Dell Policies Find Favor With Channel

Dell's entry into the market via channel has given a major boost to its
business making the brand the second most preferred after HP. With the company
revamping its channel policies and getting more aggressive in terms of
appointing partners, the channel is all praise about Dell. On the other hand the
force with which the company is increasing its visibility has shaken the
marketshare of other competitor brands including leaders-HP, Lenovo, Acer and
Sony.

Sudhir Arora of Computer Gallery, Indore said, “Dell has been appointing
regional distributors to capture the market. In Madhya Pradesh they are covering
the tier-3 cities in a bid to penetrate deeper. Besides, the brand's visibility
has increased which was not the case earlier. Dell has revamped its policies and
has now adopted a two-fold model where they are approaching the consumer both
through the channel and directly. While the channel has the stock and sell model
options before them, those partners who do not want to make huge investments in
terms of maintaining the stock and yet be able to sell Dell laptops can now
avail the website option to provide their customers with the desired laptops and
still manage to earn a margin of two percent.”

He further added that in the few months that Dell has taken the channel
route, the vendor has been successful in capturing 20 percent of the PC market.
“Dell's sale stood at zero percent in the month of May while we sold 1,300-1,400
units of HP consumer notebooks, 350 units of Lenovo and 400 units of Acer. HP
was till recently enjoying a marketshare of 40-45 percent, whereas Lenovo stood
at 12 percent and Acer at 12-13 percent. However, at the end of June the
scenario has undergone a drastic change with Dell grabbing 20 percent
marketshare. Consequently,

HP's share has come down to 35-36 percent and Lenovo and Sony Vaio have also
lost out on their shares. Another reason Dell has been able to eat into the
marketshare of Sony Vaio is that it offers various color options and customers
have started demanding Dell both for its brand image and quality.”

Navin Gupta, of Patna-based Krishna Agencies seconded the opinion and added,
“Although HP is currently the market leader in Bihar, Dell may soon change that.
The primary advantage

Dell has over other brands is the choice of colors and the design layout and the
varied customizations available. Indeed, Dell laptops can be configured in
accordance to the customers needs and the size of the pocket. I feel that in
three months time, Dell may own a marketshare of 25 percent in Bihar.”

Another highlight of Dell's policy that has impressed partners is that
instead of having a month-end closing, the company has weekend closing which
reduces their burden to a large extent and every week partners are able to keep
a track of the business generated thus far.

Arora further reiterated that so far there has been only one problem with the
company's policy. The products offered by Dell on its website and the models
available with the channel are different and this creates a lot of confusion in
the minds of the customers and hence leads to further confusion in the minds of
resellers. While on the website the customer stands to save on the taxes (four
percent VAT) and additional margin the dealer might charge them. If brought
through channel the customer does not get to enjoy that benefit. However, post
feedback from its partners, the company has now made changes to its policy.

“While the entry-level models will now be handled by the channels alone the
premium configuration models or the ones that are valued at more than Rs 50,000
will be available on the website. This will bring more transparency in the
business,” opined Arora.

Dell has taken 20 percent sales of other competing brands like Sony and HP. It has become a hot cake for sales post its entry into the channels

Rohit Kohli of Comexcell Technologies, Kanpur and Master Affiliate for UP and
Uttaranchal region stated, “It has been three months since I have been appointed
Master Affiliate by Dell for UP and Uttaranchal and since then our business for
Dell's range of laptops have been growing by 70-80 percent with every passing
month. This has certainly affected the marketshare of the other brands,
especially Lenovo. Lenovo has for quite some time been lean and as a result its
marketshare has been grabbed by Dell. There has been a drop of 40 percent in the
HP Pavilion range, and in the Compaq range our sales have gone down by seven to
eight percent. Dell is also working to reduce the delivery time of its products.
While earlier it was

15 days it is now being delivered in seven days.” Arora added that in terms of
logistics and availability Dell is delivering faster as compared to other
companies. HP, for example, takes a lot of time to deliver their products into
the upcountry market.

Anil Mhaske of Pune-based Data Care Corporation, a regional distributor for
Pune and parts of Maharashtra mentioned that Dell is certainly getting
aggressive and appointing reseller partners across the western region as well.
He pointed out that another good thing about Dell's policy is that they have
just one distributor for their products, which is not the case with HP who has
too many national distributors for their range of products.

“In commercial range the company has already started enjoying good position
and will soon capture the market in the consumer range as well,” Mhaske stated.

According to Joe Verghese, of Cochin-based Accent Netware, the entry of Dell
has brought a definite impact in the sales of other notebooks in the market.
“The service support that we would provide for Dell is driving the adoption of
the brand, besides the brand value it has,” Verghese claimed. He feels that the
channel policies of Dell sound good. “As compared to few other vendors, Dell has
some good policies like offering a 5-year warranty for monitors and it promises
a quick response time. So far everything has been good and we expect this to
continue,” Verghese averred. He also felt that Dell has eaten some 20-25 percent
marketshare of other brands. “Lenovo and Compaq notebooks are not doing as well
as they were. We can clearly say that Dell has eaten some 20-25 percent of the
sales of the other brands. It was a very good decision to take the channel
route,” Verghese opined.

K Nagendran, CEO, GBS Systems and Services, Chennai also echoed the opinion
of Verghese. “Dell has taken 20 percent sales of other competing brands like
Sony and HP. It has become a hot cake for sales post its entry into the
channels,” Nagendran informed. He is also planning on some partnership with
Dell. “With the response we are getting from customers, we are also planning to
have some major tie up with Dell on a long term basis,” he claimed.

However, even those channel partners who are not dealing with Dell laptops
were of the opinion that the company is driving its business aggressively.
Arinjay Jain of Jaipur-based Kanchan Computech opined, “Though I am not dealing
in Dell products yet I am very much aware of the fact that the company's
policies and programs are being received well by the dealer community in
Rajasthan. Many partners are showing interest in signing up with Dell and hence
the marketshare of the likes of Lenovo and Sony have been hit badly.”

Prafulla Somani of Varanasi-based Jwala Distributors echoed the same opinion
as Jain. “Dell has captured the UP market and is leaving no stone unturned in
making its presence felt. Though we have not signed up with Dell, we find
consumers walking into our shops demanding the brand which is a clear indication
that the company is shaking the marketshare of other brands as well.”

But one dealer seemed to have a different point-of-view. Seeing as Dell is a
new entrant, Pravin Jalan, of Kolkata-based Jalan Infotech felt that currently
it would take a while for the vendor to over throw the current leaders. “Lenovo
is definitely leading in terms of marketshare since its presence in Orissa and
Northeast is immense. Dell is nowhere in the scenario in

these regions. But it is worth mentioning that Dell has done a good job in Bihar
in the recent months. Dell has entered Kolkata only recently but I have a doubt
about how far it will be able to capture the market.”

Pooja Sharma

poojas@cybermedia.co.in

(Inputs from NR Sethuraman and Avishek Rakshit)