There is an increasing focus in HP recently on tablets, especially after the launch of the new business. Can you explain the rationale behind this since tablets have become a cluttered domain now?
We at HP are looking at tablets as an extension of the PC space and with the market maturing now, we feel this is the right time to increase focus there. And the tablet space looks cluttered more due to a number of low-end brands, whereas HP will position itself more amongst the high-end brands. From a consumer standpoint, there is an overlap happening when we talk of both PC and tablet segments. After positioning ourselves as a leading player in the PC business, we had to have an entire range of products with all the technology available as far as mobility is concerned. This is when we decided to enter into the tablet segment. The tablet market is reported to be selling almost 1.2 mn units per quarter. Therefore, it is absolutely right time for a brand like HP to get into. Consumers were looking for a core IT brand as now they have really evolved and HP rightly fits the bill.
For its PC business, HP enjoys one of the strongest channel in the Indian IT industry. How will you be leveraging this for tablet distribution?
First we need to understand the different products HP has launched in the tablets category. We have two Android-based dual-SIM devices–Slate 6 which is a 6-inch phablet and Slate 7, which is a 7-inch tablet. There is also the Omni 10 which is a Windows-based 10-inch tablet.
The 7-inch tablet is being sold both by our traditional IT channel as well as a newer telecom channel network, the 6-inch phablet is going through the telecom channel. In addition, the Omni 10 is witnessing more traction through the IT channel. So currently, we are using a mix of both our traditional IT channel and newer telecom channel for our tablets business.
But the dynamics of the IT and telecom channel are quite different and your traditional strength is in the IT channel. How challenging it is to co-ordinate both?
I agree there are some different dynamics like different inventories, cash flows and credits, but it is up to HP in driving a common behavior. We are already leveraging our channel-friendly strengths. We have the strongest IT channel in the market and that remains our obvious natural-to-go channel even for tablets, but even for the newer telecom channel we are able to show our value propositions for partnering with us. We already have nearly 100 RDs appointed across the country for tablets (many of them are our current PC partners); we have 20,000 partners and have just started billing the active telecom channel. Besides, the HP World partners (about 100), the large-format retails (LFRs) like Croma and Reliance Digital as well as the multi-brand outlets (MBOs) (total about 1000) are also being leveraged to push tablets and phablets. In retail stores, we are engaging below the line retail marketing tool to woo customers. When people walk into a store, HP devices should be visible to them. We have appointed Store promoters in a large number of stores to provide product information to the consumer. So it is a 360-degree marketing that we are doing.
To further boost consumer interest, HP has roped in Deepika Padukone as the Brand Ambassador for the newly-launched tablets.
With so much focus on LFRs and MBOs, is there a threat of cannibalization for the traditional channel. Especially since HP still enjoys such strong traction amongst this traditional channel?
LFRs have been in the market for some time now and instead of cannibalizing the channel partners, they have helped grow the market. That is precisely why the traditional channel has still grown alongwith. The onus is on us as HP to balance the two, and we have successfully done it till now. There is no doubt that there is pressure on traditional channel, but I feel as far as LFRs are concerned, the channel partners too have evolved.
E-commerce is now looked at by the channel as an even more pertinent threat than LFRs. What will be HP’s strategic position vis-à-vis traditional channel and online?
Just like LFRs, here again the onus is on HP to balance both e-commerce and the traditional channel. There is a value that e-commerce brings and India being a relatively untapped market owing to low Internet penetration, this new channel will definitely help grow the overall business. Though 90% of HP’s business still happens through the traditional channel, we have a big focus on HP Online Shopping too where the billing is being done through Savex.