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editorial

What the channel wants

I

n this edition, we present the first set of findings of the Eleventh Annual CRN Channel Champions 2013 Survey whereby we share the results of 11 component and consumer product categories. In the next edition, June 1, 2013, we will publish the results for commercial products. Over the years the CRN Channel Champions Survey has become the voice of the channels, enabling them to express their opinions and narrate their experiences regarding the on-ground performance of various brands on key parameters such as product availability, channel profitability, customer marketing and training initiatives. In the consumer category we discovered that there has been a marked shift in the past few years, and that the channel’s expectations from vendors have changed significantly. Consumer products have been commoditized, and the technology and innovation differential between different vendors is negligible. Along with commoditization, the convergence of digital technologies is compelling vendors to experiment with Volume 3, Issue 02

Managing Director Printer & Publisher Associate Publisher & Director Executive Editor Contributing Editor Assistant Editor Principal Correspondent Senior Correspondent

: : : : : : : :

Joji George Kailash Pandurang Shirodkar Anees Ahmed Dhaval Valia Ramdas S Sonal Desai Abhijeet Mukherjee (Mumbai) Amit Singh (Delhi)

Design : Deepjyoti Bhowmik Art Director Senior Visualiser : Yogesh Naik : Shailesh Vaidya Senior Graphic Designer Graphic Designer : Jinal Chheda, Sameer Surve Marketing : Samta Datta Marketing Head online Manager—Product Dev. & Mktg. : Viraj Mehta : Nilesh Mungekar Deputy Manager—Online Web Designer : Nitin Lahare : Aditi Kanade Sr. User Interface Designer Operations Head—Finance : Yogesh Mudras : Satyendra Mehra Director—Operations & Administration Management Services : Jagruti Kudalkar Sales bangalore Manager—Sales : Sudhir K sudhir.k@ubm.com (M) +91 9740776749

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different go-to-market strategies that can provide wider and deeper target audience coverage. As vendors explore new market routes, the IT channel too is exploring new vendor alignments. One thing is for sure: vendor loyalty is out of the window. Factors such as which vendor offers higher profitability, has clear policies and transparent channel management, and has no-headache post-sales support are top of the channel’s agenda. Stocking products for higher backend rebates or incentives is no longer the bait resellers are willing to take. Instead, the IT channel is keen to align with vendors which have optimum distribution and maintain uniform market operating prices. This is compelling vendors to introduce sell-out incentive policies, restrictions on inventory, and MOP management policies. The CRN Channel Champion 2013 crown has gone to vendors which have realigned their GTM strategies and channel policies to reflect the new realities of the marketplace. I thank the channel partners—590 in all—who voted for the component and consumer product categories. It’s your voice we are airing. n E-mail me at dhaval.valia@ubm.com

Kangkan Mahanta kangkan.mahanta@ubm.com (M) +91 8971232344 Delhi : Sanjay Khandelwal Senior Project Manager sanjay.khandelwal@ubm.com (M) +91 98117 64515

USA Huson International Media (West) Tiffany DeBie Tiffany.debie@husonmedia.com Tel +1 408 879 6666 Fax +1 408 879 6669

Rajeev Chauhan rajeev.chauhan@ubm.com (M) +91 9811820301 mumbai : Ranabir Das Manager—Sales ranabir.das@ubm.com (M) +91 9820097606

Huson International Media (East) Dan Manioci dan.manioci@husonmedia.com Tel +1 212 268 3344 Fax +1 212 268 3355

Japan Pacific Business (PBI) Shigenori Nagatomo nagatomo-pbi@gol.com Tel: +81 3366 16138 Fax: +81 3366 16139 South Korea Young Media Young Baek ymedia@chol.com Tel: +82 2227 34819 Fax: +82 2227 34866

EMEA Marvin Dalmeida Huson International Media marvin.dalmeida@ubm.com Gerry Rhoades Brown, gerry.rhoadesbrown@husonmedia.com Tel: +44 19325 64999 Fax: + 44 19325 64998 (M) +91 8898022365 production Important Production Manager : Prakash (Sanjay) Adsul Every effort has been taken to avoid errors or omissions in this magazine. In spite of this, errors may creep in. Logistics Any mistake, error or discrepancy noted may be brought to our notice Deputy Manager : Bajrang Shinde immediately. It is notified that neither the publisher, the editor or the seller will be responsible in respect of anything and the consequence of Subscriptions & Database anything done or omitted to be done by any person in reliance upon the Manager : Manoj Ambardekar content herein. manoj.ambardekar@ubm.com This disclaimer applies to all, whether subscriber to the magazine or not. For binding mistakes, misprints, missing pages, etc, the publisher’s Senior Executive : Deepanjali Chaurasia liability is limited to replacement within one month of purchase. deepa.chaurasia@ubm.com © All rights are reserved. No part of this magazine may be reproduced or copied in any form or by any means without the prior written permission of the publisher. Head Office All disputes are subject to the exclusive jurisdiction of competent courts UBM India Pvt Ltd, 1st floor, 119, Sagar Tech Plaza - A, Andheri-Kurla Road, Saki Naka Junction, Andheri (E), Mumbai 400072, India and forums in Mumbai only. Tel: 022 6769 2400; Fax: 022 6769 2426 While care is taken prior to acceptance of advertising copy, it is not posPrinted and Published by Kailash Pandurang Shirodkar on behalf of UBM sible to verify its contents. UBM India Pvt Ltd. cannot be held responsible India Pvt Ltd, 6th floor, 615-617 Sagar Tech Plaza - A, Andheri-Kurla Road, for such contents, nor for any loss or damages incurred as a result of Saki Naka Junction, Andheri (E), Mumbai 400072, India. transactions with companies, associations or individuals advertising in its Executive Editor: Dhaval Valia newspapers or publications. We therefore Printed at Indigo Press (India) Pvt Ltd, Plot No 1c/716, recommend that readers make necessary inquiries before sending any Off Dadaji Konddeo Cross Road, Byculla (E), Mumbai 400027 monies or entering into any agreements with advertisers or otherwise RNI No. MAHENG/2011/39915 acting on an advertisement in any manner whatsoever.


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Consumer desktop

Lenovo continues to lead Consumer Notebook

27

Lenovo laps it up PRINTER

28

HP is the winner MONITOR

30

AOC springs a surprise HOME NETWORKING

32

Digisol retains top slot 34

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ANTIVIRUS

Fourth in a row for Quick Heal PC UPS

APC all the way MICROPROCESSOR

Intel cruises past AMD MOTHERBOARD

Intel back to its winning ways HARD DISK DRIVE

Western Digital outscores

MEMORY MODULE

Zion on top again


methodology

Choosing India’s most channel-friendly IT vendors

W

e present the Channel Champions 2013 rankings for components and consumer products in this edition. In the next edition of June 1, 2013, we will feature the results for commercial products. The annual CRN Channel Champions Survey—now in its 11th year—is acclaimed as the most comprehensive channel satisfaction survey in the country. The main objective behind this 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

Nearly 590 unique channel partners voted for the components and consumer products categories in FY2012-13, compared to 584

C

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in FY2011-12, across 224 cities through an online poll that ran from January 15 to February 25, 2013. With each unique reseller voting for an average of seven product categories, we received a total of 4,156 vendor evaluations across 11 product categories compared to 3,822 evaluations in FY2011-12. For each product category the unique respondents voted their vendor preference and satisfaction on seven key criteria and 19 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, reliability, 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

hannel Champions

Product Categories

FY2012-13 FY2011-12 Winners Winners

Consumer Desktop

Lenovo Lenovo

Consumer Notebook

Lenovo Sony

Printer

Hewlett-Packard Epson

Monitor

AOC Samsung

Home Networking

Digisol Digisol

Antivirus

Quick Heal

PC UPS

APC APC

Microprocessor

Intel AMD

Motherboard

Intel Asus

Hard Disk Drive

Western Digital

Memory Module

Zion Zion

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Quick Heal

Western Digital

backend incentives that resellers could earn on tactical schemes and strategic partner programs. It also included MOP management of the vendors as that is a critical factor in maintaining pricing parity in the market and allowing partners to make predictable profits. Brand-pull and customer marketing: This criterion includes the brandpull enjoyed by vendors among end-customers, 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; channel meets for product training and providing 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 on the seven key criteria and 19 sub-criteria. It must be mentioned here that the Channel Champions survey is openended, 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


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methodology

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 Desktop category received 414 unique votes from 414 unique resellers, so any vendor who got less than 40 votes did not make it to the final rankings table. HCL for instance polled less than 40 votes and thus failed to make the cut. 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 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

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S

urvey Demographics

Total unique votes polled: 590

North 26% East 16%

Total vendor evaluations: 4,156

South 27%

West 31%

Region

Class A 25% Class C & D 56%

Class C 19%

Type of City

leading B2B research agency. The CRN editorial team then conducted a series of qualitative interviews with the survey respondents. For every product category we conducted 25-35 qualitative interviews to understand the voting patterns and get details

Partner 45%

Non-Partner 55%

type of reseller

about the strategies and policies of the vendors that worked positively or negatively for the channels. In all, the editorial team conducted close to 325 qualitative interviews for the 11 components and consumer products category featured in this edition. n


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Consumer desktop

Lenovo continues to lead

I

n the desktop & AIO category, the competition was close and only a few points separated the various players. Lenovo retained its Channel Champion crown scoring high on channel profitability, brand-pull and customer marketing, and channel marketing and training. Acer stood second with the improvement in its channel policy and management compared to FY2011-12. Hewlett-Packard came third owing to its low focus on desktops. Dell finished at the bottom due to its lower aggressiveness on the desktop front. HCL, which was among the finalists last year, polled less than 6 percent of the category votes and thus failed to make the final list this fiscal.

