editorial
Gloomy outlook
I
n this edition we present the CRN Channel Champions 2011 ranking for consumer products and PC building blocks—11 categories in all. One of the common themes among retailers, sub-distributors and system builders who polled for these categories was the fear of an acute slowdown. Already since September 2011 there has been a noticeable decrease in demand with a dampening of consumer sentiments. The HDD shortage, the rise in prices owing to dollar appreciation, and other inflationary pressures on input costs have played the spoilsports. The political and economic scenario over the past couple of months may have further aggravated concerns about business prospects. Many had hoped that the Congress would fare better than it did in the UP election which would make it instrumental in government formation in the state. But
Volume 1, Issue 10
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with the Samajwadi Party winning by a clear majority, the UPA government’s sustainability is under question. Had the Congress done well in UP, it would have given the central government the leverage to drive some economic reforms which would have helped boost the sagging economy. Budget 2012 is just an indication of how the UPA government is cornered by its own allies as a fallout of the UP election. High on rhetoric and low on substance, Budget 2012 fails to provide any hope of the economic situation improving. Looking at the past 10-15 days of developments at the center I doubt if the government will survive its full term. In fact the longer it lasts the more the political drama and uncertainty that will unfold. The road ahead in 2012 looks tough for businesses and IT channels will be no exception. So hope for the better but prepare for the worst. n
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Consumer desktop
Lenovo in the lead Consumer Notebook
Sony steals the thunder PRINTER
Epson excels MONITOR
Samsung going strong HOME NETWORKING
Digisol leaps to the top
12
ANTIVIRUS
16
PC UPS
20
MICROPROCESSOR
24
MOTHERBOARD
28
HARD DISK DRIVE
MEMORY MODULE
Zion is back
6
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15/03/2012 www.crn.in
Quick Heal stays ahead
APC makes it a habit
AMD ends wait
Asus still the most preferred
WD springs a surprise
41
30 32 34 36 38
methodology
Understanding channel preference
I
n this edition we present the Channel Champions 2011 rankings for components and consumer products. The last issue of CRN— March 1, 2012—featured the results for commercial products. Now in its 10th year, the annual CRN Channel Champions Survey aims to provide a definitive index of plotting channel satisfaction in the country. The US edition of CRN has been conducting the survey for over 20 years now. While the basic methodology comes from CRN US, we have customized it to factor in local market dynamics. The main objective of the exercise is to lend a voice to channel perception and experience in dealing with the vendors. The survey also aims to provide vendors a neutral view of channel expectations and how well they are managing channels and helping them to grow.
Survey methodology
In the components and consumer products categories we polled 584 unique respondents (compared to
519 unique respondents in the 2010 survey) across 237 cities through an online poll which ran from November 25, 2011 to January 10, 2012. With each unique reseller voting for an average of five product categories, we received a total of 3,822 vendor evaluations across 11 categories compared to 2,442 evaluations in 2010. For each product category the unique respondents voted their vendor preference and satisfaction on seven key criteria and 21 sub-criteria as listed below. Product availability: Included parameters such as the availability of products, and whether a product was over- or under-distributed. Price-performance: Included subcriteria such as product features, quality and reliability, and price. Channel profitability: The overall profitability that partners could achieve while dealing with a particular vendor. This included the front-end margins offered and the back-end incentives that resellers could earn on tactical schemes and strategic partner programs.
Channel Champions
8
Product Categories
2011 Winners
Consumer Desktop
Lenovo Acer
Consumer Notebook
Sony
Hewlett Packard
Printer
Epson
Hewlett Packard
Monitor
Samsung Samsung
Home Networking
Digisol D-Link
Antivirus
Quick Heal
PC UPS
APC APC
Microprocessor
AMD Intel
Motherboard
Asus Asus
Hard Disk Drive
Western Digital Seagate
Memory Module
Zion Kingston
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15/03/2012 www.crn.in
2010 Winners
Quick Heal
For the components and consumer product categories we polled 584 unique respondents for 3,822 vendor evaluations in 11 categories across 237 cities Brand-pull and customer marketing: This criterion includes the brand-pull enjoyed by vendors among endcustomers, local customer marketing, and promotions conducted to drive consumer demand. Channel marketing and training: Includes elements such as channel schemes to encourage partners to do more business; market development funds provided to partners; regular communication about new products and price changes; and channel meets for product training and providing other information about the company’s GTM. Post-sales support: Includes aspects such as warranty policy, RMA turnaround and escalation mechanism, toll-free phone support, and Web and email support. Channel policy and management: Respondents voted on parameters such as fairness, transparency and swiftness of various channel processes, and the accessibility and responsiveness of local channel teams and national channel managers.
Scoring
For each product category respondents were asked to vote for one of their top three vendors in terms of business dealings and rate it
methodology
on the seven key criteria and 21 sub-
criteria. It must be mentioned here that the Channel Champions survey is open-ended, and resellers are allowed to rate any vendor of their choice; we don’t compel respondents to choose vendors from a list of names. Vendors that received less than 10 percent of the total votes polled in a particular category were not considered eligible and were not considered in the final ranking. For instance, the antivirus category received 345 unique votes (from 340 unique resellers), so any vendor who got less than 34 votes did not make it to the final rankings table. Brands such as Net Protector and Eset failed to make the cut because they failed to receive the minimum 34 votes. Within the finalists, we arrived at the average scores for each vendor for each criterion. Under each main criterion the scores of the sub-criteria were added and averaged to arrive at the overall criterion ranking. Individual criterion scores were
Survey Demographics Total unique votes polled: 584 North 23%
South 29%
Total vendor evaluations: 3,822
Class A 22%
East 12%
Class B 25%
West 36% Region
Class C 53%
Type of City
added to arrive at the final score, and the final rankings were based on this overall score. In slicing and dicing the survey data, and providing deeper insights to arrive at the final rankings, we were ably helped by our knowledge partner, Aranca, India’s leading B2B research agency. The CRN editorial team then conducted a series of qualitative
Partner 46%
Non-Partner 54%
type of reseller
interviews with the survey respondents. For every product category we conducted 25-35 qualitative interviews to understand the voting patterns and get details about the strategies and policies of the vendors that worked positively or negatively for the channels. In all the editorial team conducted close to 350 qualitative interviews. n
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Consumer desktop
Lenovo in the lead
L
enovo emerged as the channel champion in the consumer desktop category. Acer, last year’s consumer desktop leader, came second. Dell, which is still perceived to be focused on notebooks, came third. HP, which almost exited the PC business in 2011, came fourth, and was followed by HCL.
Lenovo
Lenovo increased its consumer desktop models to more than a dozen in 2011, and faced no major challenge in availability. Unlike in 2010, when the company lacked aggression in offering entrylevel SKUs, respondents pointed out that during 2011 Lenovo offered SKUs that started as low as `18,000. Lenovo desktops were about 3-4 percent cheaper than Dell’s and HP’s, and marginally more expensive than Acer’s. Lenovo was the most aggressive vendor of AIOs with six models and reduced prices ranging from `28,000 to `70,000.
According to respondents, through a combination of upfront margins and back-end rebates, Lenovo offered the highest margin among all brands of 8 percent. Lenovo’s post-sales support was satisfactory as respondents said that the support engineers visit within 24 hours of call-lock and the issue gets resolved either on the same day or in a maximum of 2-3 days. Partners said that the company consolidated the number of RDs from over 60 in 2010 to 40 in 2011. In addition, the company enforced the policy of not allowing RDs to stock more than three weeks’ inventory. These steps reduced over-distribution and unhealthy competition among channel partners; it also enabled them to increase their margins.
Acer
Last year’s winner Acer was pushed to second spot because of the lack of customer marketing, issues with postsales support in Class-B and -C cities, and channel management issues. In December 2010 Acer realigned
Score Card Criteria
Lenovo Acer Dell HP HCL
Product availability
96.4 95.8 95.2 93.5 89.1
Price-performance
89.8 86.5 84.6 83.4 81.8
Channel profitability
78.8 77.2 74.3 72.5 71.5
Brand-pull and customer marketing
84.3
81.5
83.1
82.2
79.8
Channel marketing and training
74.6
72.1
70.1
66.7
61.6
Post-sales support
76.6 74.3 79.6 74.8 70.9
Channel policy and management
85.8
Final Score
80.2
78.8
74.7
71.6
590.3 569.6 566.2 547.9 526.3 *Scores out of 700
12
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15/03/2012 www.crn.in
its consumer desktop distribution by assigning exclusivity for the south zone to Redington; the rest of India was handled by Ingram Micro. Acer offered models in the `18,000-32,000 range. Average margins earned by Acer partners were 4-6 percent. One reason for Acer’s relatively poor show was the growing dissatisfaction among Acer Mall and Acer Point partners who felt that the company is increasingly aligning with LFRs. What’s more, many of its Master Resellers (MRs) complained of inconsistent policies and partner management. Two of the company’s leading sub-distributors said that Acer, for no explicit reason, changed their partner level and that too without informing them. A few sub-distributors reported that the company dropped certain SKUs from their portfolio without any prior information or explanation, and made other MRs in the region exclusive to those SKUs. According to the partners, Acer decreased the customer marketing of desktops. The frequency of ads dropped compared to 2010. In 2011 the company did not introduce any customer-focused scheme. However, the company’s channel marketing was good, and during the year Acer ran 7-8 schemes offering upfront discounts of `750-1,250 per unit as well as back-end rebates of `500-750 per unit. Acer continued its 2-year warranty extension pack for `2,100. While there was improvement noted in post-sales support in Class-A cities, upcountry locations saw support faltering with delays in attending to problems, and resolutions taking up to a week or more.
