priority and for the

end-customers it is still a luxury. While the corporate sector is now

targeting high returns on their investment, a saturation point is

coming in.”


Adding to this, Neogi commented, “SMB and the middle-class end-users

remain the prime focus for the channel business and we should focus on

these two sectors more than any other sector. There is a potential of

an estimated $228 million business lurking around in the SMB sector

alone, besides an estimated 52 million household in India, and we must

plan to tap it.” As consumer priorities in India remain constant with

their focus on securing their home and investments, IT features much

below in their priority list. “Our task now is to make IT a top

priority for the middle-class mindset,” he said.


It has always been said that the urban market is saturated now with

little innovative possibilities in the metros, and the upcountry

ensures a positive flow of business. However, it needs to be understood

that it is the high-end and top spending consumer front in the metros

that has been saturated while the lower middle class segment in the

urban areas is still in  focus. “We need to focus on the urban

lower middle class segment besides focusing on the upcountry. It is

expected that over the years the income of the middle-class segment

will increase 13 times, which is a very good opportunity for us to

bring them into the primary consumer forefront,” Neogi opined.


With the increase of social networking sites and its activity by about

51 percent in the Internet space, connectivity will be the growth

driver this year. However, the prospects for this FY is not as bright

as they were in the year 2006, and with primary vendors changing their

distribution policies and the exclusive retails thinking again to be

rising to prominence, a space for convergence is on the rise. Sharing

his views on the same, Neogi concluded, “I would recommend the channels

to take up non-IT products in their portfolio and be ready for the era

of true convergence to step in.”