Techaisle Analyst Insights

Intense India Focus

Indian government's Digital India campaign is getting the attention of almost everybody in the IT industry, be it the multinationals or the local players. Sensing the vast potential, Dell started early with its governing body inaugurating the entire launch of Digital India in Delhi. Summing up his excitement, Alok Ohrie, President, Dell India said, “It is one of those campaigns which I believe is going to really position the country to a point where clearly it will continue to become stronger as an economy and would help realize the dreams of the nation with regards to it being a knowledge based economy. This is one initiative from the government that's going to really energize spend on IT and it is also going to be a big play for most of the players in the IT industry”.

Dell in India is also beyond just domestic operations. Almost all business functions that exist globally are represented in India including an R&D setup of about 2,500 engineers and PhDs. The India-based R&D unit seems to have played a big hand in the development of Dell’s 13G server technology.

Capitalizing on privatization

Immediately after privatization, Dell executives saw the potential for an accelerated pace of execution of various initiatives at a global level as well as a whole lot of flexibility and encouragement to try new go-to-market models. This agility is what Dell India needed and as per its executives “has benefited Dell India big time”. In fact, they are quick to point out that the India operations have grown a little faster than the global business, “our growth in India versus the competition is five to six times faster”.

Midmarket businesses in India are listening and are accepting Dell’s end-to-end solution story and are expecting an advisory role and a consultative approach from Dell in their engagements. Many digital commerce businesses are also looking for Dell to help them define a blueprint for future with regards to IT deployment. Being private with an end-to-end solution orientation Dell’s India sales organization is neither getting limited nor getting constrained in its alignments with customer business objectives, nudging the customers to a future ready infrastructure capable of delivering a future ready enterprise. Playing an advisory role is also forcing the sales organization to be creative in its solution design, unrestricted as it does not have any legacy to protect.

The new GTM

In early 2014, Dell India rolled out a new GTM strategy for the India market. The new GTM strategy was first piloted in India and provides customers with a choice of being with Dell, either direct or indirectly through a partner. It is a GTM model that lends itself extremely well to improving Dell India’s engagement across different customer segments. This strategy brings a change from Dell India’s direct approach in the past with Dell introducing three RTMs: 1/Dell Led for direct sales engagement, 2/ Partner Led for business accounts with special pricing and products; and 3/ Distribution Led for consumer IT products.

Within the GTM model there are three different RTMs (routes-to-market). First is the Dell-led RTM which is Dell’s direct engagement with end-customers. Some of the account managers’ training modules have been modified to help them have deeper, richer, more mature conversations with customers in the form of advisory roles and consultative approaches. However, Dell-led RTM does not mean that partners are shut out from engaging in the same account along with Dell. The partners bring complementary skill-sets to work along with Dell solution experts. Dell asserts that it is more than willing to work with a partner and hence Dell has named the RTM as Dell-led and not Dell direct.

Within the Dell-led RTM, Dell has further segregated accounts into two: one that is more of reach, development & penetration consists of Dell India’s existing accounts and where a lot is already known about the customer; and in the other are those accounts that Dell calls as activation. There are close to 2,500 accounts in Dell-led RTM which are split into four geographies - the north, south, east and west.

The second RTM is the Partner-led RTM for business accounts with special pricing and products. Apart from the 2,500 accounts, the rest of the named accounts have been identified for partners to engage with by identifying, developing and addressing the opportunities. Dell is in a support mode in these opportunities.

The third RTM is distribution-led RTM focused on consumer IT products. This RTM was developed to expand reach into customers in tier 3/4/5 cities as well as customers who are not IT savvy. Dell currently has five distributors in India and a web of local distributors to reach into remote areas of India.

Disappearing Partner Conflict

Dell is recognizing the need to erase the perception of consistent channel conflict and hopes that the three different RTMs will help. Alok Ohrie points out, “anomalies have been removed through the new GTM model and it is a very, very predictable model for the partners”.

