Seagate rules channel mindspace
By Akanksha Prasad
With PC adoption growing and broadband penetration increasing, there has been an explosion in the data storage requirements of end-users. Just a couple of years back, a 20 GB HDD was considered a luxury. Today, 80 GB has become a norm, and users are pushing up the demand for higher capacity drives, mainly 120 GB and 160 GB.
In terms of market break-up, 80 GB is currently the entry-level with volumes of over 50 percent; however, 120 GB is catching up fast, and channel respondents expect it to become entry-level in the next quarter. The price differential between 120 GB and 80 GB is still around 25 percent, with the former quoting at around Rs 2,400, and the latter priced at an MOP of Rs 1,900.
Although the share of white-box PCs is on the decline, HDDs have maintained a steady pace of growth of 25 percent. A large chunk of the demand is coming from upgrades, even in smaller cities. In fact, for many respondents, upgrade sales constitute nearly 30 percent of HDD volumes.
The other growth segment is the external drive, which has started seeing healthy volumes on the back of increased notebook sales. Going forward, respondents expect external drives to grow in volumes. One of the factors that is propelling demand for external drives is that several old PCs don’t support new higher capacity drives, in which case the customer prefers to buy an external drive.
Service and support
Like all component categories, post-sales warranty support stands out as the most important criterion for channels in dealing with a particular brand. All vendors today offer a five-year warranty, so finally the channel preference boils down to the execution of warranty policies on the ground in terms of repair and replacement time, dead-on-arrival incidences, and the warranty escalation mechanism.
Seagate clinched top ranking in warranty support, followed by Samsung, Hitachi and Western Digital (WD). Respondents revealed a warranty turnaround time of 4-5 days for Seagate, while for Samsung it is an average 8-10 days. Though both WD and Hitachi have a door-to-door warranty service supported by a toll-free number, their turnaround times are longer than those of their other two peers. While such initiatives do save partners the trouble of physically taking or transporting the product to the closest service center, respondents say that the process of availing the door-to-door service and logging in the complaint is often cumbersome and complicated. The local ASP model still suits channel partners. DOA in the case of hard drives are low for all brands, and hence not a contentious issue as in the case of ODDs.
Product availability
Product availability is ranked as the second most important criterion. The regular availability of products is of course essential for channel business, but it is also critical that there is no over-distribution of products because this leads to price undercutting which eventually hurts the entire channel. Seagate and Samsung both reported the widest availability of products across the 55 cities polled. However, in certain tier-2 cities, Seagate is over-distributed. The Samsung distribution model is better streamlined, and hence it is ranked ahead of Seagate. WD scored wider availability than peer Hitachi, which is almost not present in many tier-3 cities polled. Parallel imports of WD in smaller cities in states like AP and Maharashtra are hurting resellers.
Price-performance
Price-performance is rated as the third most important criterion for hard drives. In terms of pricing across all categories—desktops, notebooks and external drives—Hitachi has the lowest MOP, followed by WD, Samsung and Seagate. The price differential for entry-level products varies between 15-20 percent. Although Seagate is premium priced, it is still the most preferred because the common perception is that it’s the best-performing product. Failure rates for in-warranty products are the lowest among Seagate drives. Respondents suggest that Samsung’s product quality has taken a hit over the last few months, a perception well-reflected in the survey as the IT major stood last behind Hitachi and WD.
Marketing and branding
Seagate has etched out the reputation of being a superior quality product in the customers’ psyche. It is the brand with the maximum customer-pull across all geographies. Samsung, due to its wider portfolio spanning IT and consumer products, also has substantial brand awareness and pull. Although WD has been around for long and customers do know the brand, the pull for it isn’t much. In terms of local marketing Seagate is ahead of its peers. The vendor has been doing regular events in the security surveillance and gaming solutions space, even in smaller cities. Hitachi polled third, presumably because since last year it has increased its channel focus and has been conducting road shows to enrol partners.
Channel relationship
Channel policies and management contribute substantially to creating confidence among channels. While warranty issues are commonplace for every brand, what often makes the vendor more preferred is how these issues are handled by its channel executives, local and national, when escalated. Channel satisfaction is often dictated by the quality of the response received in times of distress. In terms of channel responsiveness, channels voted Seagate as the number one vendor, followed by Samsung, WD and Hitachi.
While Seagate doesn’t have many local representatives on the ground, its channel managers are proactive in calling up channels and informing them about new schemes, products and changes in pricing. Seagate’s national channel managers too are as responsive, and, according to respondents, quick to respond to channel distress calls. This, according to respondents, is also because Seagate is a one-product company, while Samsung has multiple product lines and hence its channel responsiveness for a particular product category often suffers.
Conclusion
There is no doubt that Seagate rules the channel mindspace, primarily because it’s a one-product company and hence completely focused on HDDs. Samsung isn’t far behind, but it surely needs to boost its channel responsiveness. Hitachi, on the other hand, emerged as the surprise package in the Channel Champion survey, ranking ahead of WD which has been in the market for much longer.
Intro
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