Monday, March 4, 2013

DELL INDIA: CHANGING FORTUNES

As a report indicates, Dell has moved from being just about an also ran to a leading position in the Indian PC space; and an internecine tussle with HP for the top slot is now in order. B&E analyses the current and future dynamics of this competition. by Virat Bahri

A key iconic moment was IBM giving in their papers. Biswapriya Bhattacharjee, Group Business Director, IMRB International (eTech) points out to B&E, “In the corporate segment, when IBM sold off its PC division to Lenovo, a lot of IBM’s corporate customers defected. Dell was able to garner a larger share of these customers.” Lenovo was Chinese. Dell was American. In the Indian corporate segment, Dell’s model suddenly appeared to have undiminished value.

And then, things took a double jump when Dell decided to tweak its distribution model and finally went on to the multi-channel front. The company launched its channel programme in February 2008, when it had a market share of just around 5%. In just two months, Dell thundered up to 8% in the consumer notebook space; in the consumer desktop category, the jump was from 2% to 4%. While the jumps may seem small, one has to realize that for Dell, the evident shift was ground breaking.

HP at the same time refused to play the price war in India – it could well afford to, being the global leader with its differentiated offerings. Dell didn’t stop in the on-ground sales model; it adopted a Partner Direct model, where it appointed Master Sales Affiliates, who brought in more Sales Affiliates. These Sales Affiliates, took orders from customers, which were serviced by Dell directly, hence minimising inventory risks for the resellers.

Dell topped this with an extremely aggressive pricing strategy to compete with the likes of Acer and even intensified focus on above the line promotions. Experts mention to B&E that Dell’s advertising budget in the past two years has in fact been matching or exceeding the budgets of other top brands combined. Would all that and playing on price be enough to beat HP, which has a formidable brand recall? Apparently yes! Pankaj Arora, MD, Protiviti Consulting says to B&E, “According to IDC, over the last few years, notebook prices in India have been dropping by about 10% a year, primarily because of technological advancements, changes in the customs duty structure & growing volumes.” Significantly, nearly 40% of household sales for notebooks in India came from SEC B & C, sections which are the most price elastic.

And the growth in this sector is well established. In H2-2009-10 (Sep 09-March 10), netbooks grew by 66% and crossed the 1-lakh mark for the first time, and 3/4th of sales came from households (MAIT). Small form factor products like all-in-one PCs are expected to be a significant market by 2013, contributing around 38% of desktop sales. Wireless broadband & 3G roll outs are also key factors that will drive growth.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.


 
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