Techaisle’s India analyst, Gitika Bajaj and Arun Mishra crisscross the entire country directly meeting with channel partners. Not every Dell channel partner is happy but from an overall perspective there is obviously tremendous momentum and Dell’s RTM has legs. Comparing Dell with its closest competitors, channel partners say that “Dell's responsiveness is impeccable when a deal is being struck at the end user level”.

Look back

As is the case in each year’s SMB research, Techaisle SMB survey respondents are asked to detail their plans for acquisition of different types of client devices. Two of the major categories investigated by the surveys are desktop PCs and notebook PCs. To establish a baseline understanding of PC use and demand, Techaisle asks SMB respondents to specify the number of endpoint devices that are currently in use within their companies, and then asks them to specify the quantity that they are planning to buy over the next twelve months. To provide actionable insight to our clients, the question asks separately about desktop PCs, notebook PCs and tablets. While 2016 survey is in the field it is worth looking at the trends of last two years. In 2014, both the US small and midmarket businesses were bullish about new desktop and notebook purchases. But in 2015, the percent of US SMBs planning to buy PCs had dropped by 40% from 2014 for both desktops and notebooks. However, although the average number units of desktops planned to purchase dropped from 2014 to 2015 the average number of notebooks planned to purchase increased substantially from 2014 to 2015.

Many desktop buyers were motivated to replace existing units because they were reaching end-of-life and take advantage of Windows XP upgrade path. Desktops are also more of a planned/budgeted item than other client form factors (notebooks, tablets), meaning that desktop acquisitions are more likely to appear in formal purchase plans than the mobile units, and less likely to be acquired on an ad hoc basis. Notebooks are usually ad hoc purchase items – meaning that they would be underrepresented in research of this sort relative to desktops. Additionally many users upgrade their notebooks over time (to replace damaged units, to get features like touchscreen, to obtain lighter or smaller products, etc.).

However, corporate purchase intentions do not provide a complete perspective on mobile device acquisitions.

Potential Impact of BYOD on US SMB PC Purchases

Figure below presents a perspective on corporate purchase plans and the impact of employee purchases of notebooks. The top two sections of the table, shaded in green, illustrate the proportion of businesses by employee size reporting desktop and/or notebook purchase intentions, and the number of units that they plan to acquire. These figures are used to prepare a “net increase” figure – the average number of new units expected to be deployed by businesses in each employee size category. These two grey sections are followed by a line of percentages, shaded in purple, which shows the ratio of corporate desktop purchases to corporate notebook acquisitions. It shows that microbusinesses with 1-9 employees are much more likely to be buying desktops than notebooks, and that other SMBs are planning to buy 25% to 99% more desktops than notebooks.

The next section of the table, shaded in blue, begins with the BYOD penetration statistics that appear at the bottom of the figure. It then calculates the impact on notebook purchase intentions if this ratio is fully reflected in notebook purchases (the “at 100%” line) and if employees were to buy notebooks at half of the BYOD penetration rate (“at 50%), showing both corporate and employee purchases of these devices. These revised figures are used to calculate the desktop to notebook PC purchase proportions shown in the second set of purple-shaded cells. Here, we see that if employee purchases of notebooks are equivalent to current BYOD penetration levels, new notebook units would be about equal to new desktop purchases in most employee size segments, while a 50% scenario would result in ratios ranging from about 1:1 to 1:6 in all but the smallest employee size category.

Dell continues to show that it is serious about small businesses. In an economy where consumer purchases are slowing down, small businesses are continuing to refresh their technology and are showing growth rate in IT spends.

Dell today introduced the Vostro V131, a thin, powerful, and sleek laptop designed specifically for small businesses. It is an ultrathin laptop housing Intel® Core i3 or i5 processors, geared towards maximizing small business productivity. A removable 6-cell battery with 2nd generation Intel Core processors, both available as an option, is expected
to deliver up to 9.5 hours of battery life, allowing SMB users to work virtually anytime, anywhere.