Lenovo

Lenovo kept up its aggression on the consumer desktop front; it opted for exclusive regional distributors for desktops and AIOs in some parts of the country.

S

The company was focused on its desktop and AIO range, and added or refreshed more than 20 SKUs. Its entry-level desktop started at `18,000 while an AIO sporting a dual-core Celeron started at `21,000. Respondents said that Lenovo’s desktops remained about 3-4 percent cheaper than HP’s and Dell’s, but about 3-5 percent more expensive than Acer’s. Lenovo offered the maximum SKUs in AIOs among all vendors, and was the most visible AIO brand in the country. According to the respondents, Lenovo passed on customer leads to exclusive partners regularly. Many partners said that this was one of the most appreciated initiatives and that they got an average of 10 leads a week. Regarding channel profitability, partners said that Lenovo’s incentive and backend rebate structure is better than the competition, and that they got their backend payments in time. The company was most aggressive with its customer marketing; throughout the year it ran schemes

core Card

Criteria

Lenovo Acer HP Dell

Product availability

97.9

Price-performance

86.4 83.4 86.0 87.0

Channel profitability

74.8

72.9

69.9

70.4

Brand-pull & customer marketing

82.6

81.6

79.8

74.2

Channel marketing & training

64.9

61.2

63.7

58.6

Post-sales support

77.7

81.5

79.1

83.8

Channel policy & management

81.3

82.2

76.6

76.2

Final Score

96.3

97.6

96.7

565.6 559.1 552.7 546.9 *Scores out of 700

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Lenovo continued its policy of not allowing RDs to stock more than three weeks inventory. This ensured that there was no pressure on partners to liquidate, and MOP remained stable such as a free subscription to McAfee AV. For channel marketing too the company had year-round schemes. Lenovo continued its policy of not allowing RDs to stock more than three weeks inventory. This ensured that there was no pressure on its volume partners to liquidate, and also the MOP remained stable.

Acer

Acer retained its second position in the CRN channel satisfaction survey as it significantly improved its channel management and its warranty support. In FY2011-12 Acer partners had complained about the frequent changes to channel policies and the volume partner network. Considering this feedback, Acer decided not to change its channel policies for at least two years. This, according to the respondents, has given stability to their Acer business. During the last fiscal Acer combined its commercial and consumer PC units. Partners selling both commercial and consumer PCs stated that the common team and single rebate program helped simplify channel engagement. Acer made its 3-year onsite warranty standard to all desktops;


S

this, respondents said, gave the vendor an edge over the competition. Acer continued to be the most price-aggressive, and, according to respondents, was 3-5 percent cheaper than Lenovo and 7-10 percent cheaper than HP. Respondents noted increased aggression in customer marketing by Acer with year-round schemes ranging from a free 3-year AV license to discount vouchers of online portals. The company ventured late into the AIO segment and launched its Aspire Z series in early 2013. Partners opined that Acer needs to create a strong AIO play because it’s a high-growth segment.

Hewlett-Packard

Low attention to desktops was the main reason why HP came third in channel satisfaction in the desktop & AIO category. The other factor which impacted its channel preference rating was the lack of aggression and focus during the first half of FY2012-13. In H2FY2012-13, HP introduced its Pavilion P2 range with the entrylevel model at `23,000; respondents saw increased traction of the P2 range because of its power-saving features. During H2 HP also introduced six new SKUs; however, because of the lack of aggressive pricing they failed to make a dent in the market. Most respondents said that HP charges a premium over other brands though it’s not a market leader, and that they could have done more business had HP been aggressive on prices. While many HP partners praised the IPG-PSG integration because it has given them additional revenue opportunity of 10-15 percent, they noted that the integration has led to a significant reduction in the sizes of HP’s teams which in turn has affected channel management. They opined that most channel managers seemed over-burdened with targets and could not devote time to partners. HP retailers who took the survey appreciated the company’s initiative to re-brand its exclusive retail stores

urvey Demographics Unique votes polled for Desktop category: 414

South 22% North 30%

East 15% West 33%

Class A 21% Class C & D 58%

Region

Dell came last in the channel preference survey largely because of its low attention to desktops.

In FY2011-12 Acer partners had complained about the frequent changes to channel policies. Considering this feedback, Acer decided not to change its channel policies for at least two years

Non-Partner 41%

Type of City

and offer in-store sales support through its on-field staff. HP’s volume partners reported high channel inventory in Q3FY2012-13 as the company oversupplied in the market to meet its year-end targets (HP’s fiscal ends in October). With regard to brand-pull HP enjoys strong brand recognition. It ran schemes that offered goodies like a 2-year extended warranty and free digital cameras which respondents said helped in promoting sales.

Dell

Class B 21%

Partner 59%

type of reseller

Respondents who took the survey said that they observed a decline in Dell’s focus on desktops and that the company was only focused on notebooks. Partners said that Dell offered only five SKUs of Inspiron through stock-and-sell which was much lower compared to other vendors. On the AIO front the company got aggressive in H2FY2012-13, added two new AIOs at the entry-level, and introduced an AIO with touch features; despite this, partners said that they did not see much traction on the AIO front. Respondents reported product shortage during July-September 2012, and said that there was at least four weeks delay in getting supplies. Many partners were upset that Dell discontinued models without any prior intimation. On the customer marketing front, the partners mentioned that Dell offered few customer-focused schemes and that the company was fairly low on advertisements compared to 2011. Dell relied more on its national distributor Supertron to drive promotions and schemes for desktops. Many respondents complained of reduced channel interactions and said that the local channel managers did not show interest in creating demand at the local level. n

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Consumer notebook

Lenovo laps it up

L

enovo emerged the Channel Champion in the notebook category due to its aggressive market focus, product quality, brandpull and customer marketing, and channel policy and management. Sony, the winner in FY20112012, saw a major decline in its channel preference and was relegated to the last position. Hewlett-Packard moved to the second spot followed by Dell and Acer.

Lenovo

Lenovo’s decision to maintain a single regional distributor in most states (with the exception of some large states where it has multiple RDs) helped it to streamline distribution and ensure profitability for all partners. The company’s policy of not allowing its RDs to stock inventory of more than three weeks ensured that there was no excess inventory in the market. Over the past 18 months Lenovo has put in place a strong lead-

S

generation engine for its exclusive stores. Some of the exclusive retailers who took the survey reported receiving 15-20 leads a month. According to respondents, Lenovo increased its market development fund during the year from 1 percent to 1.35 percent, allowing partners to do more local marketing to increase footfalls and sales. Regarding channel profitability, partners said that Lenovo’s incentive and backend rebate structure is better than that of the competition, and that they got their backend payments in time. Its lean channel inventory management helped Lenovo to launch new models faster than its peers. At every price-point Lenovo had more SKUs than the competition. In May 2012 Lenovo signed film actor Ranbir Kapoor as its brand ambassador which helped to increase its pull. Respondents lauded Lenovo’s efforts to streamline its post-sales

core Card

Criteria

Lenovo HP Dell Acer Sony

Product availability

97.5

Price-performance

85.2 85.6 85.5 85.1 88.1

Channel profitability

76.5

73.9

73.7

78.6

75.8

Brand-pull & customer marketing

86.8

86.2

85.0

86.6

84.2

Channel marketing & training

68.6

70.3

66.5

66.4

65.4

Post-sales support

81.5

81.2

84.9

76.7

78.5

Channel policy & management

86.9

84.4

83.0

84.5

82.0

Final Score

96.0

95.4

93.5

92.7

583.0 577.6 574.0 571.4 566.7 *Scores out of 700

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support in remote locations. They noted that Lenovo appointed new ASPs with multi-location presence.

Hewlett-Packard

Respondents appreciated the way HP managed the integration of PSG and IPG, and said that they encountered no problems during the transition. They said that the integration benefitted them in terms of added business from printers and supplies. The company increased focus on consumer channels, and invested in the rebranding of HP World stores. It also invested in the in-store training of its exclusive partners. The company hired a separate agency to provide marketing and in-store support to HP Worlds; this agency ran several promotional campaigns in a planned manner during festive seasons. HP also began offering demo units for printers, supplies and a few high-end notebooks. Respondents who polled appreciated HP’s thrust on customer marketing. The company commanded fair visibility through ads and special offers including a 2-year extended warranty on a few models and discounted prices on others. This, partners said, helped them drive sales in a slow period. Respondents also reported the streamlining and simplification of post-sales support and RMA for dead-on-arrival products. However, they also said that the shortage of PC spares during the year created delays in replacement and repair.

