The year gone by: a report card

As we draw curtains to the year 2000 and welcome the new millennium, DQ Week looks at the events, which have shaped the channels market in Delhi, events which have created waves in the channel circuit including sales tax confusion, Budget 00-01, Intel PIII processors shortage and not to forget the one and only annual DQ Week awards ceremony. Here are the snippets from the year gone by.

Nehru Place to be worst affected by uniform sales tax (Jan 12)

Nehru Place, which has in the last couple of years developed into one of the most extensive IT markets in Asia, will be the most affected by the uniform taxation scheme that is to be implemented by January 15. Resellers from other states, where the sales tax was higher than Delhi, have been coming to Nehru Place to buy goods. Approximately 40 percent of Nehru Place cater to these markets in neighboring states. However, with a uniform tax structure, resellers from other states would not have any incentive to come and buy from Nehru Place.

Intel processor shortage at all time high (Feb 24)

Intel PIII processors have been in shortage since the beginning of the millennium. This shortage has affected different segments of the market in different ways. While some are missing out on big orders because of the unavailability, others are skeptical of quoting a price as the same is so volatile and changing practically everyday. Though the demand for PCs finally took an upward turn from January onwards, resellers are at a loss, not being able to fulfill the demands.

The price of the processors has been fluctuating since January. A PIII 500 MHz, which officially costs Rs 12,000, touched Rs 18,000 at one point of time. The peripheral and UPS segments have seen a decline in sales. Since, resellers are sitting on huge inventories of other components, the prices of these are dropping and at the end of the day, they might have to be sold at a loss. On the whole, the market is quite uncertain about what the situation is like and why is it so? With no clarifications from Intel, resellers are unsure about what has caused the shortage and till when it will continue.

Highlights of the Budget (Mar 1)

• Customs duty on computers reduced to 15 percent from the earlier 20 percent.

• Customs duty on motherboards reduced to 15 percent from the earlier 20 percent.

• Customs duty on floppy diskettes reduced to 15 percent from the earlier 20 percent.

• Customs duty on integrated circuits reduced to nil from the earlier 5 percent.

• Customs duty on CD-ROMs reduced to nil from the earlier 5 percent.

• Customs duty on memory storage devices reduced to nil from the earlier 5 percent.

• Customs duty on microprocessors reduced to nil from the earlier 5 percent.

• Customs duty on data graphic display tubes for color monitors reduced to nil from the earlier 5 percent.

• Customs duty on cellular phones reduced to 5 percent from the earlier 25 percent.

• Customs duty n battery packs for cellular phones reduced to 15 percent from the earlier 40 percent.

• Customs duty on specified raw materials for the manufacture of optical fibers reduced to 5 percent from the earlier 15 percent.

• Special Additional Duty (SAD) of customs remains unaltered at 4 percent. However, it would now also be applicable in case of imports being made for trading.

• Tax holiday on software exports to be phased out evenly over the next five years.

• FII holding cap in domestic companies raised to 40 percent from the earlier 30 percent.

• Tax regime for venture capital liberalized-SEBI will be the single point nodal agency for registration and regulation of both domestic and overseas venture capital funds.

• Govt to establish 446-computer information centers in the Northeast within the next two years.

AMD opens first Athlon service center in Delhi (Mar 15)

In a bid to strengthen its base in India, Advanced Micro Devices (AMD) is planning to leverage the Athlon brand in a big way. As a first step, it opened a small representative office in the capital late last year. In the second step, it is planning to open a number of AMD Athlon centers across the country.

AMD has tied up with SD Computers Ltd in Delhi for its first Athlon Center in the country. Located at Bhikaji Cama place, the center became operational from today. According to Harsh Vij, CEO, SDCL, the logistics investment in the Athlon center would be done by AMD and the technical staff, space would be provided by its partner. It is more of an awareness drive by AMD rather than a point of sale, AMD is planning to open some more centers in India by the end of 2000.

After peripherals, it is now Alpha for Samsung in India (Mar 29)

After gaining a substantial market as well as mind share of the peripherals market in India, Samsung Electronics Co Ltd--the Korean conglomerate--is all set to do the same for Alpha processors as well as motherboards.

Developed by Digital Equipment Corp, Samsung acquired the license to produce and market the Alpha processor in 1996. Accordingly, it started mass-producing these processors in 1996. After that, the company acquired SOI (Silicon On Insulator) and copper chip processing technology two years later. At its height, Samsung became the first company in the industry to complete a 1 GHz prototype CPU in May 1999. To strengthen the global marketing and sales of is microprocessors, Samsung established a subsidiary called Alpha Processor Inc (API) in Boston, Massachusetts in June 1998. This company specializes in the development and promotion of the Alpha CPU and related platforms.