Techaisle’s small business survey shows that not only enhancing IT is important for small businesses but also improving productivity through automation is extremely important. Among the newer technologies that they are currently investing in include: Windows 7, refresh of PCs and servers, as well as smart phones. It is quite clear that small businesses are seriously looking at enhancing their IT infrastructure, migrating from older technologies to more modern hardware platforms are key initiatives for reducing cost of operations. Over 60% of small businesses think that it is time for a refresh of their PCs and servers. To that extent, the timing for the introduction of Vostro V131 could not be any better.

Not only is Vostro V131 designed for improved productivity and enhanced mobility as
repeatedly by small businesses, but the laptop has also addressed the need for data security and backup. Remote back up and disaster recovery is still a top of the mind IT initiative for small businesses.

The Vostro V131 has very useful collaboration options including a full HD camera, SRS Premium Voice Pro, digital array mics and built-in Skype. In addition, the laptop offers two USB 3.0 ports, a chiclet keyboard with a backlit option, and quick launch keys. These additional collaboration features play extremely well into the new small business workplace scenario. Techaisle’s small business mobility report shows usage of relevant collaboration applications used by SMBs when traveling.

Of the options available in My Business Toolkit, that comes loaded on V131 (from September onwards), the most appropriate and useful for a small business are the Ruby Receptionists, a virtual reception service and Trend Micro Worry-Free Business Security Services.

Speaking about the announcement, Sam Burd, Vice-President of Dell’s Consumer & SMB Product Group said, “We designed the Vostro V131 to deliver fast, uninterrupted multitasking for today’s business challenges, the result is a feature-rich laptop for mobile professionals who want full performance to support their technology demands without sacrificing design and portability. In addition, the V131 offers services and software solutions that improve productivity and data security.”

V131’s starting price available on Dell.com is US$499 with a Celeron processor and a backlit keyboard which is a great price for a small business. An i3 based model is available for US$599. The price point is even better for small business owners that may be contemplating using Tablets instead of notebooks. V131 not only serves as a great content creator but also a secure and reliable collaboration tool while enhancing productivity.

We fully recommend it.

Anurag Agrawal
Techaisle

There is a continuum from smartphones to notebooks, with a variety of sizes and operating systems. The market will continue to be in a state of flux for several years before showing any signs of stable continuum.

• Widespread adoption of cloud-based apps as well as VDI will make the OS and form factor comparatively less important

• Apple will continue to have the “cool” factor in its favor, especially for those using non-office apps

• While most vendors have not been able to match Apple’s cost/price advantage (which continues to exist despite its cool factor). However, this will change as Nokia (along with new vendors from low cost economies) begin to manufacture mobile devices in large numbers at low prices

• Android developers have had the flexibility of implementing their own versions of Android (in order to distinguish themselves) although this is like to become less of a factor in the future but that itself becomes a problem of consistency and uniformity

• Apple’s advantage in terms of no. of apps will soon diminish due to several factors:
  
  
  • Of the hundreds of 1000s of apps, only a few hundred bring in majority of revenues. Most Apple ISVs are part-time developers or unprofitable and will disappear from the market
  
  
  • The vast number of Windows-based apps developers will quickly adapt their apps to Windows mobile, diminishing Apple’s apps advantage and give businesses more relevant business-related apps
  
  
  • While currently, the focus is on horizontal apps, vendors will find it increasingly important to develop vertical apps  to expand the user base and obtain higher margins
  
  
  

• Businesses will need to support multiple devices/mobile operating systems – making remote mobile device management an expanding market. Telcos, hosting companies and channel partners will play an important role in enabling that support

• Additionally, synching up different devices will also become more important and VDI will help in achieving that objective

It is too early to project future shares of various device forms and mobile operating systems as the market will continue to be in a state of flux in the next few years. We cannot write off Microsoft Mobile or Nokia. They will helped due to their vast size and resources, deep commitment and large number of users/developers.

On the other hand, Android developers/devices are a varied lot, with each having a low share of the market. WebOS (Palm, now owned by HP) has some promise but it is unlikely to regain its glory days of late 90s. RIM is the most at risk due to the proliferation of new devices and mobile operating systems

Although smartphones have the potential of increasing their employee productivity, it will happen only for those employees who are smart enough themselves.

Anurag Agrawal
Techaisle