Though Dell is recognized as one of the largest sold brands across the globe,
it continues to be at number four or five when it comes to Indian operations.
Dell, which has been present in India for a fairly long time, has much lesser
market share when compared to most of its competitors. According to market
researcher IDC, in 2004, for instance, Dell's market share was a meager 3.2%.
The reason is simple: The 'direct model' that helped the company gain
prominence in the global market, is proving to be its biggest handicap in the
'not so open' FDI in the retail environment of India. In its direct model of
selling PCs, Dell has a policy of not going via the usual distribution model as
followed by other PC makers like HP or IBM. The Dell model calls for direct
orders to be placed over the Net. But it is here that the government of India's
closely guarded approach of not allowing FDIs in retail is dampening Dell's
aspirations to gain momentum in the Indian market.
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Currently, within India no one can order for Dell's products 'online'
because any such online transaction would be considered as retail and FDI is
currently not allowed in retail. "So if Indian customers want to buy from
us, they need to do so by logging onto our US website and placing the orders
through credit cards-that way they would need to 'custom-clear' the
product themselves, explained, Romi Malhotra, managing director, Dell
International Services. "It is a cumbersome process and that's why we are
not that visible in the low end segments."
In many markets across the globe, Dell outsells many rivals. However, India
presents a different picture altogether. The world's largest computer seller
is way behind other MNC brands in India where PC sales are exploding, and the
market opportunity is immense.
"We know that there is a huge potential in the Indian market but we have
a strategy to market our products using the already evolved 'direct model.'
So we will continue to do that. At the same time, we would like the government
to do something on this front. There is no doubt that our sales in India will
increase if we sell online," he added.
So far, Dell is focussing its efforts on the enterprise side of things in the
Indian region, where the company has dedicated sales teams, working closely the
enterprise customers in India. This is primarily because the company sells only
through the Internet, with the help of a model for ordering through the web, a
practice that Dell has mastered and encourages clients to move to, world wide.
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PC industry analysts opine that even though Dell is good on the pricing front
and the company has indeed made inroads into the commercial market, it has not
much to talk about when it comes to the burgeoning small and medium businesses
and home sector.
This could change, if and when the government opens up its policies on the
FDI for retail segment. And, an already increased usage of Internet in the
country would then make sure that Dell has enough orders on hand even from small
cities.