Dell

Dell retained its third position and scored high on parameters like post-sales support and priceperformance. Most Dell partners said that the company lacked market aggression and channel engagement during H1FY2012-13.


The company didn’t have a single notebook model in the sub-`30,000 range; this, respondents said, negatively impacted sales in smaller cities. Dell increased the prices of most models in August which impacted festive season sales. However, based on partner feedback, it corrected the prices by November. Respondents appreciated Dell’s decision, in February 2012, to give exclusivity of DOS-based PCs to the channel to ensure that partner sales were not impacted by LFRs. They also stated that in FY201213 Dell’s online sales took a back-seat as the company took a decision to increase its sales through channels. To facilitate this Dell offered several models through channels that were priced lower than those on Dell Direct. Dell continued to outscore its peers in warranty support. In last year’s survey there were complaints of delay in warranty from respondents in smaller cities in the east and north. Paying heed to these complaints Dell increased its ASP network across the country, and many upcountry resellers said that the TAT has now improved.

Acer

Acer could not move up in channel preference in the notebook market due to a lack of channel focus combined with a strong focus on LFRs. There were also post-sales issues. Respondents reported TAT of up to 5-10 days for repair and replacement due to delays in supplying spares. Respondents in Class A and B cities gave the brand low ratings because they felt that Acer was focusing too much on LFRs. Several models available with LFRs were priced 3-5 percent lower than those available with channels, thus negatively impacting the latter’s sales. The company however received good ratings for its channel policy and management. During the last fiscal Acer

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urvey Demographics Unique votes polled for Notebook category: 600 South 21% North 28%

East 17% West 34%

Class A 24% Class C & D 55%

Region

The biggest reason why Sony fell

Over the past 18 months Lenovo has put in place a strong leadgeneration engine for its exclusive stores. Some of the exclusive retailers who took the survey reported receiving 15-20 leads a month

Non-Partner 37%

Type of City

combined its commercial and consumer PC units. Partners selling both commercial and consumer PCs stated that the common team and single rebate program helped simplify channel engagement. Partners who polled noted that Acer increased its push on the customer marketing front and offered a 3-year onsite warranty on all notebooks, 3-year AV subscription, and 2 GB storage on cloud. The company also offered discount vouchers for online shopping during October-December 2012, and provided a six CD pack with its Aspire range.

Sony

Class B 21%

Partner 63%

type of reseller

from the number one position to the fifth place was that it lost market aggression. Many respondents in Class A and B cities also complained about the company’s higher focus on LFRs. The lack of the aggression was evident from the fact that Sony increased its prices by up to 10 percent in early 2012 which dented its sales heavily. Respondents said that a leadership change resulted in improper product planning. The head of Vaio was moved to head the mobile business. They said that most of the entry-level and midlevel SKUs were in short supply throughout the year. Respondents added that SKUs were driven to LFRs, and this caused a shortage in the channels. Besides, partners complained about the lost focus on channels. RDs were specifically unhappy because the company started doing direct business with many large retailers who were earlier under the RDs. More importantly, Sony decreased its customer marketing heavily. The company, which in FY2011-12 ran an aggressive branding campaign which was considered a major reason for its success, didn’t have any major campaign during the last fiscal. It didn’t offer any attractive schemes during the year except during Diwali. n

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printer

HP is the winner

H

ewlett-Packard attained the Channel Champion 2013 crown due to its aggressive customer marketing, channel focus, product innovations and strong channel policies and management. Canon retained the second spot by posting good scores on channel profitability and post-sales support. Samsung was the new addition in this category due to its price aggressiveness. Epson ended up at the last spot because of product availability, and delays in post-sales support.

Hewlett-Packard

Following the integration of IPG and PSG, the company increased its focus on the consumer channels significantly. While most partners lauded its on-ground channel engagement and training, some complained of the lack of training for newly-launched models. The company was also quick in resolving channel issues and clearing incentive

and rebate claims and as a result polled highest on the channel policy and management parameter. HP was aggressive in bringing innovative products like hotspot printers and e-print technology that offered an edge over competition. They noted higher traction for HP Ink Advantage printers due to their lower printing costs and a high-decibel advertising campaign conducted by HP during the year. However, few partners opined that frequent refresh of products and introduction of new products resulted in inventory pile-up of older products. Some of the partners also faced delay of 10-15 days with HP’s newly launched hotspot printer model M1218 during May-June 2012, and with its very popular P1005 laser MFD during December 2012-January 2013. HP was rated most aggressive on customer marketing with several end-customer schemes ranging from shopping vouchers to free toners and

Product availability

93.5

Price-performance

85.2 85.3 82.6 85.9

an exchange offer on old HP printers. The company also offered scheme on cartridges. Moreover, the company commanded highest visibility through advertisements at local and national levels. HP got lowest score on profitability, as respondents accused the company of channel over-capacity. Some partners opined that following the integration of the two divisions, the number of HP volume distributors for printers have increased leading to over distribution and market operating price (MOP) issues.

Channel profitability

74.3

78.4

77.8

76.5

Canon

Brand-pull & customer marketing

84.9

83

81.1

78.2

Channel marketing & training

75.8

71.1

72.6

74.1

Post-sales support

80.2

81.2

78.4

74.8

Channel policy & management

84.3

78.9

81.9

79.5

S

core Card

Criteria

HP Canon Samsung Epson

Final Score

94.9

94.1

90.1

578.2 572.8 568.5 559.1 *Scores out of 700

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HP was aggressive in bringing innovative products like hotspot printers and e-print technology that offered an edge over competition. Partners noted higher traction for HP Ink Advantage printers due to lower printing costs and a high-decibel advertising campaign

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Canon scored highest on channelprofitability. With strong MOP control, respondents said that Canon products provide assured margins. Its back-end rebate provides good margins. Canon also scored high on postsales support due to increase in service coverage and improvement on spare parts availability. In FY2011-12, Canon had scored low on post-sales support as it was hampered due to


shortage of spares. Canon refreshed its printer range twice during FY2012-13. However this created difficulties in selling as the company did not provide timely channel training to resellers. In addition it also resulted in piling up of inventory of old printers. Respondents said that during H2FY2012-13, the company was more focused on photo printers and ignored the entry-level printer segment, which reduced the overall addressable opportunity for them. However in Q3FY2011-12, Canon added its E-series ink-efficient MFDs, which gained traction in the market. Respondents opined that Canon reduced spends on channel marketing; it sparingly did any local promotion and in-store activities for retailers and was only focused on supporting its exclusive stores. Respondents also complained about lack of adequate channel schemes during the fiscal. Moreover, they complained of delay of 3-4 months in clearing rebate and incentive claims, and noted significant reduction in channel engagement by local managers.

Samsung

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urvey Demographics Unique votes polled for Printer category: 396 East 15%

South 26% North 28%

West 31%

Class A 24% Class C & D 57%

Region

Epson, which won the title last time, was pushed to the last position due to lack of product availability and low scores on post-sales support. Respondents highlighted intermittent shortage of many of its run-rate printers like L100, L200, R230, F350

Non-Partner 40%

Type of City

authorized channel. In fact due to influx of parallel import in the last fiscal, the company was compelled to discontinue its fast-moving model SCX 3201 and had to replace it with a different model with almost similar features. Respondents noted issues in Samsung’s post-sales support. They said that as the company has common service infrastructure for all its products including consumer electronics, printers get low priority compared to CE products.

Samsung which failed to make the final list in the last year survey came third in FY2012-13, largely because of its price aggressiveness and increased channel focus. Samsung only sells laser printers and is strong only in certain regions lacking a country-wide channel coverage. It polled nearly 64 of its vote from the southern region. Due to strong overall priceperformance—with lower supplies cost and better-featured laser printers priced 10-15 percent cheaper than HP—and a stronger brand awareness due to its consumer electronic (CE) business, respondents said Samsung sells well in Class C & D cities. It got nearly 80 percent votes from resellers in Class C and D cities. Despite its limited product portfolio, Samsung often faces parallel import issues which impacts the

Class B 19%

Partner 60%

type of reseller

Epson

The winner of FY2011-12. Epson was pushed to the last position due to lack of product availability and low scores received on post-sales support. Respondents highlighted intermittent shortage of Epson’s runrate printers like L100, L200, R230, F350, etc. Partners reported delays of more than a month in sourcing some of these models. Respondents also complained of shortage in black refill tanks at the beginning of 2013. They noted that the shortage of products and supplies affected their business by 10-15 percent. Many partners alleged that by exploiting the shortage, some volume partners with stocks sold them at higher prices. While Epson was praised for its regular channel meets, the company could not roll out regular channel schemes due to persistent shortage, opined respondents. The company also scored low on post-sales support. Partners complained of delayed TAT due to shortage of spare parts. However, respondents admitted that Epson was the most price-aggressive compared to its competitors, but rued the company’s decision to discontinue its popular models, TS121 and T13, toward the end of 2012, in order to promote its L-series printers. n

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monitor

AOC springs a surprise

A

OC emerged as the Channel Champion in the flat-panel display category on its much-improved scores across most parameters while topping on priceperformance, channel policy & management, and post-sales support. Samsung, which won the crown in FY2011-12, came second. Respondents said that the company’s premium-pricing strategy didn’t go well with PC assemblers in smaller cities. Acer came third largely due to its aggressive pricing strategies and improvements in channel engagement. LG, which has been a winner in the past, dropped to the last position due to the lack of the right channel strategies and management. Dell and HP did not make the cutoff of 10 percent of category votes.

