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Insights From Silver Club

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DQC Bureau
New Update

The performance of the Silver Club members provides a few loud and clear messages regarding the medium-term market scenario. First and foremost, companies have to brace themselves up for slower growth rates in the current fiscal. Second, they have to take drastic measures to reduce costs and innovate to keep their bottom lines healthy.

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That the growth rates of companies will come down this fiscal is taken for granted. This is bolstered by the fact that the overall growth rate in agency revenue for 2000-01 fell to 52 percent from last year's 63 percent. 

Partners continue to face the onslaught of slowdown which they began experiencing in the second half of 2000-01. And there are very few positive signals to indicate that the upturn would begin before the end of this fiscal.

IDC (India) reports that the PC market grew only by 11 percent in the first quarter over AMJ 2000. Overall, IDC expects the growth rate in desktop shipments to be about 16 percent in 2001-02 against 56 percent in 2000-01.

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If this figure comes true, then the channel business would witness a major crash in comparison to the 11 point drop experienced this year. From these figures and the negative signals emanating from the marketplace, once can conclude that Silver Club members can on an average expect to grow in the range of 25-30 percent this fiscal.

Perhaps this is the right time for Silver Club members in particular and channel partners in general, to look into their organizations to see how they can be re-engineered to face the market slump and beyond. Every slowdown offers an opportunity to reduce costs and come out with innovative measures to maintain growth. 

Would the merger of HP and Compaq bring good tidings in the market? Only to a limited extent, perhaps. The merger is supposed to bring about a projected cost savings of $2.5 billion for the two companies by the middle of fiscal 2004. Of course, at the moment this is only a conjuncture and is being played upon because Fiorina has to hardsell the merger to the Wall Street where the stocks of both companies came down after the news. 

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So, what's in the merger for partners? For one, product synergy would come about since Compaq has established itself extremely well on the desktop and server front while HP is the undisputed leader in peripherals. But how would product synergy help when demand has reached abysmal levels?

Members of the Silver Club and partners across the country have to be alert to grab every market opportunity that comes their way. Also, they cannot afford to let go their current customers. Which means service and support will go a long way in tiding over the present crisis.

sylvesterl@cmil.com

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