CHANNELS: The Story Behind Today’s IT Sales

The channel community, in it self, has been as old as the IT industry in the

country. However, the industry recognized it as a transactional mode only during

late eighties. India witnessed the shaping of the first multi-layered channel

network with the launch of the first retail stores for IT products in the late

80s. The early retail initiatives however fizzled out or morphed into other

businesses including the more high profile ones like Computer Point and

Tangerine.

The

upside of this however was the industry got polarized into different sets for IT

distribution. The early channel anatomy revealed a set of organizations which

thrived on importing products and reselling in India thus behaving like a

channel partner. A classic example is what happened when IBM left India in 1978.

A few ex-IBMers broke off to form IDM and along with companies like CMC and CMS,

were the key maintenance and support providers to IBM systems. Some like CMC

quickly developed an expertise in maintenance of most other foreign vendor

platforms. Over a period of time, vendors realized the possibility of using

their maintenance partners to also push products and services in the market.

The birth of the ‘National Distributors’



The second phase of an organized channel network began a few years after the

New Computer Policy that initially lowered duty on import of hardware and then

made it easier for MNC brands to enter the country. By 1991-92 a whole lot of

new MNC vendors had entered–mostly in partnership with local vendors. IBM had

also returned in a 50:50 joint venture with the Tatas. For the channel community

this was a landmark–the time when it began to evolve from a single to

multi-tier channel network.

During 1992-93, national and regional distribution was introduced as the

primary layer. Channel patrons like HCL and Wipro who were the early adopters,

emphasized distributors as an alternative solution. The idea was the vendors

would have a national distributor who would buy in bulk and also act as stockist.

In turn the national distributor would take care of the reseller network below

him. This saved vendors the trouble of personally reaching out to all the major

metros and beyond even as it gave them greater reach.

The competition from MNC brands also pushed Indian vendors to focus on ‘reach’

as a key word. Capturing greater user mind-share in the metros became key.

Reaching metro customers was not the bigger challenge. Reaching the small and

medium sized businesses that were major IT spenders was.

Although the need was clearly there, it wasn’t until two years later, in

1994, that Unicorp and Thakral Computers became the first branded national level

distributors in the country. Others like Tangerine, Melstar, Microtek, Tech

Pacific, Ingram Micro and Redington also joined the bandwagon. At the same time

channels began to morph from being "exclusive" partners of a single a

vendor or brand into multi-product and multi-brand partners. At the same time,

‘customer centric solutions’ became the new buzzword for channels.

The segmentation becomes clearer



During 1996, channels were clearly demarcated into solutions providers,

distributors, resellers and retails. Other segmentation in the channel network

like Systems Integration, ISVs was also formed. Today channel has evolved to a

specialized solution providers for clear areas and technologies. The need to

value-add pushed channel partners to adopt technical and SI skill sets apart

from innovative marketing strategies.

All said and done, consolidation in the form of business is forecasted for

channels. Going further, smaller players getting together should be the common

trend. This should become an acceptable practice given the complexity of

technology and market trends. Lastly, the focus on niche areas to build a

multi-location presence will tend to gain.

TEAM DQ