AOC

Addressing some of the serious issues of distribution and support it confronted in FY2011-12, AOC did well to attain the Channel Champion crown in FY2012-13 largely due

S

to its aggressive focus on the PC assembler segment in Class C and D cities as well as its improved postsales support. The company polled 18 percent of the category votes. At a time when Samsung was charging a significant premium for its products and LG was suffering from a lack of the right channel strategy and focus, AOC, with its aggressively-priced products and wide portfolio ranging from 15.6-inch monitors to 29-inch monitors, gained channel preference in the assembled PC segment. The company, along with Acer, was the only top brand to offer 15.6-inch models. AOC products are priced 15-20 percent lower than Samsung’s, and also pack a lot more features, said respondents. AOC streamlined its hybrid distribution model by appointing new regional distributors to increase market coverage. Respondents noted that AOC was the most aggressive with new product launches including IPS monitors and 3D monitors. It had

core Card

Criteria

AOC Samsung Acer LG

Product availability

95.9

Price-performance

88.9 88.2 84.3 85.1

Channel profitability

80.7

76.9

77.2

76.1

Brand-pull & customer marketing

84.5

85.6

80.8

83.7

Channel marketing & training

73.1

69.9

66.3

68.3

Post-sales support

84.2

81.7

80.8

78.4

Channel policy & management

86.9

85.0

85.3

79.8

Final Score

95.7

95.3

95.3

594.2 583.0 570.0 566.7 *Scores out of 700

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AOC, with its aggressively-priced products and wide portfolio ranging from 15.6-inch monitors to 29-inch monitors, gained channel preference in the assembled PC segment more models across different sizes and technologies than all its peers. The company allowed its distributors to run channel schemes which received a good response in the north and south. These schemes were targeted at small tier-3 partners selling 2-5 monitors a month. AOC began branding campaigns for its TVs in upcountry locations; this, respondents said, had a positive rub on its monitor business because the brand awareness increased. The company, which faced serious criticism in FY2011-12 over post-sales support, switched from national ASP Intarvo Technologies to a regional ASP model at the beginning of 2012. Respondents said that apart from certain issues during the transition period, the warranty improved considerably. Average TAT reduced to 48 hours from the average of four days witnessed earlier.

Samsung

While the winner of FY2011-12 polled the highest number of votes—26 percent of the category votes—it failed to retain the Channel Champion crown. A key reason for Samsung slipping was the lack of aggressivelypriced entry-level models.


Many of Samsung’s authorized partners said that the company’s decision to charge a premium didn’t go well with PC assemblers in small cities who sought 15.6-inch and 18.5-inch monitors at low cost. The average price through the year of an entry-level 18.5-inch screen from Samsung was upward of `6,500 to an end-customer while that from AOC was under `5,400. There is no doubt that Samsung enjoys the best brand-pull. It was also the only brand which maintained its MOP and a price-premium despite the slow demand. Samsung focused on the more profitable screen sizes of 21-, 23-, 24- and 27- inches. One of the other issues was channel profitability. While its volume partners were happy with the profit margins on Samsung monitors, the smaller reseller partners who voted in large numbers complained that Samsung didn’t leave enough margins for them. Intermittent non-availability continued to be an issue with Samsung, though partners noted that it was not as severe as in FY201112. Some respondents pointed out that during H1FY2012-13 Samsung pushed older models though competitors like AOC and LG had already moved to newer models.

Acer

Acer, which polled 12 percent of the category votes, is regarded as a value brand with products at prices lower than all its peers. Acer improved its channel engagement by appointing a dedicated team for its non-PC business—displays and projectors— who engaged regularly with channels. During H1FY2012-13 the company also restructured its distribution with a regional focus which respondents said decreased the price war among volume partners. With the dedicated team Acer ran several channel and customer schemes through the year, mainly during regional festivals. It also ran monthly schemes for dealers with

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urvey Demographics Unique votes polled for Monitor category: 446 East 17%

South 25% North 26%

West 32%

Class A 25% Class C & D 53%

Region

LG’s channel woes continued from FY2011-12, pushing it from second position to fourth. The company, which polled 20 percent of the category votes, lost its channel preference further. The decision by the company to move from a regional distribution

A few LG RDs who took the survey said that they have started selling other brands, and that their LG business has reduced by almost 50 percent compared to previous years

Non-Partner 54%

Type of City

varying incentives on targets of 20, 50 and 100 units. Partners also appreciated the fact that Acer’s post-sales warranty has improved, with TAT times dropping to less than two days in many cities. However, respondents complained about the de-bundling of the Acer monitors that came with their desktops and which created MOP issues. Acer did act on the complaints though the issue persisted in some pockets.

LG

Class B 22%

Partner 46%

type of reseller

model to national distribution has not worked well for it. A few LG regional distributors who took the survey said that they have started selling other brands like AOC, Acer and Dell, and that their LG business has reduced by almost 50 percent compared to the previous years. To make things worse many of LG’s regional channel managers have exited the company. Respondents from the east and south said that this impacted the business momentum and channel engagement at the local level. Some respondents complained that their backend rebate and incentive claims are pending since 2011. They explained that there were rebate claims pending on stocks purchased from Redington which was the company’s distributor till October 2011. After Redington’s exit, LG had assured them that it would clear the claims; however, respondents said the company is yet to do so. Respondents acknowledged that LG continues to be a strong brand with customer-pull and good products, and is at par with Samsung. Nevertheless, it needs to fix its channel strategy and management if it wants to win back the channel confidence and preference it enjoyed not so long ago. n

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home networking

Digisol retains top slot

S

martlink Networks (Digisol) retained its Channel Champion crown in FY2012-13 by receiving higher ratings on parameters like channel policy & management, post-sales support, channel marketing & training, and channel profitability. Best IT (iBall Baton), which ventured into networking products in 2009, significantly increased its market aggression and channel focus and was a surprise second. While D-Link continued to be the largest-selling home networking brand, serious issues regarding its post-sales support, and its low focus on channel marketing & training and channel profitability, pushed it to the number three position followed by Belkin, which had a rough year with its senior management quitting over issues of non-performance. Netgear, which was ranked third last year, failed to make it to this year’s final list as it polled only 7 percent votes. Other vendors which polled 5-10 percent votes were Asus,

S

TP Link and Linksys.

Digisol

Smartlink Networks (Digisol) continued to be the most-preferred home networking brand, receiving high ratings on all parameters except product availability. Availability issues were reported from the north and several Class B and C cities where respondents said the products were not readily available with the local regional distributors. The company scored high on channel profitability with respondents saying that the company offers the best front-end margins and backend rebates to partners. The company was also aggressive with its channel schemes, helping resellers to sell and earn more. Digisol continues to be a pullbrand though some of its customer marketing initiatives helped create additional brand awareness. Survey respondents gave high ratings to Digisol’s post-sales support as the company improved its TAT. In

core Card

Criteria

iBall Baton

D-Link

Belkin

Product availability

94.7

96.3

96.7

91.5

Price-performance

89.8 86.5 89.8 84.7

Channel profitability

86.2

83.2

82.8

77.0

Brand-pull & customer marketing

84.8

84.2

86.3

80.4

Channel marketing & training

79.8

76.9

73.4

76.6

Post-sales support

85.4

84.7

78.2

83.2

Channel policy & management

86.9

86.6

82.9

79.2

607.6 598.4 590.1 572.6 *Scores out of 700

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many instances its channel managers also entered con-calls to resolve issues pertaining to warranty support. While Digisol conducted fewer channel meets and road-shows, what got the company high ratings on channel marketing & training was the company’s focus on shop-in-shop advertising and marketing at retail stores. This helped partners increase their sales by 5-10 percent. The company also introduced a policy to provide demo units for all its newly launched products to its registered partners.

iBall Baton Digisol

Final Score

Digisol got high rating for post-sales support as it improved the TAT. In many instances channel managers got on con-calls to resolve warranty issues

According to respondents, though Best IT launched its iBall Baton brand of home networking products about four years ago, it became aggressive with the brand only in late 2011. The company already has a strong channel network, but to push its networking products it created a separate team of 2-3 field people in each region. Respondents said the company adopted an aggressive pricing strategy, positioning its products 15-20 percent lower than market leader D-Link; this helped it gain marketshare. The company has a limited product portfolio compared to its competitors. Although a late entrant in the


networking market, respondents said that the strong brand equity created by iBall in the peripherals segment helped to convince consumers to buy its networking products. Many respondents pointed out that film stars like Kareena Kapoor and Hrithik Roshan are endorsing the iBall brand; this also helped to convince customers. Some respondents said that the attractive packaging of Baton wireless products helped to attract the consumer’s attention at retail outlets. Both volume partners and retailers who voted for iBall said that the company’s channel managers were continuously engaged with them, and handholding them to drive footfalls and sales. The company also provided regular leads to its retailers to help increase their sales momentum. iBall received good ratings for post-sales support. Respondents said that while most products were immediately replaced over-thecounter (OTC), for some products which could not be replaced immediately the TAT was a maximum of 4-5 working days.

