Few IT vendors in India have made their mark so strongly on reseller
channels. Of course, it does help if you’re a near-monopoly called Intel, and
if the market can’t do without your product. And if your only two competitors
have mostly been dormant.
Still, Intel’s has been an impressive program in the Indian IT reseller
channel community. The Genuine Intel Dealer (GID) program has become so
successful that today virtually every reseller, dealer or small assembler wants
to be a part of it.
The GID program stems from a plan conceived by Intel co-founder Andy Grove to
streamline the company’s channel community. Channel partners qualifying for
this program can expect a series of benefits and training from Intel. These
include rebates for marketing programs when they buy from authorized
distributors, regular updates on new products and technologies, and information
on price movement. GIDs also get to be part of Intel ‘core training
conferences’, and sign on for regular training sessions, apart from
participating in promotional drives. They also get to use the ‘Intel Inside’
logo on the PCs they sell, after signing a license agreement.
Assemblers |
The GID program is specific to Asia, and was launched across Asian countries
just over six years ago. The idea was to get PCs right to the doorstep of the
home user–and carry the Intel brand with it. At that time, Intel could not
have imagined the kind of success it would get. In India, the program gave a
brand identity to a cottage industry of thousands of PC assemblers. They already
had the reach Intel wanted, especially into the home consumer and small office
segment across India, even in smaller cities. There are over 2,000 GIDs in
India, across 100 cities. IDC estimates their contribution at over 60% of Intel’s
revenues.
Intel’s wasn’t the only such program, which helped in this area. Samsung’s
‘everything-but-the-chip-and-board’ branding campaign made its mark too.
Over the past few years, such campaigns helped confer legitimacy on the
assembler. The brand identity was great for those small consumers, who felt
assured of a level of consistency, "almost like buying a fully branded
product," as one home consumer puts it. This also put pricing pressure on
the big vendors, narrowing the assembler-brandname gap.
The GIDs–a countrywide network of resellers and dealers–are quick to pick
up newer products, and are able to sell systems to home users with ease. Their
low overheads and proximity to the PC consumer helps make their service
personal, and the prominent Intel association brings brand vaalue to the beige
box, important for the first time user.
The strategy worked well in India. Over the years, the GID program has become
an integral part of Intel’s overall market development strategy. And dealers
say it helped them sell more PCs. In its GID program, Intel says it helps the
channel "keep pace with technology". This includes training, and
helping them reduce the gap with the product portfolio of bigger vendors or
channel players. In line with this, Intel is now helping GIDs assemble notebooks
and servers, and sell wireless LAN products and solutions.
About 100 GIDs are part of the notebook assembly program, which began in
early 2001. Combined sales were about 700 units a quarter in the year gone by,
with 50% growth expected in 2002-03. While Intel will not provide warranty for
these notebooks (the dealers will support them), Intel tests and approves ‘third
party building blocks’. There is no fixed configuration: specs are customized
for buyers, and the notebook ships with the GID’s own brand, along with an ‘Intel
inside’logo.
Assembled notebooks are targeted at a niche market. To begin with, they’re
cheaper–up to 25% less than the brands. But Intel says the goal was also to
offer a ‘good technology deal’, and leverage the close relationships many
GIDs have in the corporate segment. This is a strong potential market, where
notebook purchases are often repeat orders. And in an earlier ‘build your
server’ program, 150 GIDs were trained and certified to build servers using
current processors and technology, custom-configured for specific customer
needs.
As for WLAN products, Intel has a large portfolio, including access point
devices, wireless cards, antennas, etc–‘the building blocks for a wireless
network’–and has trained 20 GIDs to offer such wireless solutions to
corporate customers. These were GIDs who have the skill sets to design and
implement WLAN as an optional networking solution. This was initially done in a
few key cities where WLAN is likely to be accepted faster. While there has been
no significant WLAN implementation yet, Intel says many businesses are
evaluating these wireless solutions. Intel says it’s working with GIDs to
educate customers on the technology and build the business. Also in the way so
far, are procedural and regulation issues.
Intel says these programs are helping GIDs move up the value chain. With
shrinking margins in the channels business (Intel processors, for instance, may
sell at zero or negative margins!) resellers and dealers are forced to learn
newer technologies and provide additional services. Intel’s GM (channels) R K
Amar Babu says that the key today for being a successful GID is the ability to
keep abreast of technology, and leverage existing relationships with customers
by offering custom technology solutions.
Intel has now graduated some of its GIDs to another level called ‘premium
providers’ who stand at the upper end of the channel pyramid. These 50-odd
premium providers have qualified for the position after going through specific
technology training programs. They are allowed the use of a special Intel logo
created for this program, and are privy to a number of special support programs.
|
There is of course criticism too for Intel’s channel program, especially
from the brandname PC vendors. Among other things, they say the GID initiative
has helped boost the gray market. Intel’s Babu counters this by saying that
the program has actually helped legitimize this segment, helping many of the
small players come up above board.
"We are basically encouraging assemblers and local players to work with
the latest technologies and products and are providing them the training and
support so they can leverage their reach better".
Another area of concern has been that some GIDs have been selling spurious
Intel products and processors not sourced from legal channels. Intel says it’s
aware of this, and has evolved a mechanism to encourage GIDs to buy processors
from the legal channel and maintain a specified level of quality.
Part of this process is a system of periodic audits and checks on PCs going
to end-users.
Today, Intel’s channel program is focussed on the emerging tier two and
three cities’ market. While the top eight cities bring in 60% of revenue, the
smaller cities are growing faster. Intel plans to step up the use of local
language communication in order to reach out to these regions better.
Asim Raina in New Delhi