The Channel is the Business

It's a part of the tech industry that few outsiders, or

even CIOs or other consumers, get to see up close. Even if a million people buy

from them, at Nehru Place, Lamington Road, and so many other roads and streets

across India. But the Channels rule the technology industry. Over three-quarters

of the domestic hardware, services, and software revenues, over $9 bn, flows

through the pyramid of distributors, wholesalers, resellers, and dealers that

make up the technology channels.

The 'DQ Top 20' companies account for half the

industry's revenues, and our main list in Volume 2 of the four-part Top 20

series extends to 200 companies. The recent DQ Week Channel Handbook 2006 lists

all of twelve thousand companies. That's the Channels.

Most of the success stories in India's technology market

begin and end with distribution-the channels. HP and Intel are examples of

companies that leveraged the channels to the hilt, building up market dominance

through innovative programs, incentives, financial and tech support, and

education. And when competitors came in, the entry route was, of course, the

channels. Canon took up share by rapidly building up its channel play, initially

aiming for the gaps in HP's portfolio, and expanding to other areas. AMD

finally began to gain share from Intel's 90% lock on the market when it got

its channel act together.

HP remains a favorite of the reseller community, and others

are ramping up rapidly on the shoulders of the channels. In a year, newbie

Lenovo quickly reached #2 in overall channel satisfaction in the annual DQ

Channels-IDC survey, just behind HP. If the channels are that happy with a

company, the conversion to sales becomes a lot easier.

Thanks to the sheer size and complexity of the country,

almost every major player uses the channels in India, one way or the other. Or

develops its own, such as HCL did, while it evolved into a mega-distributor of

hardware and mobile handsets. Even classical 'direct' players such as Dell

have to use support channels in India.

Investing in the channels today means growing, or

protecting, market share tomorrow. It's a bit like investing in employees:

there are the hygiene factors, things that let them sell your product better:

support, marcom, margins, incentives... But the 'channel makers' go beyond

that, into areas that help develop and strengthen the channels.

Before you can find the answers, you have to know the

questions. What are the channel's pain points? Margins? Growth? Expansion? HR

and retention? Training, even for the proprietor himself?

Can you help address them as vendor and principal?

For how vendors handle and develop the channels today, will

make or break them tomorrow.