D-Link

The company is the largest-selling brand and polled the maximum category votes. It has the largest portfolio, is the most widely distributed, and has a strong brandpull. What let the company down was its poor warranty support. Respondents strongly criticized Kaizen—D-Link’s service provider since April 2011—which failed miserably in providing quality warranty to the market-leading brand. Respondents alleged that the staff at Kaizen was rude, did not provide updates on warranty replacement and repairs of checked-in products, and at times returned the products unrepaired. Unlike its peers, D-Link doesn’t have an OTC policy, and this too impacted its warranty ratings. The warranty problem was so acute that many D-Link partners sold competing products.

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urvey Demographics Unique votes polled for Home Networking category: 307 East 14%

South 32% North 20%

West 34%

Class A 26% Class C & D 52%

Region

Non-Partner 51%

Type of City

Respondents said that after repeated complaints, D-Link rolled out its own D-Link Direct Service in April 2013, so now they are hoping this will resolve the warranty issues. D-Link also scored less on other parameters such as channel marketing & training, profitability, and channel policy & management. According to respondents, the exit of the consumer business head in Q3FY2012-13 affected the company’s overall focus and engagement with channels. Most respondents said that D-Link has a strong lead over its competitors in terms of technology and features. Some of its innovative products like the DIR-865L dual-band router with mydlink cloud services enabled partners to sell more because none of the competing brands have such features. In 3G routers too the

Respondents strongly criticized Kaizen— D-Link’s service provider since April 2011—which failed miserably in providing quality warranty to the market-leading brand

Class B 22%

Partner 49%

type of reseller

company has a strong portfolio.

Belkin

The exit of its senior managers, a shortage of certain products, and low channel profitability affected the company’s channel preference. Some of Belkin’s products were in short supply throughout 2012. The company got a very low channel profitability score because many authorized partners who took the survey said that they failed to earn their rebates and incentives since they were given high targets to achieve. While they partly blamed the slowdown for not achieving their targets, they put part of the blame on the exit of senior managers due to which there was no proper direction and support provided by the company. Respondents said that Belkin eventually slashed the prices of some products by as much as `400-500 to help partners liquidate inventory; even this cut in prices was not clearly communicated, leaving respondents confused. Respondents opined that Belkin needs to review its premium pricing. It sells at a premium of 10-15 percent over D-Link. To its credit, Belkin’s post-sales support received good ratings as it provides OTC replacements for faulty products. n

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antivirus

Fourth in a row for Quick Heal

Q

Quick Heal

Kaspersky

K7

Norton

Product availability

95.2

93.4

91.7

89.4

Price-performance

85.5

84.3

82.8

77.7

Second, the company places strong emphasis on renewals. Many respondents said that their revenue from renewals has increased substantially over the past couple of years. To drive up renewal rates, QH started sending automated reminders. Consumers who renewed their licenses a day before their last date received an additional two months on a 12-month renewal. Several QH partners said that renewals contributed 30-40 percent of their topline but added nearly 60 percent to their bottomline. Many smaller resellers selling less than 10 packs a month commended QH for having roundthe-year schemes whereby they could also benefit. In customer marketing too QH had several schemes that helped sales—one such scheme was offering a 3-year license for the price of a 2-year. In FY2011-12, partners from states like UP, Uttarakhand and Bihar had raised certain issues regarding QH’s regional distributor NCS Computech. However, many of the same respondents who took the survey this year said that after the channel feedback was published in CRN both QH and NCS worked to resolve most issues. One complaint however was regarding the company’s toll-free number which respondents said needs significant improvement.

Channel profitability

86.2

80.8

79.5

76.2

Kaspersky

Brand-pull & customer marketing

88.2

84.6

79.9

83.6

Channel marketing & training

86.1

76.2

74.8

77.2

Post-sales support

89.0

83.5

83.7

81.6

Channel policy & management

94.0

84.4

83.9

81.3

than in FY2011-12 when QH had received negative ratings on certain parameters from partners in the north and east. It improved its category vote share from 29 percent to 40 percent. The company, which was traditionally weak in the south, made an effort to improve its penetration by appointing Nook Micro as distributor for the entire region. It also launched dedicated, multi-lingual, toll-free support in Malayalam, Tamil, Telugu and Kannada. One aspect where QH scored far higher than its competitors was channel profitability. This, respondents said, was due to two factors. First, QH maintains a strong market operating price (MOP) hygiene despite selling its products at twice the price of its competitors; it has fixed transfer prices at each level of the channel, thus ensuring that there is no undercutting and that partners at every level make assured margins.

uick Heal (QH) clinched the Channel Champion crown for the fourth consecutive year in the antivirus (AV) category for consumers and SOHOs (1-5 users). It improved its ratings on all channel satisfaction parameters as compared to its scores in last year’s survey. Kaspersky retained its second position. K7, through expansion and aggressive pricing and schemes, increased its channel connect in the north and east. Symantec (Norton) came last among the four finalists though a few of its initiatives launched at the end of FY2012-13 went down well with partners. eScan, which was ranked third last year, missed the final rankings because it polled less than 10 percent category votes. Net Protector missed the final rankings for the same reason.

Quick Heal

The company was rated higher than its competitors on all parameters, making its win more convincing

S

core Card

Criteria

Final Score

624.2

587.2 576.3 567.0 *Scores out of 700

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Although Kaspersky has established itself as a strong player in the Indian AV market, in channel preference it continued to lag behind QH. It polled 18 percent of the category votes. Respondents said that Kaspersky’s products are technically very good and its marketing strategies are right but where the company needs to streamline and


realign is in the execution of its channel strategy. During the fiscal the company doubled its sub-distributors and feet on the street; this helped it to gain stronger market coverage in north and central India. Respondents said that despite streamlining its distribution in 2012— appointing separate distributors for 1-year and 3-year licenses—Kaspersky was unable to control the MOP which led to channel conflict and price undercutting. The second issue raised by some authorized partners concerned PRIMA, the company’s online partner portal which was launched last year. PRIMA suffered from technical glitches, and as a result was down for more than a quarter during the last fiscal; this led to confusion and delays in rebate and incentive payouts. Respondents noted that Kaspersky’s continuing association with brand ambassador Sachin Tendulkar made it a brand of choice especially for students and the youth. They also lauded the company’s campaign to promote the brand through schemes such as Meet the Brand Ambassador for both partners and end-customers. Toward the end of 2012 Kaspersky strengthened its tele-support and included local language support through its distributor Sakri IT.

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urvey Demographics Unique votes polled for Antivirus category: 388

South 23% North 25%

East 18% West 34%

Class A 25% Class C & D 58%

Region

Quick Heal’s focus on renewals increased channel profitability. Several partners said that renewals contributed 30-40 percent of their topline but added nearly 60 percent to their bottomline

K7 Computing moved up the channel preference ranking to third position. The company got 15 percent of the category votes. It polled more votes from the north and east, suggesting it has expanded its coverage and connect. Outside the south K7 is a pushbrand. However, through attractive channel schemes at regular intervals during the year and an aggressive pricing strategy —it is 40 percent cheaper than Kaspersky—the company managed to gain traction in the market.

Non-Partner 35%

Type of City

Respondents said that the quality of K7 products improved over 2011, and that the 2012 version was at par with its counterparts. Respondents appreciated the numerous channel schemes floated by K7 which helped in pushing the product in the market. However, the brand suffered from MOP issues, and this impacted channel margins. Many respondents from the south, which has been the company’s stronghold, complained of K7 selling products and renewals directly to customers from its website; this they said hurt their business. In Tamil Nadu the issue became so acute that several of its partners stopped selling K7 and

K7 Computing

Class B 17%

Partner 65%

type of reseller

escalated the matter to the local channel association, Confed-ITA, which stepped in to resolve the matter in December 2012. Many respondents praised K7’s distributor Compuage, which began offering technical support to resellers and helped to resolve issues.

