Techaisle Blog

A recent Techaisle survey of small businesses (1-99 employees) within US, UK, Germany, Italy and Brazil shows that only  37 percent of SBs have heard about cloud computing. Among those who have heard about cloud computing, 13 percent said that they did not know what it meant. 44 percent of the respondents think that cloud computing means subscribing to services such as servers or storage hosted by a third party and 29 percent think that it means access to applications over the web.

Even among the 29 percent of small business that use SaaS, not all of them have heard of cloud computing.

Clearly a tremendous education initiative has to be undertaken by both the channel partners and IT vendors to articulate the use of cloud computing. At Techaisle we believe that the vendors are busy courting large enterprises as they are easily identifiable and have established IT departments. Small businesses do not generally have IT departments let along knowledge and focus on cloud computing.

Techaisle survey finds that channel partners are most effective in approaching small businesses regarding cloud computing. To that extent if the vendors are empowering the channels then they are certainly succeeding. But it may be opposite that channel partners in order to survive are changing their business model to embrace cloud computing.

26 percent of small businesses have heard about cloud computing from their channels while only 13 percent have heard about it from an IT company. 25 percent of small businesses have also heard about cloud computing from blogs/forums and other social media websites.

Of those with dedicated channel partners, 48 percent say that their channels have approached them with some cloud computing offering.

While it may be said that the use of cloud computing among small businesses is on the rise there is definitely confusion and lack of knowledge about what it really means.

Anurag Agrawal
Techaisle

Mature markets are just around the corner in India.

• A lot has changed in the last 10-15 years and channels feel that in next 4-6 years by 2013-2014, about 20% of Indian market is predicted as a MATURE MARKET. Ten years ago the awareness for IT was created, PC was becoming a necessity. In last 6 yrs market has really picked up.


• The India IT market is growing and are looking for big changes. Most of the partners for various MNC brands have recognized the changes and are moving from being mere VARs or System Integrators to solution providers, getting into more of services than selling boxes.


• A dealer who has been selling software for a long time is now thinking of giving the whole solution. In the hardware market the margins are thinning, so the question is - how to make money?


• Money comes from services so channels are moving towards better markets like the Managed Services, Infrastructure software implementation, maintaining the hardware as well as the software. This has already happened in the mature markets outside India.


• One may also witness partnerships here - two big partners merging or two small partners merging forming the equation of 1+1=11 and not 2. Consolidations of various services are happening and some channels are emerging as leaders in the market.


• Business models are also heading towards a big change. The today’s scenario allows any partner to be ‘single vendor dedicated’. As an example if one is HP partner he is still selling & setting up solutions for Cisco/ IBM/ Mac. Channels opine they have to position themselves as multi brand and multi solution provider. Whatever the demand they should be able to supply it.


• The customer is negotiating or dealing with one single partner rather than trying multi service providers. This is one big change that has happened among channels keeping in view the changing perspective of the customers. These changes will help India emerge as a mature market.

Challenges in SMB (1-250 employees) segment for IT Vendors:

• It is a very disorganized segment.


• The IT maturity level is very low.


• A lot of patience is required while dealing with this segment.


• The volume business has always been a key concern.


• The principles / vendors only interested in managing bigger accounts as more money/ revenue and less effort involved.

Advice in Partner selection criteria:

• Instead of choosing many partners, vendors should focus on the selection of partners.


• The partners who are capable should only qualify the selection.


• They should then be trained and most importantly be supported by the vendor to grow and become a bigger partner of that small town or city.


•  The corporate clients of a smaller city always lack confidence in the local partners and their capabilities and deliverables. Therefore, a partner from a nearby big city may not be working efficiently but is always looked upon with confidence because of it partnerships & technological capabilities.


• If the vendors succeed in doing the same with the channels of smaller cities, this will surely be an advantage to ALL.


• The small city partners have the best of contacts to explore more business. The only challenge they face is the Bandwidth and proper guidance. The Channel partners feel that the vendor should fully support them.

New Technologies:

• There is and is not awareness about the new technologies among the channels. For example many partners may have only heard about Cloud Computing.


• Channels feel that the vendors themselves should come forward to promote the new / emerging technologies among their partners as well the users.


• There is always a demand for the new technologies and the channels are gearing up themselves for this.


• Channels also feel that today’s customer is obviously more knowledgeable. To cope up with the knowledgeable customers channels have to upgrade their skills and knowledge base. And that is the key to a partner’s growth.


•  All the big organizations the ITES/ IT companies and large corporate have their own in-house resources. They have a fully fledged IT department which takes care of all their IT needs.


•  Here, the channels only work as suppliers for the hardware and software.

Takeaway:

The government departments are also in the process of implementing various IT related program primarily for the SMB segment(1-250 employees) especially. This is being considered as the most potential segment in terms of IT growth and expansion.

The grey areas are the SMB and the government. Here the implementation has just begun and it will take another 4-5 years. Today SMB is the very large and the most potential segment and challenge lies in how to deal with them and their needs. The knowledge level of these companies/ this segment is very low as compared to the International markets and standards. The IT deployment in terms of products and human resource is very low and they are dependent on the IT vendors. A lot of knowledge has to go in educating these segments.

