ASUS to keep a razor sharp focus on profitability

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Vinay Shetty, Regional Director- India and South Asia, ASUS

Thus far, while ASUS’ focus has been on selling motherboards, it will now have a renewed focus on selling other high margin components in South Asia, discloses Vinay Shetty, Regional Director- India and South Asia, ASUS

Vinay Shetty, before becoming the Regional Director at ASUS, had worked through the rank and files in the company and graduated his way upwards over the course of 13 years. Other than him, the only person heading the country operations, who was not a Taiwanese, was a Russian. Along with the experience that he had gathered, it was interesting when he sat down with the ASUS leadership to decide on how the South Asia operations will be anchored by him.

The leadership team in Taiwan is very collaborative while charting the strategy. As Vinay Shetty, Regional Director – India and South Asia, ASUS, aptly puts it, “They don’t believe in backseat driving.” They have complete confidence in the plan of action prepared and get involved in the discussions without putting any targets related pressures. An ample amount of operational independence is given to achieve the targets. “Nonetheless, the initial target given to us was achieved in nine months,” he adds.

Shetty decided to leverage this independence to diversify the businesses which existed, but were not tapped to the extent that they should have been. The focus during 2010 – 2012 was on the numbers. The company was always behind selling more motherboards, which never allowed the other product suites to perform. It did not get the room to grow. The company was successfully achieving the numbers. Shetty decided to change gears and widen the net of the products that ASUS was marketing in the country. “We decided to change the strategy. We realised that to survive and sustain, it is important to expose other innovative product suites out of ASUS’ kitty, to pursue profitability rather than just achieving volumes,” mentions Shetty.

The thrust on many other suites began, be it graphic cards, optical drive, sound cards (operating only in the high margin 119 decible and above cards), Xtion PRO sensors, (devised only for developers), car cameras, servers, wireless offerings, etc. “No one in the enterprise or channel space knew we are doing it,” says Shetty. In the monitor space, most of the peers are in 18.5, 19, entry level because they want to play a volume game, however Shetty’s strategy was to play in the 22 and above range because of higher margins. “The volume is less but the profitability is good,” he says.

From doing a volume business, the objective was to turn the South Asia business profitable and self reliant. Hitherto, the challenge was to achieve the numbers, but no more. “The top leadership was confident about us achieving the targets, but they believed in giving a free hand to do it, and hence the step to branch out into newer areas,” he says.

While the the matured products category still holds a key position to achieve profitability, most of the time that Shetty spends is on growing the emerging products portfolio. “The channel quality and number has dropped, which requires us to make channel partners undergo rigorous training,” he says, pointing out that there are times, when the company has to kill certain offerings. “We are literally sitting in a 28 country scenario. Every state has a different thought process,” states Shetty. The challenge is always to find the next best fit for various regions. The conventional 80:20 ratio works well for ASUS. “Sixteen cities in India give ASUS 72 per cent of the business, and we also have a district wise evaluation in terms of which region is doing well and which products are doing how much,” informs Shetty. The intent is to reach out to other cities and offer other products that ASUS has started
focusing on.

Highlighting how the company is planning to synergise the successful products with others, where the focus has shifted, Shetty says that efforts are on to synergise, but the channel partners do not have expertise in every segment. For example, a channel partner doing good in the business of motherboards, will not be as good in selling ‘AiMesh’. There are not many partners who have adapted to meet the market demand and there are only a few such partners who have successfully reshaped and aligned to remain in sync with the technology evolution. To synergise with value adders is easier. “They proactively suggest us ideas about new offerings,” he mentions.

The way forward now is to create an ASUS brand. On the back of the brand recall that ASUS has because of motherboards, it is natural to think the other product suites will also be of a similar quality. End users and channel partners are being convinced to rely on the brand reputation because of motherboards, to cross and upsell other products. An ecosystem is being created. Parallelly, Republic of Gamers Global (ROG) – ASUS is operational. “We are planning to have gamers as opinion leaders and influencers,” he says, because when they recommend, it becomes a trend. Gamers use a lot of ASUS products and understand the technicalities more clearly. The dealers and partners are apprised about this, so they can accordingly convince the customers.

ASUS’ channel strategy
ASUS offers multiple schemes to channel partners. “The schemes should not be used as a loophole to discount the product, which is found many times in the market scenario,” he comments. ASUS provides loyalty programmes. The partners who perform and achieve the business will automatically not offer discounts, which can backfire the market in the subsequent year as it will result in an overall reduction of prices.

The company identifies the partners who are the next best players to raise themselves to the advanced stage from being a distributor, sub distributor, etc. “We encourage them to keep as many products of ASUS as possible because the profit margin ranges from product to product and ASUS also has innovative offerings, which can also give better margins along with significant value proposition to their customers,” says Shetty.

AiMesh
ASUS is strongly focusing on AiMesh, which is ASUS Multiple Access-Point System. The core of the offering is to combine ASUS powerful routers to form a whole home coverage Wi-Fi system with centralised control. However, there might still be some dead-zones in specific environments (concrete wall or large yard), so a powerful software (Firmware) upgrade has been designed for ASUS router buyers. By upgrading, customers can combine more than one ASUS performance routers to form a Wi-Fi system.

The product was launched in March 2018. The existing users of ASUS can also buy AiMesh. Previously, with just the Mesh offering, the customer would have to buy an entire kit, but with AiMesh, the current users who are already using the Mesh product, do not have to buy a separate bundle, thereby saving costs. “Currently, we are targeting five to seven per cent of the total market for AiMesh,” informs Shetty. The target market for AiMesh would be end users and Small Office Home Office (SOHO).

With other whole-home Mesh Wi-Fi systems, customers were limited to using matching hubs — often available only in multi-hub packs — and the old router does not work with these systems. Whereas, with AiMesh, the existing routers can still be used along with the Mesh router. AiMesh supports separate Wi-Fi name (SSID) for 2.4 GHz or 5 GHz band. This is an advantage compared to rival Mesh routers. Also, AiMesh can create a single, house-wide network name so there is no need to constantly switch between networks, no matter where it is being accessed in the home.

AiMesh keeps an eye on the signal strength to the device, and switches it seamlessly to another source, if necessary. Also, the network strength and connection is not affected in case if a device gets disconnected. The other devices take over, and the connection is seamless. The ease of setting up the AiMesh and the connectivity it provides is the biggest USP. The product can be set up within a minute. Moreover, ASUS has partnered with TrendMicro for security. It is a lifetime AI protection facility for any internet threats. The software updates are done swiftly and are delivered to the users, so the security is well taken care of.

The partner community is also trained on AiMesh. The approach taken is to reach out to 10 to 15 partners on a regular basis and explain and orient them on the product. Instead of giving a presentation with hundreds of partners, where the feedback loop is weak, it is better to engage with a smaller number, take feedback and then keep fine tuning.

“We are targeting the SI community to market the AiMesh, because they are more aware about the challenges being faced by their customers on the connectivity side,” shares Shetty.