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Kensaku Konishi, or Konishisan as he is called, has been with Canon for almost three decades now. He was earlier CEO of the company's Hong Kong operations. When he took over the Hong Kong business mantle, the country's color copier market was non-existent. Three years later, Canon held 30 percent marketshare there. He now wants to work the same magic in India as well
While other printer companies are looking at consumables as a sure shot route for continuous business, Canon seems to have caught onto the idea of cashing on software licenses for its products.
In 2005 you sold around
4,000 software licenses in India. And you were expecting a growth of 100 percent in 2006. Can you give more details about this business strategy and how you are strengthening it and why?
If you look at the copier, fax or printer machines ultimately they are all hardware devices. The hardware business is a cut-throat one with minimal margins. If
you focus on the margins, then the customer will also look constantly at the price at which you offer it.
This is why we at Canon decided that in order to distinguish ourselves from our peers we need to offer a value that other companies don't give. Our best bet was to offer applications riding the hardware, which will set it apart from our competitors. We want to offer solutions that will improve a customer's efficiency and value. And we have decided to focus our attention on this strategy.
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Kensaku Konishi
President and CEO, Canon India |
How have your channel accepted this strategy?
We keep talking to our channel about this strategy, but to be honest a majority of them are still focusing on the hardware and the cost of the product. It is tough to get them to appreciate the selling of an application rather than just the box.
This is why we need to create success stories in the market and then showcase these to the channel. Once they realize that there is more business in selling a value than just the box, and see others doing it, they will also understand our concept.
Did you try this business model earlier as well?
Yes, we have tried application-based selling in the past. But maybe it was not seriously pursued. But now our entire organization is focused on applications.
This is why we will first go directly to the customers to get some good customer hits. And once we have some success stories, we will be able to take the channel with us to reach more customers.
Will your channel be comfortable with the idea of you going direct to the customers?
We will be going direct only in the initial phase. Also, our direct marketing team will only work with very select mid and
high-end enterprise customers. This is to ensure that there is no overlap with channel partners and poaching of their customers. Over time, as we get some successful customer hits, we will transition these businesses to the channel.
To begin with, we need to
put in place a good pre
and post-sales team with a
well-established support network. And we are currently working on these building blocks.
You were earlier MD, marketing in Canon Singapore and CEO of Canon Hong Kong. What are some of your learning from these markets that you would like to emulate in India?
When I moved to Hong Kong in 2004 the market for color copiers was very small. But three years later Canon captured 40 percent of the total copier business there. A similar case was with Singapore, and there too Canon currently commands 30 percent marketshare. Right now, the color copier market in India is virtually non-existent. But we see good growth for it and as a strategy we would like to see the market and figure out ways on how to sell color copiers.
Enterprise content management, business imaging solutions and document management-these are some terms being thrown around by imaging vendors. But do you really think the Indian market is ready for these services?
To be very honest, the Indian market is not ready for these concepts yet. At least majority of companies are not. But blue chip companies and those doing business with MNCs are more willing to consider and adopt these practices. In Q3 and Q4 2006-07, 54,000 units of color copiers were sold in India.
And Canon has 21 percent marketshare in this. So we are making inroads in this space, though not at the pace we would like to.
Canon has been around for 10 years and it is aiming at just 10 percent of the inkjet AIO market this fiscal. Are you not setting your target a little low?
Not really. Inkjet AIOs were introduced three years ago by HP and since then HP more or less lords over this segment. We started putting our strength behind this product line only last year. And now we are getting our act in place for it.
Our first step is to enhance our product range. We have six now and we will increase this to 13 by this year-end. With this, we will have a comprehensive product range to go to the customer. Next, we will expand our reach to the home segment, which has of late started buying this product. Thirdly, we have to evangelize this technology and its benefit to the customers. Already we are doing this to our channel through the Gyan Yatras.
And lastly, we have to match the price points with those of
HP. Right now our products are 10 percent higher than those
of HP.
When you are trying to entrench yourself in the inkjet AIO market, don't you think you should bring your price at par with or lower than HP to get more customers?
No. This is a business where we have been told that the competition is losing money. It plans to recover this loss from the consumables business over time. But we are not in the consumables business and we do not believe in making losses to gain marketshare. So instead of pricing our products lower, we are trying to focus on its photo and printing capabilities.
What is the status of the partner portal you launched last year?
The portal is a success and we have over 281 active partners transacting business on it. Even Ingram Micro India is now doing business on it. This portal has been a good medium for us to communicate directly with the channel. And the speed of response is fantastic. If we have a new scheme we can just post it online and make the partners aware of it immediately.
We want to include a module now that will help us in inventory forecasting and generate monthly reports about sales. We have broken our channel into three categories-Platinum, Gold and Silver and each of them have their own space on the site. Last year the platinum partners, who are around 10 companies, generated business of around Rs 3 crore.
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