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The 'Model' Boomerangs

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DQI Bureau
New Update

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%.

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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.





Romi Malhotra, managing director, Dell International Services

“There is no doubt that our sales in India will increase if we sell online”

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."

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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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The India Challenge

Global Market Share



According to various industry analysts, Dell is the #1 vendor, with nearly 9 mn units shipped. It has currently around 19.3% global market share, closely followed by HP at 15.6% share, with 7.25 mn units shipped.
India Market Share



India presents a contrast where Dell is nowhere in the big league when it comes to selling PCs. Dell has a meager 3.5% market share in India while HP enjoys 13%. IBM's share stands at 7.1%, according to research firm

Gartner.

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.

Zia Askari

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