Norton

Symantec (Norton) ranked fourth in channel preference. Although the company strengthened its distribution and added more feet on the street, it failed to expand its channel footprint. It polled 10 percent of the category votes as compared to 11 percent in the last survey. Though there is no doubt that technically Norton AV is the best, respondents said that the company needs to be consistent in its market focus and channel engagement. As a result of its shortcomings, from being a strong pull-brand it has now become a push-brand. In February 2013 Norton introduced an India-specific SKU called Norton Internet Security System Builder pack. Targeted at PC assemblers, the new pack contains a single media with five license keys. Respondents welcomed the launch of this SKU and said that if marketed well it would help Norton to gain market share. n

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PC ups

APC all the way

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chneider (APC) retained its Channel Champion crown for the fourth year in a row due to its wide and deep channel connect and distribution, superior technology and product quality, higher channel profitability, and overall channel policy and management. Numeric came second followed by Microtek. Intex polled 7.5 percent of the category votes; but didn’t make it to the final list as it failed to cross the 10 percent mark.

Unique votes polled for Home UPS category: 312 South 25% North 25%

East 21% West 29%

Region

APC

Schneider (APC) polled the largest number of votes, receiving nearly 22 percent of the category votes. It received uniform votes from all regions, suggesting its wide channel connect and distribution coverage. Despite APC seeking a price premium of more than 20 percent over Numeric and nearly 30 percent over Microtek, it is the most-preferred brand among customers. It scored high on channel profitability, and respondents said that they make `350-500 margin on every unit—more than double on other brands. Respondents appreciated APC’s channel initiative called APC Day which is conducted on the last day of every month, but they were unhappy with the discount which ranges from `15-50 on the overall units sold. On post-sales support APC won high ratings. However, respondents reported delays in replacements and repairs during August-September 2012 due to the shortage of spares and batteries. Apart from this, they said that APC’s post-sales support is the best among all UPS vendors.

Numeric

Numeric polled nearly 50 percent votes from the south, suggesting that it continues to be strong on its home turf. It polled 33 percent votes from the north and 15 percent from the west. In the east the company lacks a presence.

S

urvey Demographics

core Card

Criteria

APC Numeric Microtek

Product availability

96.2

Price-performance

87.7 85.3 85.3

Channel profitability

84.5

81.8

79.1

Brand-pull & customer marketing

87.0

84.4

85.6

Channel marketing & training

78.3

79.8

77.9

Post-sales support

86.5

83.6

84.5

Channel policy & management

84.4

83.4

81.8

Final Score

93.3

93.1

604.6 591.6 587.3 *Scores out of 700

Class A 24% Class C & D 57%

Class B 19%

Type of City

Non-Partner 38%

Partner 62%

type of reseller

In terms of price-performance and product range, it is regarded as the second-best. On product availability, partners complained about the availability of entrylevel 600VA during December due to local distribution problems; the issue was sorted out in January 2013. On channel profitability the company ranked behind APC. Respondents said that they make `200250 margin on every unit sold. Apart from the south, Numeric continues to be a push-brand. In the north and west respondents said they bundle Numeric UPSs with branded PCs. Numeric increased the warranty on its batteries from one year to two in mid-2012 while its UPSs continue to enjoy a 2-year onsite warranty. Overall, while most respondents praised Numeric’s post-sales support, they highlighted the delays in support due to non-availability of spares in July 2012. Numeric scored high in channel engagement as most respondents said that the company as well as its distributors made efforts to resolve issues promptly.

Microtek

Microtek polled 13 percent of the overall category votes. It continued to be strong in the north and east from where it received almost 90 percent of the votes; the rest came from the west. In the south the company doesn’t have any channel connect. Microtek also received nearly 75 percent of its votes from Class C and D cities which suggests that its focus is on smaller cities. Most respondents rated it as a value-formoney brand. Respondents said that it was the most aggressive in customer and channel marketing because of its schemes around the year. In channel marketing too it had several schemes like a free Titan watch with the purchase of 10 units to a `500 discount on the purchase of 10 or more units. On channel profitability it offers a front-end margin of `100-150. Respondents appreciated the fact that the company maintains strict MOP and that it is prompt in paying incentives. n

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microprocessor

Intel cruises past AMD

I

ntel wrested back the Channel Champion title from AMD in the microprocessor category by fixing many of the issues that had impacted its channel mindshare last year. Though AMD strengthened its channel engagement, the lack of a strong product portfolio and lower brand awareness pushed it to the second spot.

Intel

A series of events had negatively affected Intel’s overall score in FY2011-12. These included several key channel managers being sacked, a flaw in its second-generation core processors (Sandy Bridge) which resulted in product shortages, and complaints about post-sales support. In last year’s survey, polling 85 percent of the category votes, Intel outscored AMD. Practically every year some Intel processors face availability issues. The other common problem is that of parallel imports. However in FY201213 Intel ensured good availability

S

of all its fast-moving products; the incidence of parallel imports was also much less, ensuring uniform MOP throughout the year. On the product front Intel launched the third-generation core processors (Ivy Bridge) which gave it a strong lead over AMD in performance and features. Intel then went aggressive with its pricing, creating attractive motherboard-processor bundles and offering channel schemes, thus providing strong price-performance. The company expanded its Intel Technology Partner program to include resellers of branded PCs. As a result, resellers became eligible for Intel incentives every time they sold a branded PC with an Intel processor. According to a majority of respondents, Intel also upped its channel marketing and training by increasing the frequency of its webinar training. It ran bi-weekly training for different products, and to ensure participation offered credits

core Card

Criteria

Intel AMD

Product availability

96.1

Price-performance

91.8 84.8

Channel profitability

78.8

84.2

Brand-pull & customer marketing

86.3

80.5

Channel marketing & training

91.3

88.2

Post-sales support

89.3

87.3

Channel policy & management

88.5

89.8

Final Score

91.3

622.1 606.1 *Scores out of 700

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Intel, which received strong criticism for its post-sales support in the last survey, did well to streamline it by appointing subdistributors to manage RMA pick-up centers to attendees under its Intel Flex Plus program. Intel also rolled out different training and incentive programs such as Retailer Zone for retailers, SMB Zone and Solution Zone for SMBfocused channels, and the Real Server campaign for server builders. The vendor, which received strong criticism for its post-sales support in FY2011-12 survey, did well to streamline its RMA infrastructure by appointing sub-distributors to manage its pick-up centers. Respondents also applauded the reduction in TAT for RMA from 30 days in 2011 to 2-10 days during the last fiscal. While large city-based partners were critical of Intel’s channel account managers, a majority of respondents noted improved channel engagement by Intel’s managers with decision-making at the local level improving considerably. One parameter where Intel scored low was channel profitability. A large number of respondents said that with the assembled PC market shrinking, Intel must optimize its channels and weed out partners who don’t add value but only do box-pushing.

AMD

AMD, which polled 15 percent votes, received better ratings for channel profitability and channel


policy & management, but lagged behind Intel on all other parameters. Partners appreciated AMD’s channel managers who they feel are spending a lot of time driving the business especially at partner-owned retail counters. Respondents stated that they make more margins on AMD processor-based machines. AMD continued its good work in identifying new motherboard OEMs and introducing newer SKUs. For instance, last year it partnered with Digilite to offer attractive CPUmotherboard combos for its C-60 and E-450 processors. However, AMD’s product portfolio compared to Intel’s was left wanting. Also, with the market for gaming PCs and home-theater PCs still very small, AMD’s APU innovation is yet to be fully realized. AMD launched its A6, A8 and A10 processors based on the new Trinity core which offered better performance than the previousgeneration Llano processors. The company also announced updates to its FX series of processors codenamed Vishera. However, AMD partners admit that Intel’s Ivy Bridge outscored AMD’s offerings on most performance and power consumption parameters. AMD also launched its Fusion partner program at the beginning of FY2012-13. This was primarily targeted at retailers selling AMDbased branded PCs, and was appreciated by many respondents.

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urvey Demographics Unique votes polled for Microprocessor category: 292 East 15%

South 26% North 28%

West 31%

Region

Class A 24% Class C & D 57%

Class B 19%

Non-Partner 43%

Type of City

Partner 57%

type of reseller

On the product marketing front AMD continues to be a push-brand. Respondents in Class B and C cities

reported limited availability of some of the high-end processors, notably Opteron and FX. n

Computer Reseller News

Partners appreciated AMD’s channel managers who they feel are spending a lot of time driving the business especially at partner-owned retail counters

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motherboard

Intel back to its winning ways

I

ntel triumphed as the mostpreferred motherboard vendor leaving last year’s winner Asus in the second spot followed by Gigabyte. Intel polled 37 percent of the total category votes and scored better than Asus and Gigabyte on almost all parameters including priceperformance, post-sales support, channel marketing & training, and channel policy & management. Asus, which had won the Channel Champion crown for the past two years, came second largely due to its poor post-sales support. It polled 25 percent of the category votes. Gigabyte, which accounted for nearly 16 percent of the category votes, came third. While it was rated higher than its competitors in channel profitability, it lagged in other parameters. Digilite and Biostar polled more than 5 percent votes but less than the survey cut-off of 10 percent, thus failing to make it to the final list.

