The growth in PC penetration has found its echo in the growth of motherboard industry. With margins getting thinner, channel has matured to avoid overstocking and dumping of inventory.
The Indian PC market has seen QoQ (quarter-on-quarter growth) of approximately 7% in Q2-Q3, 09. Unlike the belief that the desktop market is shrinking, figures show a 9% QoQ growth in the Desktop PC vs 3% in Notebook market.
"Notebook growth shall definitely be higher in months and years, but Desktop market shall sustain the market share percentage as India consumer base is wide and still Desktop is preferred in the home and education segment. Assembled PC market share remains at approximately 45% of the total share, totalling approximately 3.2million units /year," says Sushmita Das, Country Manager, Kobian India
"The current motherboard market in India is estimated to be around 500-600 crore. With the PC penetration growing and the economy picking up in the last quarter, we expect the market to pick up in the next year," says Mr Rajan Sharma, General Manager, Sales - MB BU, GIGABYTE India.
Trends The growth in PC sales echoes in the motherboard industry. Motherboard manufacturing is now concentrated among the Tier-I companies, which together accounted for 70 per cent of all units shipped in 2008."In the current market scenario, we see a lot of growth taking place in the mid-segment. Vendors who fall in the Tier I today hold more than 70% of the market share," says Rajan Sharma. From the buyers' side, there is a plenty of choice in the motherboard market for someone looking at buying a motherboard. LGA 775-based motherboards are still around alongside newer core i7 boards and AMDs new AM3 socket-based boards have also joined the band. "However, in a year's time, there's no telling if we'll still see as many LGA775 boards as we do right now. The core i5 is finally coming in to replace the core 2 line of processors," says Rajan Sharma.
"DDR3-based motherboards will be the latest trend. We have already launched 785G & G41 with DDR3 compatibility for AMD & Intel segments, respectively," says Rajan Sharma.
According to Kobian, the technology growth in all other components like Graphics, Memory, Audio Codec has complemented the growth in specifications in Motherboard. "Main Channel business shall be focussing on IntelG41 & G43 chipset solutions which supports DDR2 & DDR3," says Sushmita Das.Big players dominating the landscape Focussing on their motherboard activities, immense power is concentrated in the manufacturers in Tier I, which controls more than 70 per cent of the unit shipments.
ASUS is the No.1 motherboard brand in the world, commanding the biggest market share globally. Today, one in every three computers houses an ASUS Motherboard. ASUS is the pioneer of numerous innovations that have gone on to become industry standards. Recent examples include the Xtreme Phase power design, Stack Cool 3+ PCB, and anti-EMI shielding for safe operations. With its decades of expertise and dedication to pushing the envelope of motherboard design, ASUS is poised to continue leading the industry in motherboard performance, safety and reliability.
Elitegroup Computer Systems (ECS) expects its own-brand motherboard sales to remain flat at 7 to 8 million units during 2009, but foresees significant growth next year. The company will expand its mid-range and high-end product lines, and plans for a growth of 20%, with a total of 8.4 to 9.6 million shipments.
With OEM motherboards included, ECS plans to move 17.5 million units in 2009, down 17% from 21 million in 2008. The loss is mostly attributed to stiff competition from rival motherboard makers like Foxconn and ASRock. The company noted that about 80% of the motherboards sold this year were Intel-based, while the remaining 20% were for AMD platforms.
Gigabyte India, a manufacturer of motherboards and graphics cards, plans to sell two million motherboard units by the year 2011. At the recently held Gigabyte Annual Channel Meet in Hong Kong and Macau, the company unveiled its 2011 roadmap for India, with plans to increase focus on upcountry markets and touch maximum number of small cities in the next year.
Speaking at the occasion, Henry Kao, President, Service and Sales Marketing Centre, said, "We are proud of the team in India and the sales figures achieved in the current year. Encouraged by this performance, we now look forward to invest more in brand building and post-sales infrastructure. We plan to undertake focussed steps to reach our aim of two million sales by 2011."
