By Ramdas S
In what can be termed as a major restructuring and expansion of its distribution strategy, HP India’s Personal Systems Group (PSG) will appoint 50 regional distributors (RDs) to sell its consumer PC range. While the vendor refused to divulge the specifics, CRN learned from reliable sources that the new RDs are likely to comprise traditional telecom and Carry & Forward agents—who will be billed directly by HP.
According to HP sources, the original plan for this distribution revamp was submitted by Sunil Dutt, HP’s new head for the PSG business, to the global CEO, Mark Hurd, in January 2010, and it was finalized and approved in February.
HP has already communicated the new strategy to its national distributors. “We recently attended a meeting where HP informed us that it will be going beyond the present distribution model. The exact details will be unveiled in a week or two,” said Suresh Pansari, CEO, Rashi Peripherals.
The importance and impact of the impending channel realignment can be understood from the fact that Redington India recently issued a statement to stock market regulator SEBI and various stock exchanges that the changes in HP’s PC consumer distribution could have a negative impact of as much as Rs 130 crore on its revenues in FY2010-11 which would amount to a 12 percent drop in its HP PSG business.
SV Krishnan, CFO, Redington India, said, “As HP explores a new business model to resell its consumer PC range; we estimate a negative impact on our business that’s not very large as of now. This, we believe, is part of the changing dynamics of the PC market.”
According to Diptarup Chakraborti, Principal Analyst, Gartner India, “HP has reached a saturation point in their notebook business. They are struggling to move beyond the two lakh units per quarter mark. In a bid to reach more customers, it’s not surprising that the vendor is coming up with alternate routes to the market.”
Partners in Punjab say that HP is likely to appoint Unicorn, the local Samsung mobile phone distributor. “While there’s no official communication, we learn that an RD will be appointed who will cater to resellers. Authorized partners will continue to be billed by Savex,” informed Paramjit Singh Juneja, CEO, Secant Technologies, an HP retailer in Ludhiana.
Partners are concerned about the impact of competing with alternate channels. “Mobile phone resellers work at cut-throat margins, and their entry may affect the market operating prices,” said Juneja.
“PCs are more complex than mobile phones, so it will be interesting to see how mobile phone vendors customize and support these products,” remarked Chakraborti. |