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Intel

In the last Channel Champion survey Intel was ranked third due to channel dissatisfaction over its channel policies and management, and post-sales warranty. There were also complaints regarding the non-availability of certain motherboard SKUs. In FY2012-13 Intel addressed these issues. Starting April 2012 Intel consolidated its motherboard portfolio, reducing its desktop SKUs from 60 to 40. Throughout the year it ensured availability of all its fastmoving SKUs. The company went aggressive with its pricing during the last fiscal, creating attractive motherboardprocessor bundles and offering channel schemes. Respondents said that Intel—which historically charged a premium of 15-25 percent more than comparable SKUs from Asus or Gigabyte—brought down its prices to a level that was lower than those of other vendors. Intel also drove the momentum of its newer chipsets such as Z77

core Card

Criteria

Intel Asus Gigabyte

Product availability

97.4

Price-performance

88.4 87.6 85.0

Channel profitability

82.6

83.3

84.6

Brand-pull & customer marketing

86.0

87.0

81.5

Channel marketing & training

87.5

78.0

78.0

Post-sales support

86.3

82.3

86.3

Channel policy & management

88.0

85.6

83.0

Final Score

98.1

98.0

616.2 601.9 596.4 *Scores out of 700

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Asus augmented its support between Digicomp and Rashi in 2012. However certain areas particularly in south India where Digicomp was given the mandate, it didn’t have proper service infrastructure leading to issues and B75. In fact partners said that the DZ77SL-50K was the cheapest Z77-based motherboard for almost two quarters. The company ran aggressive bundling for the DH61HO motherboard with Pentium dual-core processors, and the DH61WW with the Core i3 and Core i5 processors. The company also upped its channel marketing and training by increasing the frequency of its webinar training. It ran bi-weekly training for different products, and to ensure participation offered credits to attendees under its Intel Flex Plus incentive program. Respondents noted that with the assembled PC market shrinking, Intel focused on helping its partners to sell new products and solutions. Intel’s marketing program, Solutions Master, was appreciated by leading system builders. The vendor, which received strong criticism for its post-sales support in FY2011-12, did well to streamline its RMA infrastructure by appointing sub-distributors to manage pick-up centers. Respondents also applauded the reduction in TAT for RMA from 30 days in 2011 to 2-10 days during the last fiscal. While large city-based partners


were critical of its channel account managers, a majority of respondents noted improved channel engagement by Intel’s managers with decisionmaking at the local level improving considerably. Starting last fiscal, Intel unified its product marketing and channel incentive and rebate programs across both branded PC resellers and system builders. Respondents said that this improved the overall marketing buzz around the brand. The two parameters where Intel scored low were channel profitability and customer marketing. On channel profitability it ranked the lowest. While Intel has the highest brand-pull and brand affinity, it failed to excite the market with customer-facing promotions. Most respondents felt that Intel’s decision to exit motherboard manufacturing will deal a serious blow to the system builder channel.

Asus

Asus was let down by its poor postsales support. The company augmented its support between Digicomp and Rashi in 2012. However certain areas particularly in south India where Digicomp was given the mandate, it didn’t have proper service infrastructure leading to post-sales issues. Asus signed up a third service partner, Digicare, in October 2012, but it was a while before the issue was addressed on ground. On channel profitability, respondents said that Asus, in its efforts to expand across upcountry markets, under-estimated the decline in the assembled PC market and as a result over-distributed, thus affecting margins. Most respondents said that Asus has the largest motherboard portfolio with the strongest product range for AMD products. It introduced nearly half a dozen new models for AMD last year. As a result, the company was ranked high on availability. Asus also emerged as a brand with strong customer preference. Most

S

urvey Demographics Unique votes polled for Motherboard category: 324 East 20%

South 30% North 20%

West 30%

Class A 23% Class C & D 58%

Region

Gigabyte, which was second in FY2011-12, came a close third behind Asus during this year’s channel

The main complaint was that despite being strong on quality and performance Gigabyte hasn’t been successful in creating strong brand-pull. As a result, it continues to be a push-brand

Non-Partner 45%

Type of City

respondents from Class A and B cities said that Asus is the most preferred brand among tech-savvy consumers due to its strong PR activities with the DIY audience. Respondents also said that the aggressive activities by Asus on the retail front for its notebooks, tablets and other peripherals had a positive effect on the brand. However, in channel training and marketing, it was criticized for the low frequency of its channel schemes and new-products training compared to the previous year. Many resellers in smaller cities complained of not getting regular information about new products and pricing.

Gigabyte

Class B 19%

Partner 55%

type of reseller

satisfaction survey. To its credit the company did well on post-sales support and channel profitability. Respondents who sell all the three brands said that Gigabyte offers higher margins than Asus and Intel. Gigabyte’s warranty support was praised by respondents who saw improvements in its TAT time. Besides, the company’s initiative to open its own support centers at regional hubs improved its support delivery. Some respondents in smaller cities said that Gigabyte’s TAT for replacement and repair came down from 20 days to less than 10 days. Gigabyte’s product availability improved with 40 SKUs available across both AMD and Intel. It was more aggressive than Asus in pushing new motherboard platforms. The main complaint from respondents was that despite being strong on quality and performance Gigabyte hasn’t been successful in creating a strong brand-pull like Asus. As a result, it continues to be a push-brand. A few authorized volume partners said that Gigabyte needs to consolidate its brand marketing across different product categories like Asus. Another parameter where partners want Gigabyte to improve is channel marketing & training. With newer form-factors and new technologies, partners in Class B and C cities feel that annual connect programs are not sufficient to keep business flowing. n

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31


hard disk drive

Western Digital outscores

W

estern Digital (WD) retained its Channel Champion crown in the hard disk drive (HDD) category—both internal and external HDDs—largely by getting higher ratings on important parameters such as price-performance, channel marketing & training, post-sales support, and channel policy & management. Although Seagate continues to lead in marketshare, many of its authorized partners who took the survey noted that Seagate’s overall engagement with the channel has been below expectations. Toshiba was the new entrant in this year’s survey, garnering just over 10 percent of the category votes. Following the disk drive shortage in 2011, both Seagate and WD slashed the warranty on their internal drives from three years to one. However, once the supply normalized in Q2FY2012-13, both manufacturers started offering a 2-year warranty on internal HDDs and 3-year on external drives. Although the prices of HDDs have

S

fallen compared to the steep hike witnessed during 2011 due to the Thailand floods, they have still not come down to the level that existed before the shortage began. The 500 GB internal 3.5-inch HDD which was available at a dealer price of `1,8501,950 pre-shortage is now priced at `2,500-2,700. Overall, the HDD market has consolidated with Seagate acquiring Samsung and WD buying Hitachi. While Seagate has killed the Samsung brand, WD has positioned Hitachi as the value brand focused on the enterprise rather than the consumer.

Western Digital

WD, which polled 29 percent of the category votes, aced Seagate on all parameters except product availability, brand-pull and customer marketing. Many respondents across geographies reported spurts of shortage in WD’s internal and external desktop drives from November 2012 to March 2013. A few of its fast-moving SKUs remained out of

core Card

Criteria

WD Seagate Toshiba

Product availability

95.2

Price-performance

87.0 86.0 81.5

Channel profitability

83.0

77.4

85.5

Brand-pull & customer marketing

82.5

85.3

79.0

Channel marketing & training

72.5

70.5

71.6

Post-sales support

86.8

80.4

81.7

Channel policy & management

85.6

81.5

80.6

Final Score

96.2

93.2

592.6 577.3 573.1 *Scores out of 700

32

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WD received high rating for its warranty initiative WD Express, a pick-and-drop facility. Most respondents said that WD Express was very efficient and want Toshiba and Seagate to also start a similar service stock for 6-8 days every month; this hampered business because they had to turn away customers. In addition, respondents from the west and north reported instances of parallel imports of WD products during certain months of FY2012-13. WD was rated high on priceperformance primarily because of two reasons: its prices are 4-8 percent lower than Seagate’s, and its inwarranty failure rate is perceived to be less than that of Seagate. On channel profitability, partners selling both Seagate and WD said that they make more money selling WD because there is less competition in the channels. They also said that WD’s incentive and backend rebate structure is better than that of its rivals. WD continues to trail Seagate in customer-pull. Respondents felt that the company needs to do more customer marketing to strengthen its brand-pull. For channel marketing WD received high scores as most respondents noted that in the past eight months the company has been conducting road-shows and channel connect programs such as dealer meets. Also, in many regions, WD has been sponsoring channel events, thus increasing its visibility and


channel connect. WD received high rating for its warranty support initiative WD Express, a pick-and-drop facility. Most respondents in Class A cities said that WD Express was efficient and had a replacement TAT of 2-3 days, while the TAT in smaller cities was reported to be up to 10 days. In the east however respondents from smaller cities complained that the pick-up and replacement took longer. In February 2013 WD added F1 Services to create a large drop-point footprint for post-sales in 40 locations in tier-1 and tier-2 cities. With the launch of the drop-point service customers don’t have to wait for freight to come and collect the faulty drive— they can simply drop it at the point.

