After working for Hewlett Packard (HP) in product marketing for six years and Intel for five years, Paul Solski joined Compaq in 1996 to look after the Alpha server business in the Asia Pacific region. He was in Mumbai recently to talk to resellers on ‘Business Computing in the New Millennium’. DQCI met Paul to find out how Alpha servers are distributed, the role of channels and their future, with the e-commerce threat looming large over their heads. L P Suresh Babu, Business Manager, Compaq, who was with Paul shared his insights as well. Excerpts from the interview:
What is the distribution model of Compaq?
Paul: Compaq is into distribution through channels. It has a very large channel network. Basically, there are two types of channels. One is the distributors and the resellers and the other is the distributors and the system integrators who in turn are also the value-added resellers (VARs).
Typically for larger countries, we have multiple distributors. They help us to bear the financial burden of smaller resellers and they also provide the value-add.
We have multiple systems in the distribution module. This has been the traditional system of Compaq. We also sell directly. Lately, Compaq is focusing on expanding the channel network to take advantage of their immense potential in the IT market.
What in your opinion is the role of channels?
Paul: Channels are really the army that is capable of reaching the customers, which the manufacturers themselves can’t reach. But their role has to be more than just delivering especially when we are talking about high-end systems. With e-commerce beginning to spread its wings, the existing delivery mechanisms of channels will have to change. So I urge channel partners to learn to add value to the product and create a business channel where the product can be sold with a value-addition to the customer and thus also enhance the dealer-customer relationship.
When do you think e-commerce will happen?
Paul: Well, in general E-business, is already happening. As far as selling PCs for Compaq on the Internet, there is no specific channel strategy. This is a global direction, which the company has to decide.
What is the market share of Alpha servers through channels and via direct selling?
Paul: The worldwide Unix market share through channels is 60 percent and via direct selling is 40 percent.
Suresh: There are a lot of schemes for channel partners. Channels as such play a vital role in expanding our business and so we take all measures to help them in return. We know there is a market potential for a particular product say, Linux, which is an evolving market. Therefore we make the channels realize that they should take advantage there. We help them by introducing schemes and running them. We create a market demand. Product schemes happen on various segments. Most of them are dependent on market demand.
We also have a lot of sales-driven activities for channels to sell and realize higher benefits. So schemes are often introduced to enhance the business. We have policies too for them. That is time-dependent. We come out with attractive schemes, which are more incentive oriented for them to do higher sales. All of them run parallel.
Are the schemes seasonal?
Suresh: It is definitely not seasonal. We try to keep it on a monthly basis.
Which are the schemes that have been announced?
Paul: We have announced several schemes. For example, we had a scheme called, ‘three for two’ for the reseller. If he bought two Alpha servers, he would get one free. We knew it’s going to be hard to sell one or two, so if he sells the first two, we give him a third one for free. So he can sell the third one and make money out of it or can choose a discount in order to get rid of the first two and compensate the prize money with the third one. So that’s one. Another one we have is ‘CDs for growth’, which provides CDs to encourage VARs to facilitate their business. The schemes are applicable in India and in Asia.
What is the market share of Alpha servers in India?
Paul: In the 64-bit computing needs, we have 95 percent market share worldwide. And in India also we are planning to have the same in the near future.
How many distributors does Compaq have?
Paul: Compaq has one distributor, which is Godrej Pacific Technology Ltd, nine system integrators (SIs) and about 18 resellers in India. The number of distributors would increase to three, SIs to 14 and resellers from 18 to 40.
Who comprises the users of Alpha servers?
Paul: Our target market includes TELCO, manufacturing, finance (banking), high performance technical computing organizations such as research organizations.
How do you score over your competitors?
Paul: There are a number of points. Number one is technology, right now we have technology leadership. The other advantage is that we have skills. We are capable of putting large systems together. This is our competitive style. We are still the only company to provide complete 64-bit solution. Also, we have services to go along with the skills.
What is your target for this year?
Paul: My ambition is to double the business. And I believe it is happening right now. With our aim to increase the number of resellers in India, we hope that more and more resellers will contact us in the near future.
– A CI Report