Channel partners are investing heavily in Data Centers but it will take time to develop as all the technologies are new.

The channel partners who are at the local level at Tier III & IV cities overall do not have much knowledge base as the bigger partners in the Tier I & II cities, so  they ultimately end up in Box selling. Even the customers of Tier II, III & IV are not well-educated and their understanding level for IT is low. A lot of education has to happen in these cities.

THE IT VENDOR MUST KNOW ITS AUDIENCE FIRST…

Gitika Bajaj
Techaisle

Launching and SMB focused cloud computing survey. Why are they buying or not buying. Do they even know what Cloud Computing means?

In India the Netbooks were launched about 16-18 months ago, however, growth in terms of sales has been seen only in the last couple of months. One of the major reasons for the growth has been product promotions by the respective vendors by introducing a low-cost “cousin” of the notebook during the economic crisis period. Though the ratio of notebooks to Netbooks remains low the channels see the growth as a positive trend. Netbook volumes are being driven by businesses.

While the Netbook market is still in its nascent phase in India, the channels in India feel that there is a latent market opportunity within three different segments driven by either usage or price-points.

First Segment: Mobile Segment
Initially the netbooks are being purchased by “new-age customers who have a desire to stay connected at all times”. These are:

• Students,


• Frequent travelers,


• Sales and marketing professionals

The market is seeing its usage in the corporate segment as businesses “are placing orders for Netbooks for those employees who were non-users of computing products earlier or for employees who are traveling. We are starting to see orders in batches of 10 netbooks to 25 netbooks for internal teams within SMBs and other businesses”. The low-cost is not the only factor for this segment driving sales, but portability, small size, internet connectivity and smooth functioning of Office applications are other reasons. The channel partners feel that netbooks successfully address an entry level price-point for the segment.

Second Segment: Second PC Household Segment
There are essentially two different types of consumer segments that are either purchasing netbooks or are currently investigating purchasing netbooks. The first type consists of students and children within households:

“Netbooks are essentially being purchased as a second PC by consumers in India. Netbooks may never become the choice for most Indian consumers, who are yet to buy their first PC, however parents are buying Netbooks for their younger children/toddlers for their educational needs or in lieu of video gaming products. This shift from notebook to Netbook preference is due reasonable price, low risk and easy maintenance.”

They see its usefulness in day to day activities like simple office applications or for music, entertainment, instant connectivity to social networking websites, video chatting, video streaming, E-mailing.

The second type of consumer segment is also buying Netbook as a second PC but who require and have a pressing need to segregate work units such as specifically for accounting or for side-business such as real estate or life insurance. They view that the basic applications for which a Netbook are web based applications, simple office applications like Word, Excel and PowerPoint presentations. They see its usefulness in day to day activities like financial transactions and E-mailing.

Third Segment: “White Goods” Segment
Currently a Netbook is “tagged” as a computer/computing device and its price point is in the INR15,000 – INR20,000 (US$330 – US$450) range. Once the price point comes below INR10,000 (US$220) the market will likely explode. And that time the vendors should sell Netbooks as “white good gadget” and not as a computer. It will establish itself as an essential item to purchase by females within households, a “must-have” gadget/device/appliance. “We have seen many women of the household buying a Netbook but hesitatingly”.

Why hesitatingly? Channels feel that Intel should bring in some concrete marketing and promotional activities to create awareness for its Atom Processor as many consumers are more processor conscious. If consumers are buying a PC it is because they have the money to buy one and therefore they try to go for a notebook. This trend has been witnessed in the non-metro cities like Nashik, Cochin, Chandigarh, Lucknow, Allahabad , Ranchi to name a few where many consumers are buying their first PCs. With no space constraints and no travel needs, the consumers in Tier 3 and beyond cities follow the mantra of “Bigger the Better”.

Consumers buy cell phones based on price, plan and usage requirements. They do not know and do not care about the processor inside a cell phone. Netbooks although fitting a space between mobile phones and notebooks due to its inherent initial marketing is forcing the consumer to inquire about processors. “It is perceived as an advanced version of a PDA and a far better alternative to high end mobiles”. Channels themselves are selling PCs based on type of processor. Many channels in India believe that either Intel should create more awareness of its processor or take the discussion of processor completely out of the equation and lower the price points.

All major vendors such as Dell, HP, Acer, HCL and Lenovo have launched their Netbook models in India. Brands like MSI, Simmtronics Asus, Benq, Samsung, LG and Sony also have a presence in the Indian market. Many channel partners are of the opinion that if the respective vendors bring the price somewhere below INR10,000 with restructured margins there is no second thought that the demand for Netbooks will grow by leaps and bounds as it aims to provide mobility solution for users including traveling salesmen, housewives, teenagers and consumers who require a stylish internet-surfing device. Then it would not be used as a computing product but also be able to penetrate the market as a “white good gadget” fulfilling needs like video streaming, audio communication & entertainment and gaming. It would clearly become a single product substituting the mobile, MP3, MP4 players, DVD Players and PSP consoles.

A planned intelligent marketing strategy for netbooks is required.

Gitika Bajaj
Techaisle