Dell
While Dell increased the focus on its desktop business by exclusively
Consumer desktop
distributing through Supertron,
respondents said the company is still not as focused on desktops as it is on notebooks. Though Dell rolled out its AIO models, the lack of attractive pricing resulted in lack of traction. The company ran targeted campaigns for schools and residential housing societies in Class-A cities for its AIOs. Respondents noted that the cumulative margins on Dell were 3-5 percent. Apart from Dell’s schemes, Supertron also ran its own schemes. Partners said that the company has increased its focus on channels, and that local channel managers met them once or twice a week and were swift in resolving issues. Dell scored the highest for post-sales support; in some cases the channels noted that customer issues were resolved within 12 hours. The high influx of parallel imports during 2011 impacted Dell’s channel policy and management scores. While the parallel imports were largely for notebooks, it affected the overall sentiments of Dell channels.
HP
Consumer channels admitted that HP’s announcement of its decision to quit the PC business—and then to drop the plan—affected the brand’s image, with some retailers claiming up to 30 percent drop in revenue. Despite hiccups in getting its distribution strategies right in H12011, partners noted that HP showed initiative in the second half with aggressively-priced SKUs. Its Compaq brand was priced less than Dell Inspiron by 2-4 percent, while the Pavilion range continued to be the most expensive. HP reversed its distribution partners, replacing many of the telecom/FMCG distributors it had signed in 2010 with IT distributors. In several zones it dropped redistributors, and asked the zonal distributors to directly supply to tier-2 and -3 channels. It also relaxed norms of exclusivity for RDs, and several
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Survey Demographics Unique votes polled for Consumer Desktop category: 479
North 29% East 14%
South 28%
Class A 18% Class B 23%
West 29%
Region
Class C 59%
Type of City
erstwhile partners returned to the HP fold. The company increased the front-end margin for the channel and tried enforcing an MOP model which brought a certain stability in pricing. While there’s still a certain amount of price undercutting, overall there has been an improvement in the MOP and channel margins. The company revamped its HP World stores and appointed dedicated executives to help in creating local campaigns and driving footfalls. Respondents appreciated HP’s initiative to offer a 2-year extended warranty at `2,700. HP offers a 1-year onsite warranty;
One reason for Acer’s poor show was the dissatisfaction among Acer Mall and Acer Point partners who felt that it is increasingly aligning with LFRs
Non-Partner 35% Partner 65%
type of reseller
however, the TAT isn’t as good as that of Lenovo and Dell.
HCL
Respondents who voted for HCL said that it has again become aggressive in the desktop space following the appointment of a new team. Nevertheless, post-sales issues, delays in incentive payouts and product quality issues dampened its ratings. On the pricing front HCL is on par with Acer. Respondents said they make 4-5 percent margin on HCL desktops. They appreciated the increase in channel marketing schemes; however, they complained about non-payment of scheme incentives on time. On the customer marketing front, a few schemes like the 3-year free warranty and free subscription to McAfee AV helped to drive demand. Partners said that HCL increased its channel engagement by appointing local channel managers and executives who met them regularly. The company scored low on post-sales. Though it offers a 1-year onsite warranty, respondents said that while the engineers visit within 24 hours they do not always replace the part(s) on the spot but instead send it/them for repairing which extends the TAT to 7-10 days. There were also complaints about the quality of the monitors of HCL desktops. n
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2/8/12 5:36:44 PM
Consumer Notebook
Sony steals the thunder
S
ony won the consumer mobile PC crown as a result of its market aggression. Lenovo retained its second spot while Dell came a very close third. Acer’s channel preference suffered with many of its partners voting negatively for it. HP, which had a forgettable year, came last. Toshiba, Asus and HCL polled less than 10 percent of the category votes and did not qualify.
Sony
An aggressive market strategy, consistent promotions, a focus on partner profitability and strong distribution and retail policies led to Sony winning the crown. In early 2011 Sony doubled the number of models with more than 60 SKUs across all price points. The company launched a notebook on the AMD Fusion platform, creating price points as low as `23,000. It pricepositioned its products on par with HP and Dell. Respondents said that Sony has the strongest MOP policies and that any partner found selling even a rupee
below the formulated weekly sell-out price is penalized. Retail partners informed that Sony adheres to a strong policy of territorial exclusivity to ensure there is no overcrowding and that retailers make good margins. As a result, retailers said that Sony offers the highest margins. A strictly regulated MOP ensures good frontend margins of `1,000-1,500 while back-end rebates are 2-4 percent on monthly targets. The company expanded its postsales infrastructure from 100 centers to 130. Sony also introduced a remote diagnostic facility which helped improve post-sales support. It reduced the pricing of its warranty packs from `5,000 to `2,500 for a 2-year extended warranty. Sony is the only brand that offers a 1-year carry-in warranty for notebooks; this is a disadvantage, but respondents said that it leveraged its CE retail footprint to serve as pick-up points. The only complaints received about Sony were that there were availability issues on some of its entry-level models, that it didn’t have
Score Card Criteria
Sony Lenovo Dell Acer HP
Product availability
96.0
Price-performance
91.7 87.6
89.8 86.8 82.6
Channel profitability
83.8
81.6
78.3
76.5
73.4
Brand-pull and customer marketing
86.9
85.9
87.4
83.7
83.1
Channel marketing and training
76.9
75.2
74.4
74.6
73.6
Post-sales support
81.1
82.5
84.9
75.3
77.3
Channel policy and management
94.5
88.1
85.4
81.1
79.2
Final Score
96.2
91.4
94.6
94.3
610.9 597.1 591.5 572.6 563.5 *Scores out of 700
16
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enough models, and that it focused on the high-end models featuring Intel Core i5.
Lenovo
Lenovo retained its position as the second most preferred notebook vendor. In 2011 Lenovo cut the number of RDs from 60 to 40, which channels said has helped in stabilizing the MOP with the RDs showing more focus. Lenovo was the first vendor to launch models on the Intel Huron River platform in Q12011. It pricepositioned itself 5 percent lower than Dell and HP. Most respondents agreed that Lenovo was aggressive with customer marketing and commanded fair visibility through ads. Overall, they agreed that the company’s brand image improved over 2010. Lenovo also offered free gifts worth `5,000-6,000 including MP3 players, cordless mice and headphones in Q32011, and a 2-year warranty upgrade in Q42011. Respondents noted that Lenovo increased its focus on channel marketing during the year. It offered sales-out and sales-in rebates which cumulatively earned them `500-2,000. A major allegation about Lenovo was that the company was heavily focused on LFRs, and on four popular notebook SKUs the LFRs offered lower prices than Lenovo stores. Another complaint was regarding the overcrowding of LESlite stores. Lenovo set up 500+ LESlite stores during 2011. While the LESlite strategy has been appreciated, respondents said that the company needs to consolidate rather than expand. Partners polled said that Lenovo has improved its post-sales support. They appreciated the establishment of spares depots in metros and various Class-A cities.
Consumer Notebook
Dell Dell enjoys a high brand recall, and thanks to its consistent print ads it has the biggest customer recall for a notebook brand. In 2010 there were complaints about price differences between Dell’s online store and the product lines which were sold through channels. In 2011 Dell took steps to reduce the differences, and in many cases the channels noted that the inventory they carried was cheaper than the online offers. While there were no product availability issues, respondents said that during July the online transactions were delayed by 15-20 days because of some ongoing billing software modifications at the backend. Channels said that they make 2-6 percent on Dell notebooks when these are purchased through MSAs. Dell offers a 1-year onsite warranty on its notebooks, and its post-sales support is regarded as the best. While respondents appreciated the improved channel engagement from Dell’s local channel sales team, they still hold the image that Dell is a direct company. Respondents noted that Dell’s MOP was affected by 15-25 percent due to the influx of parallel imports. While Dell took steps to curb this practice, respondents said that their overall profitability was affected.
Acer
Acer continued to be an overall price leader in the segment. However, its channel preference suffered with many of its retail and volume partners negatively voting for it. It also scored low on warranty support and customer marketing. Some volume partners complained that its customer marketing wasn’t as aggressive as in 2010; retail partners said that this impacted demand. Its channel marketing was good, and during the year Acer introduced several schemes for channels which were appreciated by partners. While respondents in Class-A cities reported an improvement
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Survey Demographics Unique votes polled for Consumer Notebook category: 419 North 26% East 13%
South 27%
West 34%
Region
Class A 21% Class B 25%
Class C 54%
Type of City
in warranty support, those from upcountry locations reported delays in TAT of up to a week or more. Channels noted that Acer was very quick to introduce new models, and has improved the overall quality of its products compared to 2010. In Q42011 Acer dropped its lowcost eMachines brand, replacing it with the Aspire Value series. Partners did not see much activity for its Gateway brand which was largely sold through LFRs.
