Channel Chief
“We are not going to play the market share game for at least three quarters”
Princy Bhatnagar, Director, Office Business Group, Xerox India shares his company’s roadmap for 2009, and how it plans to enable partners to become more profitable in the current market situation. He spoke to Sharmee Roy
What will be your roadmap for 2009?
This year, we intend to focus on specific areas. Firstly, we will try and maintain distribution credit capacity to the Xerox channel, which should remain at the same level as the last year. This may mean that we have to add more tier-2 partners or we need more SIs who are strong from the credit perspective.
The other aspect is new business opportunities, wherein we have a wide range of software applications that we have not been pursuing aggressively with our SIs in the past. We want to make sure that we drive this as a value proposition which will enable them to monitor how they are helping their customers bring down running costs.
We will eventually get down to the box pushing model for these software applications. Xerox will set up a three-layered channel network for pushing the software applications. The first layer will consist of big players like TCS who would also be able to provide turnkey solutions. The second layer will consist of SIs like HCL, Wipro and Zenith who will primarily target the mid-market. At the bottom layer will be the VARs who will be involved more in box moving and selling packaged solutions. These VARs will be a mix of sub-distributors, and partners catering to the SMBs. The first step will be to engage with partners and make them aware of these solutions. Subsequently, the next level will involve training them over a period of five months.
 We have also identified that the low-end of the laser printer category, that is the 1 to 20 ppm (Page Per Minute) segment, is not very lucrative in terms of margins. We are going step back in this segment and wait until we again see some upturn in the market. We are not going to play the market share game for at least three quarters and will focus only on more profitable printer categories like the network and the high-end A3 space.
Give a brief of your current distribution set-up. How does it differ from the earlier set-up?
Currently, we have three national distributors—Esys, Redington and Global Infotech. While Esys and Redington have been with us ever since we entered the distribution model, Global Infotech has been added to the network six months back.
At the tier-two level, we started with 60 equipment dealers. However today, we have 220 dealers across the country. For the supplies business, we have 150 dealers present across the country.
Earlier, when we started with the distribution model, we had a couple of regional distributors, Micromax Technologies and Ansatta in our network. However, we did away with the regional distribution model in 2007 and went on with a unified approach of national distribution and tier-2 partners.
Please provide us with an overview of your consumable business
Esys and Global Infotech are our national distributors for consumable business. In addition, they also distribute our equipment. About 60 percent of our consumable business comes from equipment partners while the rest 40 percent comes from the exclusive supplies partners.
Today, the consumable business contributes roughly 35 percent to the overall business of Xerox. In 2007, we had covered only 16 cities in the country. Last year, we have been able to increase our presence to 40 cities. Now these partners in 40 cities will be able to expand our reach further to 300-400 odd cities.
What would be office group’s market share? Which verticals are you looking to focus on?
The office group’s market share has grown from 6 to 10 percent over the last 3 years. We estimate that that both the standalone printers and multi-function printers categories are growing at a CAGR of 20 percent in the enterprise segment and 25 percent in the SMB segment. Our focus would be on the government and education segments, as these two segments are the only two segments which have adequate resources.
In the current market scenario, how are you enabling your partners to make their business profitable?
We would be working on two different aspects to enable our partners run their business effectively in this slowdown. We are very focused on change management and are sharing best practices with our partners that can enable them to manage the current environment. We carefully evaluate every business opportunity that comes for our partners, and in some cases, we are consciously refusing to do business. This is where we, as a vendor, are looking to value add.
For instance, we do not want to do business with state governments whose balance sheets are bad and dependent on external borrowing to run their financials. These are some inputs which partners may or may not have with them but in order to bag deals, they would have participated in the past. We want to value-add by passing on such inputs to partners so that they are able to do business in a better way.
The next part of the enablement comes in the form of training and effective product positioning. This is becoming more and more important as every customer today speaks a different language. Earlier, they wanted to buy the lowest priced device, today the scenario is different—currently they want to use a device without even paying for it. So when the context changes, the go-to-market also needs to change. This is where we are looking to equip them with tools on productivity and intend to drive down the TCO.
What kind of challenges do you usually come across in the market?
Our biggest challenge has been the name Xerox because this name is synonymous with copiers. For example, even when we advertise about our laser printers; we end up getting many calls for copiers. However, we do not sell copiers anymore. Today, we are not a big participant in the jobber market anymore. There was a phase when 100 percent of the jobber market was with Xerox. Now, we are largely in the enterprise, government and mid-market space; most of them were not our customers for printers and multifunction devices earlier. |