ELCOT to work with, not against, channel

NR Sethuraman

Chennai

April 4 2008

The Electronics Corporation of Tamil Nadu (ELCOT) has decided to supply fully
loaded desktops and laptops from reputed manufacturers for less than Rs 20,000
per unit. It is primarily for the educational institutions within Tamil Nadu.

For this initiative, it is going to work with the channel. Speaking about the
same C Umashankar, MD, ELCOT said, “This move is to bring down the digital
divide and offer best quality products to the people of Tamil Nadu. It is also
an attempt to increase PC penetration.”

When contacted, Confed-ITA said it welcomed ELCOT's decision. S Karthikeyan,
President Confed-ITA said, “This is an excellent move from ELCOT. We are very
much interested in working closely with them and look forward to the same. We
are here to take forward the interests of ELCOT.” He also thanked the MD of
ELCOT for showing an interest in working with the channel.

ELCOT will also providing 100 percent technical support and will extend the
same to the channel. “We will train partners and enable them to offer all the
technical support as a part of the service, without any charge,” he said.
Since ELCOT is also planning to extend the present offering of desktops to
educational institutions, it wishes to include the channel in the process with
immediate effect.

“We can offer the existing desktops to the channel at five percent margin
and they can add another five percent and sell it. Still there is a difference
of 60 percent, as the outside market price would be exactly double,”
Umashankar claimed.

But PN Prasad, VP, Confed-ITA was not deterred by the low margins. “This is
excellent news for the channel community. We are not worried about the margins
that ELCOT offers, as even other vendors offer the same percent of margins. With
our spread and experience, we can do a better job in distributing ELCOT's
computers and help the PC penetration increase further.” He also added that
people are apprehensive about buying computers without getting a demo of them,
so the channel can display them at their showrooms and help the customer with
after-sales support.

This is the second attempt by ELCOT to offer laptops at discounted prices. In
September last year, The DQ Week had reported that ELCOT was offering Lenovo
laptops, which originally cost about Rs 44,000, for Rs 26,000 to 30,000, to
bonafide students. But after tremendous pressure from the channel community on
the OEMs (Lenovo and Samsung), ELCOT had to discontinue the initiative.

Though ELCOT planned to sell 50,000 units of these laptops, it ended up
selling around 600 units. “This time we are going to use our own brand. We
will procure the products from OEMs and the product will be sold under ELCOT
brand name,” said Umashankar.

If vendors are willing to lend their own name ELCOT would allow that. But the
model will be specific to ELCOT and it wouldn't clash with the open market
model. The systems would be business notebooks or business desktops and not for
the home or SMB segment, Umashankar informed.

Apart from the PCs and laptops ELCOT is ready to offer nine megapixel digital
cameras for Rs 5,900 and projectors for Rs 49,000. “In the case of projectors,
our price is 171 percent less than what is offered in the market. We want to
give the best products at very low prices. Those who want to be our channel
partners must agree be prepared to earn less margins, and in turn they would be
offered more volume,” he claimed.

ELCOT is going to advertise within a week's time for the procurement of
1,00,000 laptops and personal computers through tender process. The machines
will come with Linux and VirtualBox software. The price of the desktops is
stated to be Rs 19,500, which includes Core 2 Duo processor, 1GB RAM, 500GB hard
disk, 19-inch TFT monitor with strapped-on speakers, optical mouse, standard
keyboard, DVD writer and built in modem with three year warranty.

“People may not require any add-on to this,” Umashankar quipped. The
laptops are expected to be priced at Rs 18,000 to 20,000. The equipments will
come with three-year warranty on the battery and other parts. Apart from that it
will offer international carry-in warranty for one segment and domestic carry in
warranty for another segment.

ELCOT is planning to rollout a tender and procure the machines. “First we
have to identify the vendor and we have certain people in our mind. As a
government organization any selection would be done through open tenders. More
than that the quantity is large and open tender would be the ideal platform for
selecting the vendor,” Umashankar informed.

The profit ratio for ELCOT in this is around five percent, which would be
inclusive of the service tax. There is no VAT for certain categories of machine
and he didn't disclose the names of those brands. But incase such companies
don't agree for this, ELCOT has two-three companies, who are ready for this
offer, he informed. “Everything is possible through ELCOT and if it doesn't
work out then we will go for one more tender,” he claimed.

The delivery time for the machines would be maximum four weeks. This also
requires the submission of bonafide certificate from the student and it is
eligible only for those students who study in Tamil Nadu. ELCOT also has plans
to rollout laser printers for Rs 3,900 with an additional cartridge.

Currently, it hasn't thought about the micro finance option and if the
government recommends, ELCOT is ready to introduce that for the benefit of
students. It is also willing to convene a meeting of all vendors, confederations
of associations and channel partners. “If they are ready we will host a day's
workshop in Chennai, Coimbatore or Madurai and show them how open source
software can be beneficial for them and the student community,” Umashankar
informed.