HP
Last year’s champion HP was relegated to the last position as a result of inconsistencies in channel policy and engagement, over-
A complaint against Lenovo was about the overcrowding of LESlite stores. Respondents said Lenovo needs to consolidate them rather than expand
Partner 56%
Non-Partner 44%
type of reseller
distribution, and lack of market aggression. During Q12011 channels said that the HP inventory piled up; this resulted in many partners getting into credit chokes. In Q22011 HP restructured its distribution, changed several zonal partners, and relaxed the exclusivity norms for re-distributors. On the product front HP showed aggression especially in the second half when it strengthened its highend HP Envy range. It introduced 15 new models in the Pavilion range and revised its pricing to bring it on par with Dell. Volume partners said that the HP PSG spin-off flip-flop created confusion in market and resulted in the dampening of overall channel sentiments; it also impacted sales by 20-30 percent. What hurt HP the most was the lack of customer marketing, with respondents noting that HP was the least visible brand. The HP First channel program, which offered rewards to partners registering customer details online, was much appreciated. On postsales respondents noted an overall improvement but said the warranty support needs streamlining; the onsite warranty TAT needs to be swifter. At present, even in metros, the engineer takes 2-3 days to visit the customer once the complaint is locked in. n
printer
Epson excels
T
he consumer and SOHO printer category has a new winner. Epson came up trumps, scoring ahead of Canon and HP on all counts. Its strong inkjet portfolio and new InkTank technology printers helped it edge past the competition. Canon came second followed by HP which was the winner last year.
Epson
Respondents said that Epson provides the best option in home inkjets when it comes to price-performance and cost of consumables. During 2011 the company launched its L series of printers. Although these were targeted at the enterprise segment, due to their low cost of printing per page (less than 10 paise for mono and less than 20 paise for color) they became popular in the home and SOHO segment as well. Most respondents from the four regions said that in the photo printer segment Epson has no competition. According to the respondents, the prices of Epson’s consumables are the
lowest and provide good value for money. The company provided front-end margins of `200-300 in addition to a back-end of around 5 percent which is paid within 30 days. Epson conducted a lot of promotional activities and advertising both at the local and national level. It sponsored local events in schools, participated in exhibitions, and sponsored events of IT associations in various cities, thus improving its visibility. However, it lacked in consumer schemes like cartridge bundling and free gifts which both HP and Canon offered during 2011. For the channel it did road shows. It also did partner programs like nSolution and nDimension which respondents said helped their business grow by 12-15 percent as they gained thorough product knowledge and could make better pitches to customers. Most respondents said they were happy with the post-sales support provided by Epson. It offered a
Score Card Criteria
Epson Canon HP
Product availability
95.3
Price-performance
94.4 87.2 87.5
Channel profitability
85.6
77.3
71.5
Brand-pull and customer marketing
85.7
83.5
86.5
Channel marketing and training
93.2
79.0
75.9
Post-sales support
89.8
80.5
78.9
Channel policy and management
85.7
85.2
83.6
Final Score
95.7
96.0
629.7 588.4 579.9 *Scores out of 700
20
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Canon expanded its inkjet portfolio in 2011 with five new printers. It reduced the prices of its printers to become more pricecompetitive than both HP and Epson 1-year onsite warranty. Respondents from the west and north appreciated the vast improvement in post-sales support in their regions. They said that after listening to their feedback Epson increased the number of service centers in the two regions, and that as a result the TAT improved from 3-4 days to the next business day in most cases or two days in some cases. Respondents said that Epson is prompt with replacements as well. Epson partners appreciated the company’s nDimension program which they said provides benefits not just in terms of rebates but also in terms of training to their sales representatives on a continuous basis; it also helps in identifying new opportunities.
Canon
Canon expanded its inkjet portfolio in 2011 with five new printers including Wi-Fi-enabled printers. The company reduced the prices of its printers by `500-1,000 to become price-competitive. Respondents selling both Canon and HP said that one of the advantages of selling Canon is that its product rollover is very less and that it takes 2-3 years to overhaul its
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Agra - 6453125, 4041027, Ahmedabad - 64508450, 26851663, Amritsar - 6450186, Aurangabad - 645 7141, Bangalore - 65687567, Baroda - 6595588, Bhopal - 6464925, Bhubneshwar - 6510444, Calicut - 6515152, Chandigarh - 6512547, 2694932, Chennai - 64501273/28412414, Cochin - 6452299, 2310381, Coimbatore - 6572160, Dehradun - 6546333, Delhi - 64734905, 26387897, Ghaziabad - 6517809, Goa - 6514657, Gurgaon - 64514614, Guwahati - 273101, Hubli - 6453123, Hyderabad - 66901598, Indore - 6510124, Jabalpur - 6457306, Jaipur - 6577844, 2280421, Jammu - 2437478, Jodhpur 6450387, Kanpur- 9235601410, Karnal - 6450508, Kolhapur- 9223101332, Kolkatta - 64517248, 22315174, Kottayam - 6452013, Lucknow - 6546333, 2286134, Ludhiana - 6512545, 6450125, Madurai - 6463839, Mangalore - 6451030, 2494355, Mumbai - 65261670/65990329, Nagpur - 6502571, 2420009, Nasik - 6450103, Parwanoo - 645108, Patna - 6453850, 273137, Pondicherry - 6530470, Pune - 65205706, 24497489, Raipur - 6538333, 4221307, Rajkot - 6593588, Ranchi - 6455499, Siliguri - 6450108, Surat - 6596267, Trivendrum - 6535433, Varanasi - 6454820, Vijaywada - 6622872, Vizag - 6590992.
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printer
entire product range hence partners
are comfortable selling them. By contrast, HP launches new products very fast, almost every six months, and this creates difficulties in selling due to lack of technical knowledge about the new products as well as the stocking of the old printers. With a strong MOP mechanism in place, respondents said that Canon products provide a front-end profit margin of 5 percent. During 2011 the company also launched attractive channel schemes which were appreciated by respondents. Where respondents were unhappy was with the delays in incentive and rebate payouts. They said that Canon has a policy of clearing incentive schemes through its RDs who delayed the payout of incentives by more than six months. Respondents said that they have escalated the matter to Canon which has assured partners that it will work to resolve the matter. Respondents opined that in the past couple of years Canon has reduced its customer marketing. At a time when both HP and Epson are advertising regularly in newspapers and on TV, this is impacting Canon’s overall brand recognition among consumers. On channel marketing too Canon has reduced spends; it sparingly did local promotions and store activities for its select retail partners. Canon received substantially low scores on warranty with many partners complaining of longer than expected delays due to the shortage of spares. Partners in upcountry locations said that though Canon provides onsite warranty they have to carry the printers to the service centers. A few authorized partners from the north and south also complained about the lack of communication in terms of price changes, launches, new schemes and partner programs.
HP
While HP continues to be the most widely distributed brand and also the
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Survey Demographics Unique votes polled for Printer category: 411 North 25% East 12%
South 28%
West 35% Region
Class A 22% Class B 25%
Class C 53%
Type of City
one with the largest market share, on channel preference it was voted third. Respondents said that from a price perspective HP has a large portfolio which was further enhanced by the launch of its Ink Advantage printer—K209—which became an instant hit as it offers print costs of 20-30 paise per page. Respondents said that the pricing of this product and HP’s strategy to bundle a cartridge with the printer helped in driving sales. However, respondents reported a shortage of K209 (and the other fast-selling model, P1020) from May to October 2011. Most respondents said that there were intermittent supply issues and delays with all fast
Respondents said HP didn’t enforce the MOP as strictly as it had done in 2010, and that there were swings of 5-8 percent on the enduser MOP of fast moving products
Partner 54%
Non-Partner 46%
type of reseller
moving consumer models. HP, which was always labeled as expensive in consumables, launched its Economy pack during MarchApril 2011, and introduced the Normal and the Mini series (priced at `420); these were marketed as affordable options. Tier-3 respondents continue to complain about HP’s fastmoving printers being billed by volume partners at more than MRP. Respondents also alleged that HP didn’t enforce the MOP policy in 2011 as strictly as it had done in 2010, and that there were swings of 5-8 percent on the end-user MOP of fast moving products like the P1020. HP scored high on customer marketing and branding. Respondents said that throughout the year the company ran customer schemes which offered either gift vouchers or free cartridges on the purchase of printers. The company also upped its marketing spends in the media which partners said helped drive demand. Post-sales support was another parameter where HP received low scores. It received low scores for toll-free support as well as the quality of warranty support provided with respondents from Class-B and -C cities complaining of a TAT of 7-15 days. n
monitor
Samsung going strong
S
amsung retained its title in the flat panel display category. LG came second. AOC retained its third position on the basis of its compelling price-performance. Although Acer came fourth it improved its channel preference. Dell polled less than 10 percent of the category votes.
