Patrick Lo feels that Netgear's ability to make its products simpler to understand, for the channel and its customer, is the reason why the company has been seeing a three-digit growth in India. He is banking on a three-pronged expansion strategy-expansion of its product portfolio, channel network and geography-to help it maintain a over-100 percent growth rate in India

What sets Netgear apart from its competitors globally and in India?
Our mission is very simple. While our competitors are vying to cater to the Fortune 500 companies, we are clear that we want to cater to those companies who do not fall in this hallowed circle. We want them to adopt the latest technology, but not get bogged down by its jargon.

At the same time, we believe in staying lean and mean rather than having flashy offices or lot of people. When we enter a market we want to bring in the technology, establish an extensive channel network and then leverage of these two to get marketshare.

What is your channel strategy in India?
We have a three-tier channel strategy. We have our national distributors who we call our importers who then cater to the VARs, who then cater to the resellers and systems integrators (SIs). Currently in India we have Ingram Micro, Rashi Peripherals and Cyberstar as our national distis. We have 20 VARs who cater to over 700 partners in 20-odd cities.

Do you think Netgear ought to sign up with another solutions-focused distributor rather than box pushing ones?
No, I don't think so. It is our job to educate our channel and customers about the solutions. As long as our distributors can stock, ship and bill, we are happy. I believe that if we can't tell our channel or customers about our USP and why they need our products within 30 seconds, we have failed.

It has been four years since you have entered India. At what point of the business growth curve is your local operations?
Our first phase in any market is to get the products into the country and then set up a channel network and work extensively on having a strong reseller base. Then we work on getting more SMB customers, who our reseller channel can work with, which is our phase two. This is because here the products that are offered are simpler and more or less of the plug and play variety.

Next we move onto the catering to slightly bigger enterprises that have up to 250 employees. This is where we begin to work with the SI channel as there is a lot more technology that goes into the networking setup keeping in mind network storage and security. Later we work with the service providers who can deploy our solutions on their backend.

Once we have achieved that we go back full circle to work again with the retail channel.

Right now in India we are embarking on phase three, which is why we are working closely with the SI channel, educating them and having events with live demos of our solutions.

In the first year of operations Netgear posted a growth of  350 percent in India. Last year the company grew its local business by 130 percent. Do you think you will be able to sustain this bull run?
Yes, and if we don't then there is something wrong with the way we work. I spoke to around  30 resellers during my visit and most of them agreed that we have 30 percent marketshare, which we have gathered only in the past four years.

If we continue working the way we are then we can hope to increase this to at least 40 percent in the next two years. The networking market too is growing at 40 percent YoY. Therefore I don't see why we continue a 100 percent growth in a burgeoning economy like India. Incidentally, in the SMB market, we have started outselling D-Link, which was the industry leader at one time. These are signs that we are not talking off our hat.

How do you propose to maintain this growth? Will you continue with your mandate of launching 15 odd products every quarter?
Yes, we will continue to bring in the latest products to India, which will mean our product portfolio will improve and bring in incremental business. Besides this we have identified a couple of products, like ReadyNAS and ProSafe, that we are sure will do very well in India and will focus on that.

But how will you do this with your small setup in India?
We will be adding manpower and will also reach out to more cities in the country. We want to have a ratio of one representative to handle the channel in four cities.

The other thing on our agenda is to work harder to educate our channel. We want our partners to realize that they don't need to be a PhD to understand our solutions. That is what our competitors do. We want even a high school graduate to know our products and understand them.

Patrick Lo Chairman and CEO, Netgear Inc

In addition to that we will help our partners identify the customer verticals that they can focus on. Like for network storage we will urge them to go to lawyers who have lot of documents and they need this to be online as they never know when the trial will come up. Similarly there are surveillance companies which need to record the images captured by the camera and then store it for certain period and be able to trace it, when required.

What other investments will you be making in India, which you have identified as one of your stronger growth markets?
We have been thinking of having an Indian manufacturing unit but no deadline has been set aside. The main reason we have sat on this decision is because of the lack of infrastructure in the country.

If we have a manufacturing unit in India it has to be in a place with a good airport and seaport. On an average Netgear ships around two lakh products daily from its manufacturing unit in China. Of this 30 percent are shipped through sea while the rest are flown to the different geographies.

Also our manufacturing units do not cater to the local geography but ship to the entire world. So we need to be sure that India can handle this bandwidth before we invest into a plant here. We would rather invest more on improving our technical team here, which will cater to the service needs of the English-speaking customers all over the world. We will also have a software development center keeping in mind the large base of software professionals in India.

Besides this we will also open up three more offices in Chennai, Bangalore and Hyderabad.

Vinita Bhatia
(vinitavs@cybermedia.co.in)

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