"Having established its mark in the South and West markets, Gigabyte will now concentrate on the North and East markets in the coming year," the company said. "These steps are aligned towards taking the Gigabyte market share in the country from the current >20 per cent to 25 per cent in the next year."
Gigabyte further said, "Having invested in excellent post-sales network in 2009 with touching almost 100+ locations for service and establishing 'Toll Free' technical helpline, the focus will be on creating more brand value and visibility during 2010 to reach and meet new customers. The focus would be to create more informed segments in DIY markets." Channel charges Motherboard business has always been a lower margin product, but now channel has matured to avoid overstocking and dumping of inventory. "The knowledge of chipset roadmap and planning of various brands can definitely improve the ROI for the channel partners. Partners should focus on a basket of models compiling on N-1 solution, mainstream and high-end boards. The mainstream boards shall not offer high margins, but the N-1 and high-end models shall get higher margins," says Sushmita Das.
"These are challenging times and the channel partners would benefit by aligning with TEIR I vendors, who have the best post-sales infrastructure to depend upon, best quality of products and above all excellent channel policies," says Rajan Sharma.
Currently, Gigabyte is spread across 270-plus locations through its distributors. In order to grow this network, the company will be concentrating on building a sound structure, conducting regular training on latest products for its channel partners, providing competitively priced products that match its performance. "We will also be strengthening our post-sales services. Through our recently launched toll-free number, we have been able to form a good connect with our partners and customers. Further, we are also aware that it is important for a channel partner to be assured that his investments are secure and will provide attractive returns," says Rajan Sharma.
At present, Gigabyte India has four national distributors, INGRAM MICRO, REDINGTON, NEOTERIC and AVNET. We are looking at expanding our distribution set-up in other SAARC regions. "We are spread across 270+ locations through our distributors 150+ distributors and 2,000+ resellers and our target is to take this number to more than 400 locations by 2010," says Rajan Sharma.
Kobian offers a range of products which create a unique offering for the partners. Business is about striking the balance is the regular product and some special offering. The right mix allows a profitable and sustainable business line.
Kobian has two distributors for motherboards who reach out to prime 400 dealers. "Our focus is on upcountry channel and our distributors and dealers have reached to the deepest pockets in the channel," says Sushmita Das.
SES has emerged as the largest selling distributor for Intel motherboards in the world. Having achieved this remarkable milestone gives impetus to the renewed focus that SES has had on ensuring its position as the number 1 Intel distributor in India.
Reaching the top position as the No. 1 Intel distributor overall in India, was itself a momentous achievement when SES assumed the position for the first time in Q2 2008 (September 2008). Remaining at the top for five quarters in a row is an achievement in itself. With SES legendary capability and reach, the achievement of the magical number of 100,000 Intel original motherboards has been a dream that the teams at Intel and SES have been targeting and working towards for some time already.
Commenting on the fabulous efforts of SES, Mr Pradeep Thamman (Country Head - SES), stated, "Under the guidance of our MD, Mr Kamran Gani, we have been seeing a very positive growth in our business with Intel over the past one year. We have all been waiting for the magic moment to come where our efforts, especially that of our Intel product head Mr Gangadhar - delivers us something special. Selling 100,000 motherboards in a single quarter is exactly that magic! The fact that SES has been able to achieve worldwide No.1 status for motherboards business is like the cherry on top."
Another feat that makes this achievement even more special is the fact that SES has already sold more than 100,000 units of chipset motherboards. This solidifies SES overall dominance in motherboard distribution in India.Branding and marketing activities The brand promotion of Gigabyte India will focus on three things - product, infrastructure and customers. On the product side, the company will be bringing in the latest innovation in Motherboard features, and best quality products. "We will also be working on developing the biggest post-sales network for our partners and customers. To reach out to the customers, we plan to touch base with them at different levels like campus, schools, etc.," says Rajan Sharma.
The consistency of a brand is the best brand promotion. The IT market has witnessed upsurge of various brands and their vanishing from the market too. Mercury is one of the most consistent brands which is present and selling in India for over 12 years with the same consistency and focus in the market. "Other activities like advertisements, schemes, etc. are facilitators for the business for our channel partners," says Sushmita Das.
