NETWORKING: Insulated From Slowdown

The growth, albeit a small one, in the networking segment comes as a bright

spot amidst other slowdown stories. Organizations went for networks that

enhanced their operations, which in turn created demand for networking products

and solutions. Rapid fulfillment of warranty kept customers happy.

The slowdown that the economy was reeling under did not seem to touch the

networking market in India. According to Voice & Data, the market for

networking vendors grew by four percent to reach Rs 2,852 crore in 2001-02. Of

this, more than three fourth of the business was done by the top ten vendors.

The top three vendors–Cisco, Enterasys Networks and D-Link– maintained

their positions despite competition heating up in this domain too. On the other

hand, the network integration market grew by 14 percent to touch Rs 1,906 crore.

The key trend that emerged in the networking market last year included the

growing recognition of the need for an IP network within an organization. Seeing

this as a huge opportunity, several vendors stepped up their focus on the SMB

segment. But the business remained focussed on a few domains like IT-enabled

services and banking and financial services.

SWITCHES: ROBUST GROWTH



The market for switches grew at 27.9 percent to Rs 783 crore from previous

year´s Rs 612 crore. This is incidentally the largest segment within the

networking market.

Says Prasad Linganna, COO, Panduit International Corporation, "The major

cause for this growth was the drop in prices of unmanaged 10/100 switches by

almost 50 percent." Agrees Milind Kamat, Country Manager, Accton

Technology, "Attractive price points are fueling growth."

This growth is expected to continue, feel a number of industry experts. Hubs

are going out of the market very fast and switches are replacing them. Says

Sanjay Aggarwal, Product Manager - CNet, Rashi Peripherals, "The main

reason for this is that people have large files to share and a hub takes time

because its bandwidth is shared between all PCs connected to it."

He further explains, "A switch, on the other hand, gives a dedicated

bandwidth of 10/100 Mbps to all PCs connected to it."

Adds Kamat "Within unmanaged switches, eight-port switches have replaced

hubs in the SME market."

Another area that saw good growth was structured cabling. Voice & Data

figures put the growth at 20 percent. But there is still a lot of awareness that

needs to be created about the subject even though more and more offices are

adopting structured cabling. Laments Sandeep Gupta, MD, Delta Force, "The

sad part is that most integrators do have a clear-cut idea what structured

cabling is all about."

There are certain international standards and benchmarks, which have to be

followed. But this is not the case. This is a lacuna that vendors need to work

towards filling up.

SCHEMES AT WORK



Sujit Singh, Country Manager ­ DAX, Apcom Computers finds that sales promos
have become the order of the day! In the process he sums up the scenario even in

a market which is largely demand-driven. Schemes in the industry vary from

quarterly schemes for generating revenues, to push a new product, to help stock

depletion and so on. Says Harpreet Brar, Head Corporate Business, Advantage

Computers, "Schemes largely depend on the stock keeping units and are run

when the push is needed."

Schemes have evolved to take on a seasonal flavor too. Apcom is presently

running ´Monsoon Masti´ in Bangalore and Mumbai. It is giving out umbrellas

with modems and NICs.

Points out Sanjay of Rashi, "Partners are more interested in best prices

than anything." In a price-sensitive market, partners’ concern for a good

price makes good business sense. Rashi however runs periodic incentive-based

schemes for its partners.

Companies take adequate precautions to ensure that the schemes and incentives

are not discounted. Says Sujit, "We ensure the freebies that go with our

promos are always in kind so that the trade does not discount them on

price."

SPEED IS THE MANTRA



Not too much networking equipment goes into homes. And at a workplace, it is

very critical for the network to be up and running at all times. As a result,

warranty and replacement become extremely important.

Says

Harpreet, "All our networking products carry a lifetime replacement

warranty." Adds Purswani of Allied Telesyn, "We are working on giving

over-the-counter replacement for our products." The company is also looking

at appointing a national service agent to cater to all RMA issues.

Apcom too follows an ´Instant Replacement Anywhere´ policy. Sujit puts the

objectives behind the same rather eloquently:

Anywhere , anytime support, 99 percent network uptime, protection of

investment, optimal unit life and peace of mind.

It was warranty that Cisco had in mind when it set up six Rapid Fulfillment

Depots in six locations across the country to ensure that spares reach the

customer site without delay. Of these, two were established just last year

despite the economy being under stress. Accton, on the other hand, has

outsourced services and spares supply. Its spares are available across 16

locations in the country.

NEED FOR TRAINING



An important aspect of the networking market is the greater-than-normal need

for training. Networking technology has become quite complex as customers build

a sustainable business model around generic value-added services.

Cisco works with partners closely to train them and ensures that the partner

organization is specialized in developing, deploying and maintaining the

delivered solution. This specialization program recognizes partners for

achieving and demonstrating expertise in specific horizontal segments. "Our

partners have to specialize in some horizontal-focussed solution," says

Rajeev Chopra, VP ­ Marketing, Cisco Systems (India). The Cisco head office

keeps constant track of the expertise residing with each of its partners. This

enables them to tailor a best-fit solution for their customers.

Similarly, Tyco Electronics rolled out the UTOP program, which trains channel

partners on the basics of installing a local area network. This program helps

them to design and plan out the network architecture to meet the needs of SOHO,

SME and other segments. Says KK Shetty, Country Manager - Netconnect Solutions

Division, Tyco Electronics, "For our authorized systems integrators we have

a world-class training facility in Bangalore."

Adds Prabodh Vyas, Director - Sales, D-Link India, "We train all our

partners regularly at channel meets and also keep them abreast about the latest

technologies through e-mail and personal interaction."

Training has come to occupy a place of importance and is often a factor to

differentiate from competition in this industry that is rapidly becoming

over-competitive also on account of the fact that customer awareness is

increasing rapidly.

MULTIFARIOUS SKILLS



Technical knowledge is a must in the networking industry, but that is not

all. Vendors suggest that a close proximity with the customers to understand

their needs and the ability to best fulfill them is a definite pre-requisite for

success. Says Chander Purswani, "The partner must be able to gauge customer

needs and give products accordingly." It is not a place where a round peg

can fit in a square hole.

Adds Sujit of Apcom, "The partner should know to relate products with

applications." >From a business perspective, he adds, "He should

know to differentiate his solutions from those of the competition, for mutual

progress."

Says Prasad of Panduit, "A channel partner should have a thorough

knowledge of the growth sectors in the industry." He further suggests that

an understanding of buying patterns in niche verticals like banking and finance,

education, government and so on will only help channel partners to succeed in

this business.

WIRELESS: THE NEXT FRONTIER



Despite government regulations on the deployment of wireless LANs, industry

pundits feel there is still a long way to go.

"Even small offices do not want wires hanging from their machines,"

says Purswani. An equally upbeat Harpreet says, "35 to 40 percent of new

LANs in the next year and a half will be wireless."

The other new segment that both partners and vendors are expecting a lot of

growth and profit from is VoIP. Competition in this domain is expected to be hot

as all vendors are eyeing the space quite aggressively. But how the market will

shape up, only time will tell.

MOHIT CHHABRA in New Delhi with VINITA BHATIA in Mumbai and SUNILA PAUL in

Bangalore