 "Volumes don't get you anything in this business: Alok Ohrie")
Alok Ohrie, who recently took over as the president and managing director of Dell India, says it will continue to be very aggressive in the Indian market, but choose value over volume. In an interview to Surabhi Agarwal, he talks about the strategy. Edited excerpts:
Just a couple of years ago, Dell became very aggressive in the PC segment. Now, there has been a certain cooling. Why?
The Indian market is under-penetrated. The entire market is only 12 million units (a year). Compare this with China: how can one explain the gap between 12 million and 66 million (unit sales) in China last year? That's like five times, so to that extent, there is a huge potential. One should also acknowledge that the competition is extremely fierce and the margins are wafer-thin and every company has its own set of objectives when it comes to playing in a particular market.
Is that why Dell has been consciously staying away from government business?
No, we are not staying away from government. We have a fairly high mix of government business. We have not been there in those large state government deals, which run into multi-million units as to our mind that business is financially not sustainable. It helps with volumes and market share but it is such a huge challenge to manage your portfolio. We are considering a few different approaches for that segment. So, when we find a way in which we can address it in a financially meaningful manner, we will participate. There are products that we will be launching over the next six to nine months at a price point which will make us much more visible in that space.
Dell has very little presence in the new form factors - tablets and mobile. What is the strategy there?
We are very excited about tablets. It is one area in which you will see us being much more aggressive than we have been. You will very soon hear from us about seven- and eight-inch form factor tablets running on both Windows and Android operating systems. We will come up with the Android first and follow it up with the Windows later. We believe that over a period of time, there will be a blurring of lines between the smart-phones, notebooks and the ultrabooks. And, the tablet seems an intermediately step to that.
In which segment would you position yourself?
We had the tablet in our product portfolio, but it was priced a little high (Rs 35,000-40,000) and was more in line with the technology that was available that time. You will see a substantially lower priced product than that when we launch the eight inch one. The launch will be very soon, much before the end of the year.
Just a couple of years ago, Dell became very aggressive in the PC segment. Now, there has been a certain cooling. Why?
The Indian market is under-penetrated. The entire market is only 12 million units (a year). Compare this with China: how can one explain the gap between 12 million and 66 million (unit sales) in China last year? That's like five times, so to that extent, there is a huge potential. One should also acknowledge that the competition is extremely fierce and the margins are wafer-thin and every company has its own set of objectives when it comes to playing in a particular market.
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In this category of products, we do not want to play at the expense of margins. But we are seeing an aggressive market share gain coming our way in the past three quarters, based on the IDC reports. In the consumer space, a larger play, we are seeing a substantial gain - first and second quarters put together, we have gained almost 4.5 percentage points of market share. But we will continue to ensure that we don't go under. Volumes don't get you anything in this business, it is a business which is hugely dependent on a customer seeing value in something and paying you for that value.
Is that why Dell has been consciously staying away from government business?
No, we are not staying away from government. We have a fairly high mix of government business. We have not been there in those large state government deals, which run into multi-million units as to our mind that business is financially not sustainable. It helps with volumes and market share but it is such a huge challenge to manage your portfolio. We are considering a few different approaches for that segment. So, when we find a way in which we can address it in a financially meaningful manner, we will participate. There are products that we will be launching over the next six to nine months at a price point which will make us much more visible in that space.
Dell has very little presence in the new form factors - tablets and mobile. What is the strategy there?
We are very excited about tablets. It is one area in which you will see us being much more aggressive than we have been. You will very soon hear from us about seven- and eight-inch form factor tablets running on both Windows and Android operating systems. We will come up with the Android first and follow it up with the Windows later. We believe that over a period of time, there will be a blurring of lines between the smart-phones, notebooks and the ultrabooks. And, the tablet seems an intermediately step to that.
In which segment would you position yourself?
We had the tablet in our product portfolio, but it was priced a little high (Rs 35,000-40,000) and was more in line with the technology that was available that time. You will see a substantially lower priced product than that when we launch the eight inch one. The launch will be very soon, much before the end of the year.