Samsung
Samsung improved its channel preference as it was aggressive with its channel strategy during 2011. Many Samsung authorized partners said that they grew their Samsung business by 20-25 percent in 2011 vs 2010. The company was particularly aggressive with channel marketing and ran regular schemes with 3-unit monthly targets. Tier-3 partners said that Samsung’s regional distribution model—whereby it has aligned Ingram, Redington and Savex exclusive to different regions—and
the fixed sell-out price for its volume partners has ensured a standard MOP which has led to healthy profit margins. The company has a good backend incentive which is paid out every month. In addition, Samsung’s MOP is 8-10 percent higher than LG’s; this results in more front-end margins for tier-3 resellers. While many authorized tier-2 partners said that Samsung offers good profitability, they want the company to review its negative billing model which it has been following for the past 4-5 years. They said that while in good times they don’t have an issue with this model, during periods when the demand for monitors comes down the negative billing hurts them. The company offers a 3-year onsite warranty, and most partners expressed satisfaction with its postsales support. Availability is an issue with Samsung as throughout the year
Score Card Criteria
Samsung LG AOC Acer
Product availability
94.8
97.0
Price-performance
92.7
89.6 86.6 85.5
Channel profitability
83.2
78.8
76.2
75.7
Brand-pull and customer marketing
88.4
86.3
82.1
76.8
Channel marketing and training
79.6
76.1
68.9
65.5
Post-sales support
86.7
82.1
76.4
82.3
Channel policy and management
91.2
85.6
86.5
82.1
Final Score
91.8
91.5
616.6 595.5 568.5 559.4 *Scores out of 700
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some of its fast-moving SKUs experienced intermittent supply issues. Samsung’s brand-pull is at par with that of LG; however, in product quality, many respondents who also sell LG said that Samsung is perceived to be a better brand.
LG
The company faltered on several counts during 2011 which impacted its channel preference. Many LG RDs who took the poll voted negatively for the company because the introduction of national distributors such as Redington and Rashi impacted their LG business by 25-30 percent. Rashi was signed up in June as the exclusive ND for three ranges— Slim Series, Monitor TV, and the entry-level 16-inch LED monitors. Redington was signed up as RD in March for nine territories. RDs alleged that LG provided all the good SKUs to Rashi. In territories where Redington was distributing, RDs said there were serious MOP issues because Redington was billing the products at 5-8 percent lower prices. Then in November LG discontinued its partnership with Redington which liquidated its inventory which crashed the MOP and created excess inventory in the market. But while RDs gave negative votes to LG, many tier-3 and -4 channel partners said that the availability of LG products improved after the introduction of Rashi and Redington. Earlier, the RDs offered credit to limited partners, but with the NDs more resellers could buy LG products on credit. The other big mis-step by LG was to make its 3-year warranty conditional. In July it introduced a change in its warranty policy whereby the 3-year warranty was
monitor
offered only to customers who
registered themselves online. In case the customer failed to register he/she got only a 1-year warranty. The company didn’t communicate this condition clearly to tier-3 and -4 channels, and it created the perception that LG had reduced its warranty from three years to one year. Many tier-3 resellers said that they began selling Samsung and were able to command higher margins since they convinced customers that by paying 8-10 percent more for Samsung LEDs they would get a 3-year warranty. In December 2011 LG removed this condition and assured all customers, registered or unregistered, that they would get a 3-year warranty for all products purchased from July 2011 onward. RDs complained that with the new MD coming in the overall channel management suffered. Earlier, LG’s local managers provided them support in clearing stocks; however, since July 2011, the local managers don’t have any power to take decisions on pricing and stock clearance.
AOC
The company has firmly established itself as the No 3. The brand recognition for AOC has increased over the past couple of years although it still lags significantly in customer-pull compared to LG and Samsung. AOC is priced 5 percent cheaper than LG and 15 percent cheaper than Samsung. Respondents said that AOC was ahead of Samsung and LG in launching new products and features. For instance, it launched the first 3-D model—E2352— in April 2011. The Razor range, which it launched toward the end of 2010, became the fastest-selling series for most respondents in 2011. Respondents said that Razor was the slimmest and highest-resolution in its category, with features like different display modes for Internet,
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Survey Demographics Unique votes polled for Monitor category: 381 North 24% East 14%
South 28%
West 34% Region
Class A 23% Class B 25%
Class C 52%
Type of City
text and gaming—features that even Samsung and LG monitors didn’t have. Partners said that AOC didn’t conduct any channel schemes, customer marketing, local promotions or channel meets during 2011 on the pretext that its margins had suffered. Instead, it asked its volume partners to conduct local promotions and schemes but they didn’t conduct any. Respondents said they were not even given product catalogs. According to most respondents, AOC’s post-sales support was woeful. There was a shortage of spares, the toll-free support wasn’t
A mis-step by LG was to make its warranty conditional. In July it introduced a change in its policy whereby the 3-year warranty was offered only to customers who registered themselves online
Partner 46%
Non-Partner 54%
type of reseller
up to the mark, and the TAT was more than 10-15 days. In Q4 the company changed its national ASP Intarvo to introduce a regional ASP model. However, resellers said they are yet to see any significant change in the quality of service.
Acer
According to respondents, Acer has emerged as a value brand in the flat panel display category over the past two years. The company offers its entry-level 18.5 inch model at an end-user MOP of `4,800-5,000, which is 15 percent lower than LG and 25 percent lower than Samsung. Many LG and Samsung volume partners distribute Acer as a second brand in Class-B and -C cities which are value-conscious. They opined that a difference of `800-1,500 on an assembled PC in these locations amounts to a big advantage for system builders. They said the reason for selling Acer is that its product quality and warranty support are good. The company scored low on channel management because it didn’t have a local sales team engaging with partners. In the west and north respondents said that Redington, the company’s exclusive distributor, appointed a dedicated channel sales team which has started meeting channels regularly. n
home networking
Digisol leaps to the top
D
espite being a nascent brand in home networking, Digisol won the channel preference on the back of its aggressive prices, channel marketing and training, post-sales support and overall channel policy and management. The company differentiated itself with its 5-year warranty support. D-Link remained the most recognized brand in home networking but slipped to second spot primarily because of issues in post-sales support and product availability during August-September 2011. The company became aggressive on pricing in the second half of the year and offered attractive schemes for partners and customers. Belkin came a close third and maintained its position by virtue of its thrust on customer-focused schemes and its warranty support. It was aggressive on channel schemes but lacked focus on channel engagement and management. The company needs to work on expanding its portfolio of home
networking products as well as lowering its prices. Netgear drifted to the fourth position by a small margin due to the high turnaround time in post-sales services and low level of partner engagement. Partners want Netgear to lower its prices as well as broaden its portfolio.
Digisol
Digisol jumped to the leading position from the fourth position in 2010 primarily because of its channel engagement and price aggressiveness. Partners appreciated the company’s efforts to engage frequently with them. It organized roadshows in various tier-1 to tier-4 cities in 2011. Digisol also introduced attractive channel schemes which were appreciated by partners, specially those in Class-B and -C cities. Respondents agreed that Digisol offered them the highest margins (8-12 percent) across the brands, and that was the reason why they put in
Score Card Criteria
Digisol D-Link Belkin Netgear
Product availability
95.6
Price-performance
92.5 91.1 87.5 86.9
Channel profitability
88.6
84.5
82.0
83.3
Brand-pull and customer marketing
86.9
88.2
88.0
85.4
Channel marketing and training
91.1
87.3
86.8
86.6
Post-sales support
88.7
86.1
84.7
83.3
Channel policy and management
91.9
89.1
86.7
86.3
Final Score
92.1
95.5
94.3
635.3 618.4 611.2 606.0 *Scores out of 700
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extra effort to promote its products. The company differentiated itself from the competition by offering a warranty of five years. Digisol also leveraged on the strong service support of Digicare. Respondents said that the product availability of Digisol was good throughout the year. The company remained aggressive on prices, which acted as a facilitator in this pricesensitive market. Digisol offers several options in entry-level products. However, partners wanted it to expand its portfolio of high-end products including 3G wireless routers. Most of the partners said that while Digisol’s brand-pull has increased, it still lags in brand recall compared to the competition. They agreed that the company needs to do a lot in its customer marketing efforts to create brand-pull among customers.
D-Link
The company enjoys the highest brand-pull among customers. Being a widely distributed brand, D-Link offers the least profit margin to the channel. Delays in replacement and servicing during the transition of service support to kaizen in AprilMay 2011 as well as the latter part of the year acted as a real dampener. Many of the partners complained of a shortage of products in AugustSeptember 2011. According to the respondents, these shortcomings forced them to also promote other brands unless the customer specifically asked for D-Link. Taking note of the resentment among partners, in 2012 the company assured partners that it would designate various business distributors as ASPs in their regions. In H22011 D-Link reduced its prices by about 10-12 percent;
this resulted in D-Link matching the prices of almost all the home networking products of Digisol. D-Link’s entry-level wireless router, which was priced at about `1,350, came down to about `1,200 after the price reduction. This reduction in prices, coupled with its wide home networking portfolio, worked well for D-Link. The company offered foreign trips to partners achieving the quarterly target in Q42011, but partners in upcountry locations complained of the target slabs not being achievable by small partners. Many respondents agreed that D-Link was not as aggressive in channel marketing and training in 2011 as it was in 2010.
