19 - The PC Rebel

height="260" alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/e46ce934a59bdd5f1a6f685ef2e739379b1c71c11fe29b16960a50149c30ad79.jpg (12715 bytes)" border="0" hspace="2" vspace="2"

align="right"> CEO

& MD: RAJ KUMAR SARAF

T size="2">he story of Zenith has always been interesting and the unwavering spirit of the

company has brought forth many an example of one-upmanship in the Indian IT industry. Be

it the pioneering moves in networking at the start of the decade or the branding of its

own PC range, the company has always stood up to the market in unique ways, sometimes

defying existing market models.

If the prevailing model is to distribute MNC brands and

earn in services, Zenith chooses to go exactly the other way. CEO & MD Raj Saraf terms

this as Zenith’s transformation from a solutions and distribution company to a

products company. He likens it to a Compaq, Dell, or the PC division of IBM. Lofty indeed,

Saraf is busy working on achieving the top slot in the branded PC market in the country.

And it has already alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/ea57089a197aede92fba82d39e0dca3374c39780a43f7fda9fe60e2b77a07462.jpg (9495 bytes)" border="0" hspace="2" vspace="2" align="right"> size="2">become the third-largest PC vendor in the country.

Nearly 87 percent of the revenues came in from system

sales, amounting to Rs 157 crore. Of that, about Rs 131 crore came in from Zenith’s

own brand, a neat 72 percent. That speaks for the success of the Zenith brand. IBM and HP

brought in the rest.

Smart timing explains Zenith’s marketing success.

First, launching the right product at the

right time. The trick is to launch a product which

is configured just right for the market, neither under nor over. For instance, before the

Zenith Home PC launch in April, Intel had insisted that only the PII machine should be

launched. Instead, Zenith launched both Pentium and PII to catch the tide both ways.

Second, the company clearly understands the usage and market segments and adjusts the

timing according to that. In the next three months, Zenith will be launching a machine for

the Internet segment.

Zenith does enjoy an advantage in trailing the MNC

vendors because they take up the market development activity. Zenith never had to create

market segments for itself. In fact, the company’s smartness lies in identifying gaps

and filling them up with its own product—which is made ready just in time.

In the race for the top slot in the PC segment, Zenith

competes with the mightiest forces in the global PC industry. Because of Zenith’s

scale of operations, it gets very favorable sourcing options for components. Just-in-time

sourcing and production have an impact on inventory levels and manufacturing cost.

Compared to any MNC, Zenith has lower administrative costs and overheads.

To increase market reach, Zenith has expanded its

channel strength to 310 dealers and resellers across the country. Networking and

datacommunications being an integral part of PC these days, Zenith is tying up with 3Com

for its range of products. Retailing of PCs is still a year away. It may be recalled that

Zenith was the first company to venture into retail distribution three years back. But

since the retail market didn’t pick up as per the expectations of the company, it

aborted the idea.

Saraf has one, pointed goal for the current year—to

maintain its position in the PC market, if not climb up to the # 1 position. Even to

maintain its current stature, Zenith will have to contend with an IBM on the rebound, a

Wipro relaunched, and an Acer without a prefix. The key to Zenith’s volume game will

be the ease with which Saraf is able to source out components and the amount of pressure

he is able to apply on his margins. The most obvious route that this tactic could take is

by sacrificing margins for volumes and eat into marketshares of competitors.

alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/3ded75e7447468548473258cfa47fb11fcc9692f6b888a85421b3ab2f8e1ff32.jpg (21546 bytes)" border="0" hspace="2" vspace="2" align="right"> size="2">Zenith has generally been hailed as the industry’s barometer. It is this

uncanny knack for spotting the winner in a technology maze that has given Zenith’s

customers the confidence in the company. However, in order to push the advantage further,

Saraf will probably have to scale his portfolio one notch higher. While till now, he has

been homing in on the First Time User (FTU) market, it may just be the time to expand

laterally into the corporate market. That the corporate market is price-insensitive is a

myth that has already been blown. Saraf can use the tremendous gains that he has made in

the last year by offering a value proposition to the corporate users, especially in the

Small and Medium Enterprise (SME) category which, in the current tough and illiquid

market, may find a bargain in Zenith.

Another issue that Zenith will need to contend with, if

the volumes have to be ramped up, is one of reach. While Zenith is and has been

traditionally strong in the metros in the country, volumes will have to come from a

combination of metros and mini-metros. Here Zenith’s distribution channels are,

simply put, inadequate. The current year will be a good one for Zenith to consolidate its

channel strategy, get a coherent marketing action in place, which will factor in

countrywide channels. And, as the economy begins its upward motion, Zenith will be in a

better position to move volumes.

It is to be seen how Zenith, and its savvy boss, put

pressure on the MNC companies, both through marketing as well as other means. For

instance, Saraf is the head of a MAIT panel for recommending as to how PSUs should be

brought round to jettisoning the ‘only MNC PC’ buying pattern. Saraf is

extremely bulish about the outcome. And it will be a measure of Zenith’s success if

the company is able to capitalize on the changed stance of the PSUs—if and when that

happen.

In more ways than one, this will be a year of reckoning

for Zenith.