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'Everyone is talking about everything being available at the palm of the hand.'

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DQC Bureau
New Update

As VP, Marketing, PG Kamath heads the all-India marketing function for all products of Ingram Micro. He also oversees two key business divisions — the printers and the peripherals division as well as the application software division — as profit centers. Kamath always believed that to establish reach and depth in the marketplace, the channel network was indispensable. Beginning from 1996 he has meticulously built up the channel network for Ingram Micro. Now that the company has decided to get into the distribution of mobile phones, Kamath talks to

CI on how he is planning to develop a new channel network for these products.

Why has Ingram Micro decided to enter the mobile phone distribution business? And that too with just one vendor?



We have been dealing with the IT segment of Samsung International and now we will start dealing with Samsung Wireless which looks after company’s telecom products. We have tied up with Samsung for the handset business as a natural extension to our relationship with them in monitors, where we have done exceedingly well thanks to the joint effort of our teams. And there is a lot of convergence happening between computers and telecom. As a distribution house it makes sense for us to get into this business, as it is an emerging market.



How has your channel reacted to this decision?



The reaction has been lukewarm as expected, as we are not really looking at existing channel network for this product. We will tap the traditional mobile phone channel that has been present in the country as well service providers. We will also enthuse our IT retail partners to carry the product in their showrooms as that would be a great way to target the home segment.



We might even convert some gray market players to join our new channel network. We would also get new people to look at this new business opportunity. We could even have our existing IT channel partners to focus more on the Computer Accessories Division (a new division dedicated to the mobile phone products) and perhaps start a new division in their own companies. This division will be headed from Chennai and we expect a new general manager to be on board soon.



Do you think that getting into convergence products will be a good move for Ingram Micro?



We have primarily thought about this business because firstly, the duties have come down. This will help us to have more mind share as compared to the gray channel. Secondly, we look at the handphone to being a very pertinent device in the years to come, because everyone is talking about everything being available at the palm of the hand. We are talking about WAP and other technologies, which is basically a handheld device.



We thought that this is the right time to get into the business because the volumes are bound to grow. Besides Samsung, which has got great brand image and market share worldwide, is planning good investments in terms of resources for this product line. Then again the home market is becoming more important now. Projections say that it is going to be 40 percent of the PC market.



Will Ingram cater to the home market directly?



No, it will be through the channel, as Ingram does not deal directly with customers. The channels are going to be more focused on home as a segment. It is well known fact that in the distribution business, the channel is always looking for newer business areas to focus on. And this is one area, which is very focussed and developing. This is why we decided to offer the home segment a suite of products that could be computers, printers, mobile phones or

PDAs.



How many distributors has Samsung appointed so far for its mobile?



For starters there are two distributors -- Tech Pacific and Ingram Micro.



But why have you decided to introduce only the mobile phones? Why have the other Samsung mobile access products, like the PDAs, been excluded from the product list?



Samsung has only introduced the mobile phone at the moment. We would definitely like to partner with them when they introduce other products too. Besides, talking about PDAs, it is still not commonly used, as it will take some more time for that market to mature.



We will come out with more models in the near future. We will have dual band and Internet products.



Are you also willing to partner other manufacturers for similar products?



Yes.



Have you zeroed in on any other manufacturers?



Yes, we have, but I cannot tell you which ones they are. We are looking at product lines and brands that are synergic to the market that we are targeting.



Which are the different models of handsets that will be available in the Indian market?



Right now there is only one model which is the SGA 600. This model has a host of features, including miniature design, voice dialing, vibratory mode and hands-free talking. It also has a two-day battery life.



What is the price of this product?



Before we launched it, the product was selling beyond Rs 20,000. We have slashed it to Rs 13,995 for the user with the charger and earphone. We also offer one-year warranty anywhere in the country.



What are the schemes that you have for the dealers to help them push this product?



Samsung Wireless is the official sponsor for the Sydney Olympics. So we have schemes which include free tickets to the event. These are initial ramp-up programs and more will be added as time goes by.



How are you going to combat the gray channel, which is prevalent in the mobile phone market?



As we are in the IT industry, gray is a word we deal with everyday. We have gray channels in CPUs, monitors and every possible product. Many of the dealers that you



see now, have all graduated from the gray channel. And they have done this as they see more value in the legal channel. Essentially the gray channel came up when duties were very high. When manufacturers were not interested in coming into the country because of lack of volumes or they did not provide warranty support or built up a distribution setup. And that is where the gray channel came in.



Now, manufacturers of mobile phones have seen duties come down and volumes go up, and rates for services too have come down and more and more investments are going into making the product available through the legal channel. They will also subsidize the product for the Indian market to buy more mind share.



But don’t you think educating the users is a better way to deal with the gray market?



I think users are becoming more and more mature with respect to the gray channel. Today the gray channel themselves too are into legal products. They buy from distributors like us and they see great value in that. They are getting a lot of advertising and marketing support from us and they get a lot of mileage as they can build up their company brand with the help of our resources. So I think that everyone wants to be in the long term and the gray channel knows that the only way they can survive in the market is if they become legal.



The gray market is present where the price spread between the products is very high between the legal and the gray product. Now in the handphone business the gap has come down. I don’t see the gray market flourishing. If that had been the case, then people like Samsung would not have come into the market.





Vinita Suvarna

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