Belkin
Belkin retained its third position riding on its aggressive customer marketing supported by customerfocused and channel-focused schemes. The company increased its brand-pull through ads on the radio and in the online and print media. Belkin also offered attractive customer schemes during October with gifts such as mice, mobile phones and laptop cooling pads. The company remained popular among the channel due to its various quarterly schemes for tier-3 partners in which it offered Sodexo vouchers, water purifiers, refrigerators and washing machines. Belkin also offered trips to Uzbekistan and 5 percent cash-back rebates to its tier-2 partners. However, being the costliest home networking brand, partners admitted that only discerning customers with a specific brand preference opted for its products. Belkin’s entry-level wireless router was 8-10 percent more expensive than those of D-Link and Digisol. Also, the company increased its prices by 6-8 percent in Q42011 while there was no hike by the competition. The company lacks wired modems and 3G routers at the entrylevel; this restricts the low-priced
Survey Demographics Unique votes polled for Home Networking category: 311 North 22%
South 32%
East 9% West 37%
Region
Class A 24% Class B 28%
Type of City
options for customers. Apart from wanting Belkin to become aggressive on pricing, respondents want it to expand its home networking portfolio. According to the respondents, a reduction in channel engagement acted as a real drawback in Belkin’s channel strategy. They said that the company reduced the number of channel managers in 2011 and this reduced the level of its regular engagement with the channel. The company also curtailed its 5-year warranty to three years in 2011. However, partners faced no delays in replacement or servicing.
Being the costliest home networking brand, partners admitted that only discerning customers with a specific brand preference opted for Belkin’s products
Class C 48%
Partner 27% Non-Partner 73%
type of reseller
Netgear
Although Netgear worked well on the channel and customer marketing fronts, delays in service support and lack of channel engagement resulted in its slipping to the fourth position from second in 2010. Partners complained of delays of more than 15 days in replacement and servicing due to non-availability of spares. They wanted the company to increase its service support network. Respondents also complained about the scarcity of local channel managers which resulted in a lack of direct engagement by the company. It also led to slow resolution of any issue raised by a partner. Partners were supported only by executives from national distributors. Partners wanted the company to become aggressive on pricing since it is about 5-10 percent costlier than Digisol. Netgear also has limited options in entry-level products as well as in wireless modems/routers. Partners however agreed that customer-specific schemes helped in creating demand. The company also remained aggressive with channel schemes. Besides the back-end cash rebates, the company offered rewards such as digital cameras, DVD players, home theaters and LCD TVs. The company conducted two roadshows in 2011. n
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29
antivirus
Quick Heal stays ahead
Q
Uttarakhand and Bihar alleged that the regional distributor (RD), NCS Computech, cut down the incentive structure in their regions though other distributors in other regions were passing on all the incentives provided by QH. According to them, the post-sales support provided by NCS also wasn’t up to the mark. When they raised these issues with the QH management it failed to intervene and resolve them. QH continued to enjoy strong brand-pull. In Class-C and -D cities, partners opined that with competition increasing QH needs to revisit its premium pricing since the MOP of QH products is 50-60 percent higher than those of Kaspersky. Many partners raised issues with regard to QH’s toll-free support which they said was constantly busy. However, they appreciated that the local engineers were accessible and quick in fixing any post-sales issue raised by customers. In July 2011 QH launched renewal packs with CDs to be sold over the
uick Heal (QH) retained its title as the most preferred in the antivirus (AV) category for consumers and SOHOs (1-5 users) followed closely by Kaspersky. eScan improved its channel preference to come third followed by K7. Symantec Norton was relegated to the last position. Net Protector failed to cross the eligibility mark of 10 percent.
Quick Heal
The winner in the last three years, QH did well to retain its crown as the most preferred consumer AV brand. The company polled the largest number of votes—29 percent of the total category votes—which is indicative of its wide coverage and channel connect. QH received high rating for brand awareness and customer marketing, post-sales support and channel marketing and training. Its channel policy and engagement was rated higher. A few large authorized subdistributors in states like UP,
Score Card Criteria
Quick Heal
Kaspersky
Escan
K7
Norton
Product availability
96.1
95.1
93.4
93.7
91.9
Price-performance
90.1
91.2
88.6 86.9 83.2
Channel profitability
88.5
84.8
83.3
84.4
75.4
Brand-pull and customer marketing
94.1
91.8
86.5
86.1
84.6
Channel marketing and training
88.6
85.1
86.2
83.5
73.8
Post-sales support
89.2
81.4
83.6
83.2
78.4
Channel policy and management
89.3
84.3
84.5
84.1
81.0
635.9
613.7
Final Score
606.1 601.9 568.3 *Scores out of 700
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counter. Earlier, the company sold scratch cards in Class-A cities while in smaller cities the renewal was done manually or over email.
Kaspersky
In 2011 Kaspersky consolidated its distribution with the appointment of an exclusive national distributor, Sakri IT Solutions. It also appointed RDs and gold partners, thus improving its market coverage and availability. Overall, Kaspersky polled 21 percent of the category votes. It continues to be strong in the south polling 50 percent of the votes. The company segregated its RDs into two categories in each region— one to sell its single-user product, the other to sell its 3-user product. Respondents from all regions (except the west) said that the new model helped streamline distribution; those in the west complained of frequent changes. Partners who voted from Maharashtra and Gujarat said that Sakri made frequent changes in the distribution policies; this created confusion and made it difficult to do business. Also, the sub-distributors that were removed by the company in OND on the pretext that they weren’t performing liquidated their inventory, thus disturbing the MOP. Kaspersky is rated as a very good quality product. The company also enjoys good brand-pull. The signing up of Sachin Tendulkar as brand ambassador has helped raise brand awareness and pull. One area where Kaspersky received low rating was post-sales support. Its toll-free support wasn’t operational during the better part of H22011. Although the company has changed its toll-free number, the problem still persists. In addition, there was no clarity provided to RDs and sub-distributors regarding who would provide the
local installation service which is still required in 25 percent of consumer sales. Partners said that to succeed Kaspersky needs to be more consistent with its policies. They want Kaspersky to create a proper incentive structure and not just provide ad hoc incentives. It also needs to have a stronger MOP system.
Survey Demographics Unique votes polled for Antivirus category: 345 North 23% East 11%
eScan
eScan improved its channel connect and preference in 2011 to take the third position. It polled 12 percent of the category votes. It polled nearly 60 percent votes from the west. According to respondents, in January and February 2011, eScan faced problems with installation, and the scanning slowed down the PC. Some partners opined that this was because eScan moved to a different AV engine. Partners said that the vendor worked over the problem by March 2011. Respondents informed that the vendor increased the billing price by `200 citing a rise in input costs during H22011; however, it also reduced the MRP on the package thus reducing the profit margin. The main complaint of respondents is that eScan is a push brand, yet the company isn’t doing enough of customer marketing. eScan’s post-sales support was enahnced in 2011. Respondents said it provided onsite resource for installing the software. They also appreciated the toll-free support. In early 2012 the company introduced a 4-CD pack which has been appreciated by all its partners. Partners opined that eScan keeps chaning its distributors frequently and to succeed it needs to have a consistent parnter policy.
South 29%
West 37% Region
Class A 19% Class B 28%
Norton, once regarded as the best in AV, has been relegated to the last position. Over the years, due to the lack of proper focus, Norton has lost the brand-pull it enjoyed earlier
K7 also improved its channel preference to move to the fourth position, polling 13 percent of the category votes. It polled nearly 70 percent of the
Partner 51%
Type of City
votes from the south but received no votes from the east. The company is considered a push brand, and its key USP is its pricing. Its AV has an end-user MOP of `200 for a single user, while the Internet security is available at `350. Respondents said that the quality of K7 products improved in 2011. While the 2010 version could not track all viruses, the 2011 version was more effective. Two schemes launched by the company—Virus Hunter and Wire Center—were appreciated mainly by the company’s authorized partners. Respondents said that K7 improved its post-sales support,
K7
Class C 53%
Non-Partner 49%
type of reseller
mainly the toll-free support which was enhanced from 9x7 to 24x7. In the south the company also provides onsite installation support, but that’s not the case in other regions like the west and north.
Norton
Norton, which was once regarded as the best in AV, has been relegated to the last position in channel preference. It polled 11 percent of the category votes. Most respondents agreed that Norton 360 is technologically the best product, and though the company became price-aggressive during 2011 it failed to create any excitement among channels and customers. Respondents said that over the years, due to the lack of proper market and channel focus, Norton has lost the brand-pull it enjoyed earlier, so today it is largely a push brand. The company also lacked any customer marketing initiative. Although the company introduced some channel schemes, respondents said that they did not avail of it because of the high target of `10,000 per month to be eligible for rewards. The company appointed field sales people to engage with its local sub-distributors and retailers in many states; however, respondents said there has been little improvement in the sales of Norton. n
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31
PC UPS
APC makes it a habit
A
PC once again emerged as the most-preferred PC UPS brand in the Channel Champions survey with Numeric coming a close second. Microtek came third with an improved channel preference. Intex showed improved channel connect but failed to make it to the final list as it got less than 10 percent of the votes.