Delhi resellers a confused lot on sales tax issues (Apr 6)

The Delhi IT trader community seems to be a confused on matters relating to sales tax, whether central or local. Whereas, Mahinder Singh Saathi, State Finance Minister announced in his budget speech that the Central Sales Tax (CST) has been brought down to two percent, the Delhi Computer Traders Association has not received a formal notification of the same. The website of the Sales Tax Department

(www.delhisalestax.com), which has a list of notifications given out after the budget, doesn't mention anything about the changed CST.

Apart from the confusion, the budget has also brought in dissatisfaction among resellers. Rumors before the budget had it that the Local Sales Tax (LST) would come down to two percent. End-users had deferred their buying to after the budget or were buying from states, which had a lower sales tax. Almost all distributors in the country had opened offices in states like Karnataka, where the sales tax was zero percent, and were raising their bills from there. Delhi-based resellers were also thinking of opening their offices in other states. With pre-budget rumors of the CST and LST coming down, these resellers had deferred their decisions. However, now once again they stand at where they were earlier.

Vintron restructures its channel model (Apr 13)

Vintron Informatics Ltd is repositioning itself from being a manufacturer and distributor of a variety of products, to being only a manufacturer of its own brand of PCs and components. As a strategic step towards this goal, the company has consciously severed its distribution ties with Hewlett-Packard, Viewsonic, Logitech, etc and is now realigning its marketing and financial resources to build its own brands. The company is also in the process of restructuring its channel. It now has separate channels for peripherals and PCs. Apart from this; it will also focus on increasing capacities in its manufacturing plants to 60,000 units per annum. A new manufacturing facility at Daman is being set up.

One of the strategies that the company has adopted for this new avtar is having two separate channels for PCs and peripherals. For the peripherals, the company now has a two-tier distribution model, with around 150 distributors and 1,700 resellers under them. For the PCs, there is a single tier of 350 resellers. PC dealers are attached to Vintron directly, while for the peripherals, the resellers do the commercial dealings with the distributors. Prior to this arrangement, Vintron had a single tier channel looking after all the products.

OA Compserve bags the best reseller award (July 11)

OA Compserve Group bagged the best reseller award instituted by the DQWeek Delhi in a glittering ceremony held here. The HP-DQWeek reseller award night was held in connection with the survey `Top 50 Resellers' brought out by DQWeek Delhi. Incidentally, the occasion also marked the successful completion of 150 weeks of DQWeek Delhi.


Micromax Technologies was awarded the runner up in the reseller category while Samtech InfoNet Ltd was judged the best System Integrator in that particular segment. Multiplex Corp was awarded the runner up in the System Integrator category while Snowhite Office Superstore bagged the special award for the most promising retailer.

Govt creates confusion over sales tax...again (July 19)

The Prime Minister and IT ministers of 14 states have in very good spirits announced a Common Action Plan for promoting IT in the country. Among the measures recommended includes reducing sales tax to zero percent, for the next three to five years. Though the IT market in general is elated by this 'resolution', uncertainty looms large over everyone.


Resellers are fast to react to any announcement. In anticipation of reduction in prices, resellers have slowed their buying. Even end-users have started postponing their decisions. The end result is a sluggish market and uncertain consumers. 

Also, there is widespread confusion, because of the varied interpretations of different people. Some feel the announcement by the Prime Minister is in itself a notification and zero sales tax is applicable with immediate effect. No one knows for sure whether it is mandatory or optional for states to implement the zero tax structure or if a deadline has been given to the states. 

Dell to revamp its distribution business (Sept 12)

The wholly owned Indian subsidiary of Dell Computers is in the process of revamping its distribution business in India. This means that some new ones who will be selected on the basis of a set of parameters will replace a number of its current distributors.

Ron Goh, VP (Asia), Dell Computer Asia Pte Ltd in an exclusive chat with Cyber News Service disclosed this. He also disclosed that in line with Dell's worldwide policy of selling direct to customers, sales of Dell machines would be stopped through the reseller channel in India. Accordingly, all its distributors will have to sell directly to end customers including bidding for government tenders. Elaborated Goh, "Every machine we ship from our plant has the name of the customer on it unlike other PC vendors who have no idea where the machine is going to land up as it would pass through several layers comprising of distributors, sub-distributors, resellers etc."

