THE CHANNEL RUN

Now a days almost all vendors are stri­ving hard to beef
up their distribution networks to increase their market shares, as the channel
help vendors maintain lean direct sales teams, leaving the selling aspect in the
hands of resellers.

We spoke to a host of vendors strongly enscon­ced in the
Indian market to get an idea about their channel structure and the strategies
they have adopted to strengthen their distribu­tion networks. What we found out
was that in line with the changing market dynamics, most vendors are going about
launching a host of new channel initiatives in 2006 aimed at either retai­ning
or increasing their market shares. Other trends witnessed included a strong
retail focus either directly by the vendor or through chan­nels, a heated
debate on the adoption of a national distri­bution model as against a regional
one, the growing clout of the SIs, solution pro­viders and the VARs amongst the
vendors, the different strategies in pushing volume products as against value
ones, more and more incen­tive programs devised by vendors for partners besides
the increased focus to penetrate B&C class or even smaller cities and towns.

Lenovo's express arrival

Vivek Malhotra, Director, Sales and Channels, South Asia, Lenovo informed
that there have been two key focus areas for the company. One is to ensure the
profita­bility of the channel partners and the second to help these partners by
bringing the relationship that Lenovo shares with its customers to them. To
expand its market share, Lenovo also made a conscious effort to replicate its
Chinese focus on retail to the Indian market. “Out over here, as part of IBM,
we were strongly focused on large enterprises that contributed to a major chunk
of our business. We have started consciously focusing on the government, and
small office-where we were not very strongly present earlier. We also started
looking at the consumer space.” Think­Worlds and ThinkZones were two key
initiatives to gain retail fotthold.

Transparency, the keyword for Samsung

This Korean giant had to navigate really rough wea­ther last year. The
distribu­tion network was probably the worst hit, and, therefore, it comes as
no surprise when Rajeev Singh, Head, Volume Business, Samsung India, talked
about the transparent policies that have been put in place for channel manage­ment
by the company, following the imbroglio.

The company also now advises dealers lower inven­tory
levels as it would not offer them price protection; in fact, no partner should
keep stocks beyond 10 days. At the same time Samsung would also restrain from
taking random pricing calls, which at times hurt channel sentiments.

Distributor pricing would, however, be standard and no
variance will be entertained for support from Samsung. And, most importantly,
large deal pricing support would be provided only against end-user confirmation
by the Samsung sales team and receipt of order details.

This year, Samsung will focus investments in deve­loping
Note PC, TFT & MFP market size. Retail would be another major focus area
where Samsung would drive business through its brand stores, 15 of which are
likely to come up this year.

The Intel challenge

Intel probably has the oldest distribution network in the country, a
structure of Intel Traders (ITRs), Genuine Intel Dealers (GIDs) and Intel
Premium Partners (IPPs) that has evolved over the last ten years. Rajesh Gupta,
Direc­tor, Channel Sales, Intel India, informed that this structure is headed
for a revamp in 2006, though he adds that the changes would hinge more on
nomencla­tures, keeping the under­lying philosophy same. The new strategy is
aimed to­ward scaling up the chan­nel partners and increa­sing their volumes
and profitability.

As part of its strategy, Intel is changing its way of trai­ning
the partners, which will be more solutions for user model where the part­ner
will work with the custo­mer and drive solutions accordingly rather than sell
what he has.

By end 2006, Intel plans 85 percent of the products based
on the dual core platform and, hence, its drive to increase channel contri­bution
also comes in the form of vendors driving PCs based on the dual core technology,
priced at around Rs 20,000.

With the mobility market attributing just two percent to
the channel contribution, which is a concern area for Intel, Gupta has a program
wherein Intel will work with ODMs (Original Design Manufacturers) from Taiwan to
create and supply back­bone products at a reason­able price to the channel,
and also in enabling mobility on desktops to increase channel penetration in the
market.

Microsoft's 4Cs solution orientation

Amongst pure software vendors, Microsoft perhaps boasts of the most robust
distribution network, one based on the principle of 4Cs-coverage, capability,
customer centricity and capacity.

The focus for Microsoft has been to shift its two-tiered
partner ecosystem towards assuming a more solution-based orientation. This has
definitely helped the company rope in more SIs into its fold, a community who
were traditionally not too keen on selling software. With the company now crea­ting
a go-to-market network constituting of both SIs and ISVs, it is not only broade­ning
its channel spectrum but also increasing customer focus through customized
solutions.

The company has evol­ved a Micro­soft Server Specialist
Club (MSSC) for its resellers and would rope in 25 of its gold resellers as part
of this, who can avail greater bene­fits and asso­ciate with the company in
driving these solutions. The program also aims to en­hance partner reve­nues
by way of specializing them in certain areas.

HP's extended arm

This year, HP India has evolved a new channel stra­tegy and ap­p­roach to
tap the market in conjunc­tion with the three newly crea­ted business groups-PSG
(personal sys­tems group), IPG (ima­ging and printing group) and TSG
(Technology Solutions Group).

Breaking the trend where vendors impart product training to
partners and let them drive their solutions and address customer que­ries on
their own, Ashok Pamidi, Head, Commercial Accounts & Base Business, TSG, HP
India, informed that the pre-sales divi­sion of TSG has taken a dif­ferent approach
and intends to create a pre-sales com­munity from their channel partner groups.

Canon's value proposition

Accordingly, Canon is trying to educate its partners about its strength
through the Canon Achiever Program conducted by its National Training Cell.

Though retail is going to be a crucial catalyst, Bharadwaj
knows that their high ambitions cannot be fulfilled without his channel
partners. Earlier, there were four layers in Canon's distri­bution chain for
IT —Canon, regional distributor, premium part­ners, and resellers. As part of
the strategy shift, Canon has removed one layer, that of distributor, in the
metros, and would sell directly to its premium partners and they would, in turn,
sell to resel­lers.

Intelligent channel mapping by Cisco

Business intelligence (BI) is no more just an enterprise application,
networking king Cisco is now using it to revamp its channel strategy too. The
company had hith­erto concentrated on inter­nal alignments to address its
verticals base including government, ITeS, manufac­turing, education, health­care,
security and finance. But it would now also “re-align” at the channel level
to get a focus on these verticals and evolve select strategies.

A few tasks that Cisco consciously undertook recen­tly
were to rope in the second tier partners to plan on the targeted market for each
of the product line, and asso­ciate with industry verticals. Partner mapping
was one of the crucial aspects Cisco took up to select the partners and trained
them to become specialists of each verticals by imparting intensive training and
having a sup­port struc­ture to increase the partners' bandwidth.

Acer on restructuring path

Acer India has firmed up on its restruc­turing chart as part of its phase
III expansion plan, making it more pro­duct and channel focused. According to S
Rajendran, GM, Sales & Marketing, Mobility & Display Products Group,
Acer India, in the phase III plan, the company has re-aligned its business units
into two new units- the Mobile Display Product Group (MDPG) and the Networking
and PC Client Group (NPCG). As part of the new strategy, about 400 of its
accounts will now be addressed by the channels, while about 50 accounts, which
are critical, like e-Governance projects, NIC, Reliance and Tata will be
retained by Acer to be addressed directly.

Rajneesh De
with inputs from Goutam Das