APC
The company introduced new products to expand its overall portfolio in the 600VA-1,500VA category. The company launched models specifically for upcountry markets that can manage higher voltage and work on transformer-based input rather than SMPS. It added an extra socket to its products, thus allowing for three devices to be connected for back-up as compared to two sockets earlier. While there were no major availability issues during 2011,
respondents from cities like Sangli and Jamnagar complained of zero local billing and said that they had to source products from other places. APC is the most expensive brand among all the four vendors; its end-user MOP for the 600VA product is `2,100. APC increased its prices by around 12 percent during September 2011, the steepest rise among all UPS vendors. Its batteries are priced 10 percent higher than the competition at `700. Due to its high pricing partners said they have to compromise their front-end margins to sell in upcountry locations, hence they don’t make enough profit on APC. However, in Class-A cities, APC partners said that customers are willing to pay a premium for the brand. While APC enjoys a good brandpull in Class-A cities, in upcountry locations it doesn’t have strong brand recognition and mostly sells on resellers’ recommendations.
Score Card Criteria
APC Numeric Microtek
Product availability
96.0
Price-performance
89.1 87.9 86.4
Channel profitability
81.5
85.6
77.7
Brand-pull and customer marketing
85.4
82.4
82.2
Channel marketing and training
84.9
82.3
75.0
Post-sales support
88.9
86.7
81.7
Channel policy and management
88.5
85.5
86.1
Final Score
91.4
93.7
614.3 601.8 582.8 *Scores out of 700
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Due to APC’s high pricing partners said they have to compromise their front-end margins to sell in upcountry locations, hence they don’t make enough profit on it
Respondents said that they recommend APC because its product is reliable, its warranty support is good, and its batteries last 7-8 years. Respondents from Class-C cities said that APC should rationalize its prices or introduce cheaper models because the demand is now shifting to upcountry locations where customers are very cost-conscious. In channel marketing, while APC ran schemes for partners whereby it offered gifts like pen drives and digital cameras for monthly billing of five units and more, resellers complained that they received the incentives after six months and several follow-ups. In 2011 APC improved its postsales support significantly to receive the highest rating among all brands. In 2010 respondents had complained of 7-15 day delays in service turnaround; the company reduced this to 1-2 days in all cities. Respondents in the north and south said the company has increased the number of service centers in their regions. APC offers a 2-year onsite warranty on the UPS and 1-year warranty on the battery. It also offers
a 1-year extension pack for `4501,200 depending on the model.
Survey Demographics
Numeric
Numeric continued its hold on the south, polling 50 percent of the votes. While in the north and west the company received 24 percent votes each, in the east it got just 2 percent of the votes. As per the respondents, Numeric offers the best margins compared to all the other brands. Partners said they make a good upfront margin of `250-350 on the UPS as a 600VA UPS is billed to them at `1,600 and they sell it at `1,800-1,900. Numeric is regarded as a better quality product than Microtek. The company is focused on bundling its UPSs with assembled and branded PCs for school students and shops. It ran an end-user scheme which provided free school bags and free game CDs to students. It also offered a free 1-year warranty scheme during Q32011. The company received good ratings for channel marketing and training. It was visible at channel exhibitions and ran an attractive quarterly scheme which offered `180 per unit back-end for 500 units to subdistributors and `100 per unit for more than 20 units sold by resellers. Numeric offers a 2-year onsite warranty on the UPS and 1-year on the battery. However some respondents in the west, especially in cities in Gujarat and the north, complained that they had to carry the UPS to the service centers. The TAT for Numeric is 24-72 hours. The company has a Tamil and Hindi toll-free service, something which is not available for any other brand. While respondents from the south praised the channel engagement from local managers who visited them regularly and discussed ways to achieve targets, those from the west and north said that the quality of channel managers in their regions is not up to the mark
Unique votes polled for PC UPS category: 255 South 26%
North 26% East 9%
West 39%
Class A 23% Class B 28%
Region
Partner 47%
Type of City
and that some of them don’t even have basic product knowledge.
Microtek
Microtek came third in the channel satisfaction survey with an improved channel preference in 2011 compared to 2010. While the company continued to be strong in the north from where it polled 50 percent of the votes, it also improved its tally from the east and south. It polled nearly 96 percent of its votes from Class-B and -C cities which suggests that it is focused on upcountry locations. Microtek introduced new models
Respondents from the west and north said that the quality of Numeric’s channel managers is not up to the mark and that some of them don’t even have basic product knowledge
Class C 49%
Non-Partner 53%
type of reseller
in 2011 with improved back-up time and battery life. Its portfolio ranges from 600VA to 1,500VA. Microtek’s 600VA UPS is available at an end-user MOP of `1,800. It is considered a value-formoney brand by respondents. Its battery prices ranged from `550 to `600. The company has a backend incentive policy in place for authorized partners; monthly incentives range from 2 to 4 percent. The incentive payout is within 45 days and hassle-free. During June and July 2011 the company ran a customer scratchcard scheme wherein it offered buyers the opportunity to win mobile phones; this, respondents said, boosted sales. According to the respondents, the company is regular in its channel communication and updates them through SMS or mailers about the latest launches. Channel managers are also frequent in meeting partners. Microtek received low scores on warranty support. While the vendor offers a 2-year onsite warranty on the UPS and 1-year on the battery, most respondents (except in the north) said that customers don’t get the onsite warranty and have to carry their products to the service centers. n
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microprocessor
AMD ends wait
Survey Demographics
A
MD took advantage of the fault-lines in Intel’s channel engagements to emerge as the Channel Champion in the category for the first time.
AMD
In 2010, the biggest grouse for partners was that AMD was focused only on OEMs, trying to crack big deals, while the vast channel community felt ignored because of the lack of concrete channel engagement. In 2011, with its Smart Partner program and investments in creating a strong field sales team with a presence in 50 cities, AMD boosted its channel preference manifold to emerge as the winner. AMD won appreciation for its one-on-one channel engagement from many respondents who said that its sales representatives met them regularly and shared info about new products and prices. A number of small system builders said that these representatives visited their premises to train them and their employees to position AMD as a strong price-performance alternative to Intel. AMD also worked with motherboard vendors to ensure the availability of compliant motherboards. Companies such as Asus and Gigabyte offered several models during 2011, giving partners a wider choice. AMD created bundles through distributors Rashi for Asus motherboards and Ingram Micro for Gigabyte. Respondents said that on the overall product portfolio AMD cannot match the firepower of Intel as it lacks a compelling product line to take on Intel’s secondgeneration Core i3, i5 and i7 processors. Realizing this, AMD adopted a strategy of leveraging its graphics brand ATI to focus on the gaming and graphics market. AMD partners who took the survey admitted that AMD hasn’t been as successful in creating a new category in the form of APU. They opined that although the APU delivers
Score Card Criteria AMD Intel Product availability
92.5
Price-performance
95.1 96.2
94.1
Channel profitability
83.3
76.6
Brand-pull and customer marketing
83.5
86.0
Channel marketing and training
83.8
83.1
Post-sales support
90.3
83.2
Channel policy and management
95.8
87.3
Final Score
624.3 606.5 *Scores out of 700
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Unique votes polled for Microprocessor category: 253 North 21%
South 30%
East 12% West 37%
Region
Class A 18% Class B 25%
Class C 57%
Type of City
Partner 40%
Non-Partner 60%
type of reseller
a good price-performance, the company needs to do more. Respondents noted that the increasing visibility of AMD in the branded notebook space is having a positive rub-off on customer perception about the AMD brand, and that this helped their assembled PC business. In Q22011 AMD refocused on white box server platforms by aligning with Asus, Tyan and Supermicro for the dual socket Operon 6100 series platform. However, respondents said that AMD needs to do more in terms of the availability of building blocks and customer marketing to increase its share in the white box server market.
Intel
Intel’s biggest strength was its product portfolio, but its overall channel engagement took a beating. The biggest complaints were the lack of channel profitability and the overall lack of channel initiatives to keep the system builder market thriving. While Intel scored high on priceperformance and product availability, a series of incidents got it negative votes. Respondents said that there was a product shortage during Q12011 when Intel globally pulled back deliveries of its Sandy Bridge platform due to a technical flaw. The company re-launched Sandy Bridge in Q22011 and had a smooth transition from the older Core i platforms to second-generation platforms. Intel witnessed a major shakeup in its channel management team with several senior staffers leaving; this affected channel momentum and connect. Some large system builders said that Intel became too stringent in price approvals for large deals during 2011. This resulted in delays in price clearances for regional OEMs on government purchases—and, according to a few respondents, loss of the orders. On the server processor front, Intel cut the prices of its entry-level Xeon 5500 and 5600, and channels were happy with the focus on the white box server market. A number of respondents expressed dissatisfaction with the warranty support. While the impact was more on motherboards, partners scored negatively on the processor front too. Channels want Intel to re-create demand for Intel-based white boxes through regular programs. n
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motherboard
Asus still the most preferred
A
sus remained the most preferred motherboard brand in the CRN Channel Champion Survey 2011. Just like last year, significant credit for Asus’ success lies with its sole national distributor, Rashi Peripherals, which helped the brand achieve strong mind- and market-share. Gigabyte, which came second, increased its channel preference over Intel which came a distant third. Other brands such as MSI, Biostar, Digilite and Mercury polled less than 10 percent of the category votes and therefore did not qualify for the final ranking.