Giagabyte's marketing plan includes a combination of activities aimed at product, channel and customers. To promote its products, the company undertakes advertisements, product reviews. "To develop our ties with our channel community, we organize channel meets, reward them for their performance, offer them rebates and regular attractive schemes. To touch base with our customers, we also conduct campus activities, gaming events, tutor class-DIY activities, shop branding/decoration. We also conduct regular market surveys to get the feedback and response from our channel partners and customers," says Rajan Sharma.
Mercury has been reigning on the top slot in the third-party chipset motherboard category for a long time. "We have slowed the numbers in the last 6-8 months consciously as we don't want to dump stocks to our dealers. Market intake capacity was reduced and thus we followed the same trend. With the change in strategy, we are currently at a 16-18% market share," says Sushmita Das.Support strategy Customer support is an essential ingredient in the successful marketing of products - from domestic appliances to high-tech computer networks. It is an important operation for most multinational manufacturing companies. It provides installation, inspection and maintenance support their worldwide customers. Customer support on faulty machines or customer enquiry is usually supported by service centre or help desk of the customer service department via telephone calls.
Nowadays, customer support is most important in any sphere of business. It is important not only to attract as many customers as possible, but also to keep the old ones satisfied.
"At GIGABYTE, our constant effort is to enhance post-sales service and provide maximum support to all our customers and partners. Gigabyte has a well-equipped call centre service outsourced in collaboration with ACCEL FRONTLINE, which assists customers and channel partners on all support services. We have 119 service centres in place and we are planning on increasing this number," says Rajan Sharma.
Kobian offers service support through its support arm Kaizen Infoserve across the country for all Mercury and iXA products. "This is another advantage for our partners who can purchase all peripherals of a PC from one point and get services also from one point," says Sushmita Das.
At present, South and West are the best performing markets for Gigabyte. The company will be concentrating on channelizing the East and North markets in the 2009/2010. "Right now, we are predominantly focussed on driving growth in these regions through channel consolidation, enhanced post-sales and RMA services, channel development initiatives and strong focus on delivering reseller partner return on investment. We are also recruiting qualified reseller partners into Gigabyte's Channel Partner Programme so as to spread the market," says Rajan Sharma.
In the year 2009, Gigabyte has concentrated on spreading its reach in the upcountry markets. "We have conducted special programmes and relationship meetings with our channel partners in the tier II & III cities of all regions. Going forward, our target is to reach as many small city as possible by 2010," says Rajan Sharma.
Mercury's strongest market is South as on date. "Our distribution strategy has improved our positioning in the regions. We do have some weak areas where we are increasing our offering by conducting product shows n training programmes coupled with schemes and reward programmes custom made for these region," says Sushmita Das.
To reward and motivate channel partners across the countr, Kobian has announced their channel scheme "Sizzle this Winter with Mercury ". Kobian, the leading manufacturer of IT components and peripherals including Motherboards, Cabinets, TFT, Speakers, etc. under the brand name Mercury and IXA, aims to reach and reward the channel fraternity in the metros and C&D class cities. Sushmita Das, Country Manager, Kobian India, said, "We thank our partners for their efforts and continued support for all these years. This scheme is to make business more rewarding for them, especially this festive season. At Kobian, we have always been channel-focussed and such programmes have always aided us in multiplying our channel strength. The scheme is meant for ensuring an improved bottom line to their business."
Kobian is also starting a series of product shows from December 2009, which will give a stage for partners to see the entire range which is available for them.Finally… With the PC penetration growing and the economy picking up, it is only to be expected that the motherboard market in India is buoyant and moving ahead with reasonable growth prospects. The commoditization of motherboard has resulted in structural changes that have concentrated the manufacturing power in the hands of a select few companies.
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The Indian PC market has seen QoQ (quarter-on-quarter growth) of approximately 7% in Q2-Q3, 09. Unlike the belief that the desktop market is shrinking, figures show a 9% QoQ growth in the Desktop PC vs 3% in Notebook market.