Seagate

Although Seagate continues to be the largest-selling HDD brand with the widest market coverage and strong brand-pull, its channel preference over the past two years has suffered significantly. The company, which earlier won the Channel Champion crown thrice in a row, received low ratings on channel profitability, postsales support, channel engagement and management. Many respondents, which included some of Seagate’s long-time authorized partners, said that the Seagate channel team is inaccessible and is not attending to pressing issues. For instance, authorized volume partners said that for over two years they have been asking Seagate to strengthen its post-sales infrastructure because Accel Frontline, its exclusive national ASP, is unable to keep up with the volume of in-warranty issues. However, they said that Seagate has done nothing to address this grievance and as a result its warranty support has today declined to a level where TATs range from 20-30 days, and that even to check-in products at the service centers resellers have to wait long hours. While Seagate has a pick-and-drop service, several respondents in small

S

urvey Demographics Unique votes polled for Hard Disk Drive category: 323 East 16%

South 27% North 24%

West 33%

Class A 24% Class C & D 56%

Region

Although Toshiba has been selling its HDDs through Rashi since 2010, it was only in FY2012-13 that the

Seagate needs to strengthen its postsales infrastructure because Accel Frontline, its exclusive national ASP, is unable to keep up with the volume of in-warranty issues leading to delays and dissatisfaction

Non-Partner 59%

Type of City

cities seemed unaware of it. Those who have availed the service said that while the company promises 72 hours for pick-up and return/replacement within 15 days, the pick-up actually takes 4-5 days and the replacement takes more than 20 days. Seagate also received low ratings on channel profitability, with many authorized sub-distributors and resellers from the south and west complaining that due to stiff competition they were compelled to sell Seagate drives at almost costprice, thus impacting their margins.

Toshiba

Class B 20%

Partner 41%

type of reseller

company and its distributor put in place an aggressive GTM strategy. This helped the company to enter the Channel Champion rankings for the first time, polling just over 10 percent of the category votes. While Toshiba is a well-known brand in TVs and PCs, very few customers know that it also makes HDDs, hence the customer-pull is very low. Interestingly, the majority of respondents who voted for Toshiba’s HDD were from Class B and C cities; this suggests that Rashi is focusing on smaller cities to push the brand. Toshiba emerged as the brand which offers the best channel profitability. This could be because Toshiba is priced roughly 3-5 percent lower than WD and 7-12 percent lower than Seagate. The vendor has also kept the channel margins higher as it’s a push-brand. According to respondents, the company got aggressive with its channel marketing from mid-2012 and rolled out quarterly schemes offering foreign trips for partners doing certain volumes. This helped to create awareness in the channel, especially in smaller towns. Rashi is also the service partner for Toshiba. Respondents said that the distributor needs to streamline its warranty process and reduce the TAT. Most respondents in smaller cities recommended that the company start a pick-up and drop service. n

Computer Reseller News

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33


memory module

Zion on top again

A

bacus Peripherals (Zion) remained the most-preferred vendor in the memory module category which includes DRAM products. It was followed by Kingston, Adata and Transcend. Corsair, which emerged as the fourthmost preferred brand in the 2011 survey, could not make it this time because it got less than 10 percent votes.

Zion

Abacus Peripherals (Zion) retained the Channel Champion crown by scoring high on post-sales support, channel policy & management, brand-pull & customer marketing, and channel marketing & training. Looking at its vote pattern—it received 68 percent votes from Class C and D cities—it is clear that its focus is largely on smaller cities. The company polled 14 percent of the category votes. Zion scored low on product availability because it polled many negative votes from the east where respondents complained that since

S

July 2012 its products, especially 1 GB and 2 GB DDR3 1066 MHz, faced long phases of non-availability. The reason cited is the frequent change in subdistributors in the area. Availability in other regions was normal. Channel profitability is also where the company scored badly as respondents said that Zion offers low front-end and backend margins. Zion has good brand-pull especially in Class B and C cities. Respondents in smaller cities said that their customers are aware of the brand. Zion regularly does local advertising in Class C and D cities. The company was aggressive in channel marketing and ran schemes whereby it offered silver coins for volume purchases. It was also proactive in providing regular updates on new products and pricing through email and SMS. Zion scored the highest in postsales support due to its prompt replacement process. Partners noted that Zion is the only brand that has a policy of over-the-counter

core Card

Criteria

Zion

Kingston

Adata

Transcend

Product availability

92.5

90.4

96.4

96.7

Price-performance

92.3 90.2 88.3 87.0

Channel profitability

83.0

88.4

82.7

84.0

Brand-pull & customer marketing

84.3

81.9

84.0

76.8

Channel marketing & training

77.8

71.8

70.8

64.7

Post-sales support

85.1

83.1

79.2

74.8

Channel policy & management

85.8

81.2

76.1

74.2

Final Score

600.8 587.0 577.5 558.2 *Scores out of 700

34

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Zion scored the highest in post-sales support due to its prompt replacement process. It is the only brand that has a policy of over-the-counter replacement replacement. In case of nonavailability they offer a TAT time of within three days. In remote areas where there are no service points or distribution drop-points, Zion allows resellers to send faulty products directly through courier. Channel policy & management was an area where Zion received the maximum score. Respondents said that there is a strong connect between the company, its sub-distributors and resellers. Abacus representatives are available whenever required over the phone. Many partners who took the survey knew Zion’s channel managers by name.

Kingston

Kingston polled close to 18 percent of the category votes. The company scored highest on channel profitability. However, its lower scores on other parameters compared to Zion pushed it to the second rank in channel preference. Product availability was one of the parameters where the company scored low. Respondents blamed this on Kingston’s distributors, accusing them of hoarding memory whenever global memory prices shot up, thus creating scarcity. Partners also stated that Kingston suffered from counterfeit products though the


volumes were less compared to the previous fiscal. Most respondents said they could easily make `150-200 per unit on Kingston’s memory modules. Kingston products have good demand, are of good quality, and are reasonably priced; this helped partners to get a healthy margin. Kingston provides a healthy backend of 1.5-2 percent and is also prompt in payment. Most respondents said that Kingston made payments within 30-40 days. Kingston has the widest memory portfolio, and enjoys strong brandpull among customers and channels. It was aggressive in customer marketing in Class A cities. However, respondents from Class B and C cities complained that Kingston lost ground to competing brands due to lack of customer campaigns. Regarding channel marketing, respondents in smaller cities stated that while the company did regular schemes, they didn’t receive timely information as a result of which they were unable to participate. Barring a few negative votes for post-sales support, most gave Kingston a positive rating. Those who gave it a negative rating were largely from Class C and D cities; they complained of not having local service centers.

Adata

Of the 12 percent of the category votes received by Adata, 80 percent came from the west and north while 20 percent came from the south. In the east the company seems to have zero channel connect. Nearly 79 percent of the votes came from Class B, C and D cities. In the last survey respondents had complained about the nonavailability of products; however, in the FY2012-13 survey they said that the company streamlined its distribution and that stocks were available in sufficient quantities. Adata is priced 15-20 percent lower than its Taiwanese peer

S

urvey Demographics Unique votes polled for Memory Module category: 354 East 16%

South 33% North 19%

West 32%

Class A 27% Class C & D 55%

Region

Non-Partner 61%

Type of City

Kingston. Respondents said this went against the brand because it has created a perception among tier-3 channels and customers that it is a low-quality brand. It scored lowest in channel profitability. While respondents agreed that Adata offers decent frontend and backend margins, the low score was a result of major delays in incentive pay-outs. To make things worse, despite repeated complaints, partners didn’t get any response. Adata lags in brand-pull. It also didn’t do any customer marketing, thus failing to register itself in the customer’s mind. Besides, Adata didn’t conduct enough channel marketing and training activities during the last fiscal. While Adata received good ratings on post-sales support from

Kingston scored low on product availability. Respondents accused Kingston’s distributors of hoarding memory whenever global memory prices shot up, thus creating scarcity

Class B 18%

Partner 39%

type of reseller

large cities, in Class C and D cities respondents complained about the lack of local service points, thus creating delays in replacements. Adata received the lowest votes in channel policy and management.

Transcend

Transcend polled the highest number of votes, 20 percent of the category votes, continues to be the most widely distributed brand, has a large portfolio, and has good channel coverage and customer awareness. However, it continued to score low on most channel-satisfaction parameters. It scored the lowest on post-sales support as most respondents complained of delays in repair and replacement. The company didn’t offer over-thecounter replacement, and resellers complained about the sorry state of its toll-free number where they have to wait for long. Many said that their repeated complaints over email about delayed product replacement to the Taiwanese managers did not elicit a response. Respondents said that Transcend’s channel focus and engagement lacks ownership. They said that Transcend needs to open an office in India because the managers sitting in Taiwan are unable to control its service providers and distributors here. n

Computer Reseller News

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35


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CRN May 15, 2013 issue