Asus
Asus scored high on all channel preference parameters such as product availability, brand-pull, warranty support, product quality and channel marketing and training. The vendor consolidated its market leadership on the back of the strong mind-share it has been able to acquire thanks to a channel-friendly
distributor like Rashi which not just manages the reselling of the brand but also provides post-sales support and manages all channel marketing and incentives. Asus introduced several new models during 2011 for Intel and AMD platforms. Respondents noted that Asus offers the widest choice across all Intel platforms and across all price options. The company has nearly 40 SKUs available in the market in all cities. During the first two quarters Asus announced aggressive price cuts on its Intel G41-based motherboards. However, channels noted that Asus was not very aggressive when it came to the newer H61 boards, where they carried a premium over Gigabyte. Asus also had the widest offerings on the AMD platform with as many as 15 models available. Respondents noted that Asus was the first to launch the 990FX, 880G, A50 and A55 platforms, and with AMD doing well this worked for system builders. Respondents said that Asus
Score Card
Gigabyte
Criteria
Asus Gigabyte Intel
Product availability
98.1
Price-performance
86.2 85.5 83.5
Channel profitability
79.2
82.1
76.8
Brand-pull and customer marketing
87.6
84.0
86.8
Channel marketing and training
87.9
86.9
82.6
Post-sales support
87.0
84.1
79.4
Channel policy and management
93.8
88.8
85.1
Final Score
95.8
95.3
619.8 607.2 589.1 *Scores out of 700
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ran several channel schemes for its gaming and workstation motherboards during 2011. These schemes were designed for even smaller partners to participate as they had an eligibility criterion of just five units per quarter. The company also pushed graphic cards which helped its motherboard business. The company’s post-sales support received high ratings, with respondents even in smaller cities reporting that the TAT for repairs and replacements had reduced. The TAT for repairs and replacements in cities with Rashi service centers was reported to be up to 48 hours, while that in upcountry locations was less than five working days—the quickest among all brands. While channels expressed overall satisfaction with Asus, a few partners expressed concern over the company’s plans to enter the market with its brand of desktops. Respondents felt that this would impact their white-box business, and opined that Asus should also have a white-label option to protect the system builders’ business.
Gigabyte, which came second, increased its channel preference over Intel. It scored the highest in channel profitability among all vendors. The company was aggressive with its product refreshes and availability during 2011. Listening to complaints from system builders in 2010 about the lack of a strong AMD portfolio, Gigabyte launched several new motherboards in 2011. Gigabyte was the first to introduce aggressively-priced motherboards for the new Intel chipsets. In Q22011 it launched H61-based models priced at less than `5,000 when other brands were still pushing the G41 motherboards. Similarly, Gigabyte was the first to launch models for
Intel’s X79 platform. According to respondents, Gigabyte continues to be perceived behind Asus and Intel in product quality and brand-pull. Gigabyte’s leading partners admitted that the brand lacks a pull as strong as Asus even though its price-performance and availability are as good as Asus’ if not better. Gigabyte scored low on channel marketing and training. While the company did run channel incentive schemes during the year for tier2 and -3 partners, these schemes, according to respondents, weren’t as attractive as those floated by Asus. On post-sales support, while there were no major complaints reported during 2011 from Class-A cities, respondents in Class-B and -C cities were critical of Accel Frontline’s pickup centers and the TAT which in some cases went up to 30 days.
Intel
Intel, which enjoyed a strong channel preference till 2008, has been gradually losing its channel connect largely due to the lack of a strong focus and channel strategy for motherboards. While Intel offers more than 60 desktop motherboard SKUs, respondents noted that at any point of time availability through distribution channels was limited to less than a dozen SKUs. A number of partners alleged that on several occasions Intel distributors pushed motherboards as forced bundles with processors; this practice was not liked by channel partners. Intel’s lack of customer marketing under its Genuine Intel Advantage program has led to the weakening of its brand awareness and customerpull. Respondents said that unlike in the past customers no longer insist on an Intel motherboard along with the processor. To its credit, Intel became aggressive with its motherboard pricing during 2011. Respondents informed that the company lowered
Survey Demographics Unique votes polled for Motherboard category: 341 North 21%
South 29%
East 13% West 37% Region
Class A 19% Class B 26%
Partner 46%
Type of City
its prices on new motherboards faster than in the past. In fact two of its popular H61 motherboards— DH61WW and DH61BE—were priced less than Gigabyte’s and Asus’. Its very aggressive price cuts on server boards (especially on the newly introduced S1200BTS and the older S5500 platform) were also appreciated. During the HDD shortage Intel worked with its distributors to make HDDs available; however, a few partners disliked the fact that HDDs were force-bundled. Intel partners welcomed the revamp of the Intel Flex Plus channel program which they said provided
Intel’s post-sales support received very low ratings with several respondents complaining about the quality of service from its new national ASP, Digicare
Class C 55%
Non-Partner 54%
type of reseller
for more incentives on high-end boards and also extended more overall benefits than before. The company also pushed its mini-ITX platform as well as thin ITX platform targeting the AIO market. Respondents noted that in terms of innovation and product choice Intel has a very wide range, but that the company is not doing enough to educate channels about the opportunities or educate customers about new form factors and technologies. Intel’s post-sales support received very low ratings with several respondents complaining about the quality of service from its new national ASP, Digicare. The company signed up Digicare as its sole national ASP in Q2 replacing Redington. Respondents said that Digicare initially enforced harsh RMA guidelines—including rejecting motherboards having minor scratches—which went against acceptable market norms. After strong protests by partners, both Intel and Digicare later relaxed the RMA policy in accordance with Indian standards. Respondents complained of unacceptable delays in repairs and replacements; these ranged from four to 40 days depending on the motherboard SKU and the location of the service center. n
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hard disk drive
Western Digital springs a surprise
S
eagate lost the title after four years of consecutively winning the CRN Channel Champion crown in the Hard Disk Drive (internal and external) category. While Seagate polled 55 percent of the votes, its overall channel preference suffered due to an increase in product failures and the lack of quality post-sales support. Western Digital (WD), with its streamlined distribution, better price-performance and improved post-sales support emerged as the most-preferred HDD brand. Hitachi, Samsung and Toshiba (external drives) received less than 10 percent of the votes and hence failed to make it to the final ranking. The acquisition of Samsung by Seagate and Hitachi by WD resulted in a consolidation of the industry. The flash floods in Thailand disrupted the HDD global supply chain and created a shortage. 2011 was an eventful year for the HDD market—the acquisition of Samsung by Seagate and Hitachi by
Western Digital resulted in a major consolidation, while the flash floods in Thailand threw a spanner in the global supply chain and created an unprecedented shortage that many believe could last till 2012. The shortage led to wild swings in prices—from `1,800-2,000 for a 500 GB internal drive in September it shot up to `4,800-5,200 during December with current prices at `3,500-3,800. During Q42011, most respondents said that their overall PC component business suffered by 5060 percent due to the HDD shortage. Both Seagate and Western Digital drastically reduced the warranty period during the year. Seagate reduced it from five years to three years in Q12011, from three years to two years in November, and in December to one year citing shortage as the key reason. WD reduced it from five years to three years to two years. While external drive sales took a hit during this period, respondents noted that overall during 2011 the
Score Card Criteria
Western Digital
Seagate
Product availability
94.6
96.7
Price-performance
89.1 85.9
Channel profitability
82.1
80.4
Brand-pull and customer marketing
82.8
84.1
Channel marketing and training
72.5
75.9
Post-sales support
86.7
75.7
Channel policy and management
78.7
81.7
Final Score
586.5 580.4 *Scores out of 700
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Both Seagate and WD drastically reduced the warranty period during the year. Seagate reduced it from five years to one while WD reduced it from five years to two external drive market grew at more than 50 percent, while the internal drive market grew in single digits. External drives constitute less than 15 percent of the overall HDD market.
Western Digital
The company added Ingram Micro and Global Infonet as distributors alongside Redington; this improved the market coverage and availability of its products. WD polled 25 percent of the votes. WD was also rated high on price-performance. With a price 5-10 percent lower than Seagate, it was also rated better than Seagate on product quality with very low failure rates. In external drives respondents said that WD drives were better than Seagate as their range is slimmer than Seagate. Many respondents appreciated that WD sold its external drives with USB 3.0 cable while Seagate customers had to buy it; the original cable from Seagate cost `1,500. Respondents agreed that WD lacks the brand-pull that Seagate has; they also gave low rating to the company on channel marketing and training, and customer marketing. One area where WD received very †
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hard disk drive
high rating was post-sales support.