But the biggest activity in India for Dell is the setting up of the call center at Bangalore, which is slated to become operational before the end of this year and will have around 20 seats. The call center will have two compartments--technical support and sales & marketing. Goh revealed that the plan is to have 1,000 seats in the call center in the next one-year time. And once that happens, it will become a 24-hour call center where people will work in shifts and will cater to not only India but also all the other English-speaking countries.

Media resellers in Delhi form new association (Oct 11)

A few media resellers of Delhi have come together to form a new association, called the Delhi Computer Dealers Association (DCDA). Though the association would specifically focus on resolving issues related to media resellers in the city, it is open to resellers from other verticals to join it.

A new association is fine. But, to what extent would this organization be able to resolve issues, is a question that resellers

are asking. The current association is plagued, not by the fact that the office bearers don't want to take any initiatives, but by the fact that they hardly have any time for these extra curricular activities. As Shyam Modi, President, DCTA, said, "All of us are so busy in our businesses that we hardly get any time to interact with each other. After something is decided in a meeting, it might not be followed up as rigorously as it should be."

Pandey, however, is confident that his team will be able to take out time for the association's activities. "This is a noble cause that we are working towards. We sincerely feel that there are major problems that our fellow resellers and we also are facing. And it is because we feel strongly about these issues, that I think all of us will take out time for the association's activities."

Printer market hots up as HP enters sub-Rs 5,000 segment (Nov 8)

Hewlett Packard India Ltd (HP) has announced its foray into the sub Rs 5,000 inkjet printer market. The one model that has been launched in the category--DeskJet 630C--is available for Rs 4,999. The company has also announced that it will grow its marketshare in this segment, from zero to 60 percent within the next three months.

The sub Rs 5,000 segment is approximately 13 percent (approximately 8,000 to 9,000 units a month) of the entire inkjet printer market. Thus, HP targets at selling about 4,500 to 5,000 printers every month within the next three months. Canon and Lexmark are the other players in the segment. Canon has said that it will surely react to HP's move, but has not decided as yet, how and when.

Unlike its two competitors, HP will target its sub Rs 5,000 in the up country markets in the A and B class cities.

Sales down by 50 percent in Nehru Place (Dec 5)

Nehru Place market seems to be in a slump in the current quarter. Businesses as well as purchases are low, with even the goods not moving much. The sluggishness is after the market had seen an excellent JAS quarter.

"The market is fluctuating and what it is witnessing is sales under depression. Nobody is willing to quote any amount because there is no money left with the resellers. The prices are low and the sales have come down by 50 percent, as compared to the last quarter," said Ramesh Jain, Director, Marks Marketing Pvt Ltd.

It seems the American elections also have affected the Nehru Place market. "Since the US was the prime purchaser of RAMs, there was not much movement in the last month, due to the sluggishness in economy due to elections," explained Jain. He also informed that due to the introduction of the new US ATA 100 hard drive; there is an artificial shortage of hard disks in the market, which has resulted in the prices of HDDs going up by 35 percent.

There is another opinion that the depression is mainly a local phenomenon with the decrease in sales starting with the Dussehra holidays. "The projection of Delhi being disturbed due to the recent bandh has stopped many outstation customers to come to Delhi to make their purchases," said Saurabh Nagpal of Multilink Systems & Services.

Has DCTA become redundant? (Dec 20)

Dealers in Nehru Place are not satisfied with the way Delhi Computers Traders Association (DCTA) has been working and has worked so far. Almost every dealer, small or big, members or non-members have unequivocally come out in open to show their gripe against the association.

It seems there are so many issues to be tackled but the association has not been forthcoming in extending its much-needed help. The gap between the expectations of the dealers and the work done by the association has widened to a large degree.

The foremost problem that plagues the association is its un-accountability. Dealers are complaining that DCTA has never been responsible enough to let them know where their money is being utilized. They complain that they have not been even rendered the receipts of the money they have submitted for the membership fees. "Last year they collected Rs 2,000 from each member and till today we have no idea where is it being used," said Harish Sethi, Director, Puja Devices Pvt Ltd, and a member of

DCTA.

To add to that, there have been a lot of complaints regarding bouncing of cheques in the market. Dealers' grumble that association has not taken any concrete steps in this direction. "Had more systematic approach been taken, the problem would have resolved to a large degree," said Keshav Madhav, CEO, Vidur and Co Pvt Ltd.