IT hardware companies, in a bind already due to falling demand in a slowing economy, are now offering freebies to consumers and taking concrete steps to support distributors in an attempt to fuel demand.
The measures include offering distributors more percentage discounts (on pre-determined sales targets), bundling more solutions in a single product, more back-end discounts (on support and maintenance), and also increasing the credit period for distributors to around 45 days from 30 days, according to Diptarup Chakraborti, Principal Analyst, Gartner Research Services.
Arun Narayan, Head - Marketing and Corporate Communications, Datacraft India (principal distributor of Cisco and Microsoft), admits to “a concern on the demand side” but qualifies that “enterprise-facing product orders are placed back-to-back (unlike consumer-facing products), so we have no stock pile-up”.
Vendors are running various schemes to fuel demand in the market, he concurs. They are adding more value to the products besides there are customer support programmes. For instance, vendors are providing free assessment and helping clients redefine their needs for maximum utilisation of their money, also providing free training to the support staff of the clients for maintenance of the systems, and have accelerated their managed services support.
Subhodeep Bhattacharya, Country Manager for India and South Asia, HP ProCurve, says, “We are not pushing our stocks to them. We are moving their material to our regional sub-distributors. Therefore, we are not overstocking and we are catering to the orders that are coming in. We are doing lot of bundle activities with other HP groups. Like we are bundling switches with servers, then bundling switches with basic entry-level products...so these are in the line to generate more demand so that the base-level storage products can move faster into the market.”
NetApp claims they have a just-in-time delivery model, to save distributors from stocking. Surajit Sen, Director - Channels, Alliances and Market, NetApp India, adds, “But demand remains a concern. We are giving complimentary products, integrating more solutions in one product, for which we have allied with Microsoft, Oracle, SAP, Symantec and Vmware.”
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NetApp has adopted two support models: Booking attainment rebate (distributors get discount on achieving a certain booking) and objective attainment rebate (distributors are given incentives on achieving targets on training for sub-distributors and their own sales staff). The company provides its distributors with a market development fund that they can utilise to generate demand through holding demos and seminars. “Also, we are on verge of tying up with GE Money, GE can pay us credit in the specified time and distributors can later on pay GE,” adds Sen.
R Dhamodaran, Sr Vice President, Channel Operations and Commercial Strategy, India and SAARC, Cisco, says Cisco Capital — a wholly-owned subsidiary of Cisco which specialises in financing networking solutions — has recently introduced a Zero Percent Progress Payment programme. “It offers our customers in the APAC region a 120-day deferred payment option when deploying the Unified Communication solution from Cisco, and at the same time extends payments to the partners at deployment milestones,” he adds.
To inspire additional sales, Cisco will provide rebates and incentives, as also Cisco-funded network assessments to identify opportunities within the customer base.
Consumer-facing product companies, on their part, are also offering exciting freebies to lure consumers, like consumers can win a Sony Ericson mobile or leather carry case on purchase of premium notebooks of Lenovo. They can also get a one-year additional onsite warranty on mid-range consumer notebooks and a two-year warranty upgrade, printer or UPS on purchase of the desktops.
Ramprasad L, VP, Transaction Business, Lenovo India, says, “Lenovo aims to increase the profitability of partners through warranty and other value-adds. We plan to address the issue of liquidity crunch through better margins and immediate payment rebate schemes, for example, Lenovo is offering per sale rebate on Lenovo S10 netbook sales.”