Following complaints about a long TAT for repairs and replacements, WD replaced Intarvo (as its national RMA and warranty provider) with Flextronics in May 2011. Flextronics, with its franchisee network of service providers, improved the warranty and RMA experience with the TAT reduced to 3-4 days in metros and 7-10 working days in other cities. Partners also appreciated the pick-up and drop facility that WD offers partners across regions. A few large volume partners from the north and west complained of an increase in parallel imports of WD internal drives. They alleged that some of the old sub-distributors who were removed by WD were involved in parallel imports; this affected the MOP by 10-12 percent. They said that despite complaints to WD, the company didn’t do much to resolve the issue. WD doesn’t have too many feet on the ground and hence lacks oneon-one engagement even with some of its authorized sub-distributors in Class-B and -C cities. The company also did a poor job of communicating product pricing and availability with its authorized distributors during the HDD shortage.
Seagate
While Seagate continues to be the largest-selling HDD brand with the widest market coverage and a large channel base, the company faltered on product quality and quality of post-sales support. Both these issues were highlighted in the 2010 survey, but during 2011 respondents reported that the problems increased further. According to respondents, the fault rate for Seagate products has increased over the past couple of years. While the industry norm is 2 percent, respondents said it ranges from 3-4 percent for Seagate. Authorized partners said that the product fault rate has increased ever
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Survey Demographics Unique votes polled for Hard Disk Drive category: 396 North 19% East 9%
South 28%
Class A 27%
Partner 26% Class C 47%
West 44%
Class B 26%
Region
Type of City
since the company did away with the sea-shell packaging two years back. A few of these partners informed that Seagate has finally taken cognizance of this issue and has assured them that it would launch the sea-shell packaging again in the next few months. The issue of increased fault rate has been further accentuated because of the company’s weak post-sales and RMA support provided by Accel Frontline. Respondents complained that customers have to wait hours in long queues at the service centers to check in the faulty drives. The TAT has increased to 25-30 days even in Class-A and -B cities where Accel has
Respondents complained that Seagate customers have to wait hours in long queues at the service centers to check in the faulty drives
Non-Partner 74%
type of reseller
service centers. In smaller cities respondents said they have been urging Seagate for years to launch a pick-up service but it is yet to do so. The decision by Seagate to reduce its warranty period to one year (as compared to WD’s two years) has also created a negative sentiment among the channel with regard to the company’s overall warranty support. Many Seagate authorized importers said that the company has clearly communicated to them that its global priority is to cater to OEM supplies and that consequently the supplies to the channel will continue to be low throughout 2012. Several volume partners informed that Seagate’s supply-to-demand ratio is only 30 percent following the shortage, and that as a result they have no alternative but to stock and sell WD products which have higher availability. Respondents appreciated the training program started by Seagate in 2011 for partners’ engineers once every year. They also appreciated the fact that Seagate sent out regular communications on pricing and the status of product availability during the shortage. In 2012 Seagate, listening to partner feedback, has started bundling a USB 3.0 cable with its external drives. n
memory module
Zion is back
Z
ion, which won the memory crown in 2009, returned to the pole position in the CRN Channel Champions 2011 survey. Transcend came second as a result of a much improved show, while last year’s winner Kingston came third. Specialist memory maker Corsair was voted fourth, while AData came fifth.
Zion
Zion scored high on post-sales support, product availability, channel marketing, and channel policy and management. Abacus Peripherals, which manufactures the memory modules in Daman, also has the widest sales and support network across 23 locations. The vendor offered over-thecounter replacement of memory modules, and its stockists acted as a single-point contact for replacements. This meant that a partner essentially dealt with the same entity for sales and support. In 2011 Zion started offering modules for PC OEMs such as HP and
Dell. What appealed most to smaller partners from Class-B and -C cities was the availability of local company representatives who were quick to resolve issues. The company also offered free gifts worth `100 with the replacement of a defective RAM. In 2011 the pull among system builders for Zion significantly increased due to its good performance image and channel schemes. Its scheme in Q3 and Q4, whereby channels could earn rewards (including BlackBerries) was appreciated by resellers. In Class-B and -C cities, due to its local branch presence and good warranty support, Zion saw more demand than even MNC brands such as Kingston and Transcend. Being a local manufacturer, Zion is almost immune to MOP issues and parallel imports that continued to plague brands like Kingston and Transcend.
Transcend
Transcend improved its channel
Score Card Criteria
Zion Transcend Kingston Corsair AData
Product availability
94.7
Price-performance
91.7 87.9
88.5 87.5 84.0
Channel profitability
85.1
80.9
79.2
78.7
80.7
Brand-pull and customer marketing
88.1
88.1
88.5
82.3
78.0
Channel marketing and training
81.2
74.9
76.5
76.2
73.3
Post-sales support
83.8
81.0
74.5
80.0
78.9
Channel policy and management
85.1
81.5
76.3
77.1
78.3
Final Score
93.7
91.1
89.1
90.1
609.7 588.0 574.6 570.9 563.3 *Scores out of 700
preference over 2010 when it was criticized for its lack of India focus, increase in parallel imports, and inadequate post-sales support. While parallel imports continued to be an issue, respondents said the quantity came down during 2011. The company also ran various campaigns to promote its authorized national distributors, Mediaman and Supertron Electronics. This helped the authorized channel to counter the impact of parallel imports. Transcend’s post-sales support improved considerably with national ASP Accel Frontline stocking more replacement spares. Respondents said that Transcend became active in channel marketing and ran many schemes during 2011. Some schemes were directly launched by the company while the others were introduced by its distributors. The company conducted several BTL activities on the retail front as well as online campaigns during festivals for its non-memory products. This helped improve the overall demand for Transcend and had a positive rub-off on its memory business as well. Most respondents said that Transcend enjoys strong brand recognition in India. However, since Transcend’s business in India is still remotely managed from Taiwan, channel engagement and management is lacking. Respondents said that having local managers would definitely help the company gain more market share.
Kingston
Kingston had won the 2010 memory crown based on a series of activities it undertook to reduce parallel imports, improve post-sales support, and enhance channel marketing and engagement. However in 2011 Kingston frittered away the channel preference and satisfaction gains made last year. Most
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memory module
respondents reported an increase in
parallel imports compared to 2010. They said it impacted the MOP by 10-15 percent, thus impacting channel margins. The company also received low scores for its post-sales support as compared to 2010 since the channels reported delays in repairs and replacements. Nevertheless, the company scored high on brand-pull and marketing. Kingston has the widest memory portfolio including server and modules for PC OEMs. It enjoys strong brand recognition among both customers and channels. Respondents appreciated some of the company’s marketing initiatives such as doing events at colleges and organizing a PC-assembling competition. Kingston has the widest market coverage and channel connect, and is also regarded as a good quality brand. Many Kingston sub-distributors said that in 2011 the company moved all decision-making to Taiwan and as a result decision-making on schemes, marketing approvals and other partner support suffered. While there were no availability issues with regard to its generic modules, there were delays in sourcing server RAM and third-party PC OEM modules. Kingston partners felt that the company was more focused on its SSD and USB drive business with decreasing focus on memory products and channels. Some Kingston authorized subdistributors informed that a competing DRAM vendor ran a campaign among channels in Class-B and -C cities which claimed that Kingston ValueRAM uses second- and thirdgrade memory. While this campaign had little impact on their business, they said that when they brought this matter to Kingston’s notice the company did nothing to address the negative campaign.
Corsair
Corsair is a specialty memory brand focused on high-performance, gaming and graphics applications. Due to its
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Survey Demographics Unique votes polled for Memory Module category: 291 North 21%
South 28%
East 13% West 38% Region
Partner 23%
Class A 21% Class B 28%
Class C 51%
Type of City
niche focus and limited market share, the company received only 12 percent of the category votes. The company mostly received votes from large cities where the gaming and workstation business is large. Corsair is considered to have the best product quality, and authorized partners said there have been few or no warranty issues with Corsair. However, they noted that the price of Corsair memory is 10-20 percent higher than every other competing product, including Kingston’s and Transcend’s premium memory modules. In 2011 the company ran schemes wherein memory products were
Sub-distributors said that Kingston moved all decision-making to Taiwan and as a result decisionmaking on schemes, marketing approvals and other partner support suffered
Non-Partner 77%
type of reseller
bundled with other Corsair products such as chassis, coolers and SMPS for the gaming and HPC market. Corsair was also the first to launch the triple and quad channel memory upgrade targeting the latest Intel and AMD platforms.
AData
AData showed aggression in 2011, when during some periods it offered prices that were less than those of other brands. Its distributors Rashi ran bundled schemes with Asus motherboards which helped the sales of AData memory. AData came out with partner schemes every month in which it offered gifts like memory modules, pen drives and back-packs. It also offered back-end rebates of 2-3 percent on its entire product line. Since AData is not over-distributed, channels said they made 7-8 percent front-end on the brand. While the overall supplies were good, there were delays in the availability of the high-end 1600 MHz and above memory modules. Partners said that the company conducted channel meets and roadshows during 2011, and was consistent in its channel communication. While the AData product line is said to be good, the vendor did not offer higher-end memory or server RAM in the country. n
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