Majority of Channel Customers are SMBs

According to a survey conducted by Access Markets International Partners Inc, the SMB segment forms a major bulk of the channel's clientele. And partners who cater to this segment rank product quality, promotional support and referral
for new customers as most critical factors when selecting vendors

As the SMB sector in
India grows to adopt new technology initiatives, most of the leading IT vendors are eager to increase their
share of the spoils. In this endeavor, channel partners are likely to be their
most important allies. Their partners are instrumental not only in increasing
sales to the SMB customers but they also provide vendors with valuable inputs
about client mindsets and preferences, thus helping them customize their
products for this sector.

The above findings were released by New York-based Access
Markets International (AMI) Partners, Inc., a consulting firm that specializes
in IT, Internet, telecommunications and business services market intelligence,
with a strong focus on global small and medium business (SMB) enterprises.
AMI-Partners conducts annual tracking surveys of SMBs in more than 20 countries.

VARs comprise the majority of the channel partner universe,
both in terms of number of businesses and revenues. This is a further
confirmation that the prime requirement of SMBs from their channel partners is
timely sales and support for basic IT products in the computing and networking
arena.

India channel's businesses are closely linked to the
country's economy. As a result of booming growth, three fourth of India's
channel experienced an average revenue growth in the past year. With the
anticipated boom in IT spending, partners are optimistic about their future
earnings and anticipate a substantial 19% increase in revenues in the next
twelve months.

An overwhelming majority of channel partner revenues are
generated locally (from customers located in the same city/town). Only 5% of
revenues are generated from customers located in another state. Approximately
four-in-five of the channel members operate from a single location only
indicating sufficient scope of future expansion. However, larger organizations
(with over 50 employees) have the propensity to be more distributed and function
from three to four locations, on

average. 

Channel partners service a diverse mix of customers - a
typical partner derives 46% of revenues from small businesses, over a fifth from
medium businesses, and another fifth from consumers. The majority of India's
channel partners generate sales from repeat customers indicating that channel
partners make an effort towards building up a long-term rapport with their
customers.

Making the right choice

India SMBs are often strongly influenced by the channel when
selecting between different brands of IT products and services. In general,
partners exert most influence in the computing hardware arena followed by
networking hardware and software, and then servers and storage. They exercise
lesser influence in the Internet and software categories. System/network
integrators are the most influential partners for India SMBs and exert brand
influence over a wide gamut of IT purchase categories.

Additionally, in emerging markets like India, partners play a
vital role in educating less IT-savvy SMBs about various aspects of IT purchase
and usage. These businesses lack sufficient knowledge about IT technicalities
and consequently depend on the channel for guidance.

A huge majority of channel partners resell mostly simple and
essential computing products such as desktops, portables, printers, peripherals,
networking hardware, anti-virus software and third-party packaged software.
However, in the next twelve months, channel partners plan to increase their
bouquet of product offerings to the SMB sector by expanding into the following
products such as PDAs, internally developed software for resell, networking
solutions (i.e. WANs), outsourced IT support, etc.

Judicious selection of vendors

Channel partners evaluate their vendors after considering
various factors. "They would like to build up a stable, long-term
relationship with vendors who have high-quality products/technologies,"
commented Swati Sasmal, Research Manager at AMI-India. "Providing quick
pre- and post-sale support by vendors is also a must for most channel partners.
A few other factors that are given significant weight by partners while choosing
vendors are attractive gross margins and the option of testing out a product
before offering it to customers." 

The Indian channel rates Intel, Samsung and HP as the most
popular global vendors along with several local players. This finding is
synonymous with the results of the Channel Choice Awards that DQ Channels has
constituted for the past two years.

Among various marketing tools, channel partners favor means
of promotional support like literature, advertisement, giveaways, as well as
referrals and vendor financing. They would also like to avail the opportunity of
co-branding with the vendor that can help them enhance their brand equity.