The channel community, in it self, has been as old as the IT industry in the country. However, the industry recognized it as a transactional mode only during late eighties. India witnessed the shaping of the first multi-layered channel network with the launch of the first retail stores for IT products in the late 80s. The early retail initiatives however fizzled out or morphed into other businesses including the more high profile ones like Computer Point and Tangerine.

The upside of this however was the industry got polarized into different sets for IT distribution. The early channel anatomy revealed a set of organizations which thrived on importing products and reselling in India thus behaving like a channel partner. A classic example is what happened when IBM left India in 1978. A few ex-IBMers broke off to form IDM and along with companies like CMC and CMS, were the key maintenance and support providers to IBM systems. Some like CMC quickly developed an expertise in maintenance of most other foreign vendor platforms. Over a period of time, vendors realized the possibility of using their maintenance partners to also push products and services in the market.

The birth of the ‘National Distributors’
The second phase of an organized channel network began a few years after the New Computer Policy that initially lowered duty on import of hardware and then made it easier for MNC brands to enter the country. By 1991-92 a whole lot of new MNC vendors had entered—mostly in partnership with local vendors. IBM had also returned in a 50:50 joint venture with the Tatas. For the channel community this was a landmark—the time when it began to evolve from a single to multi-tier channel network.

During 1992-93, national and regional distribution was introduced as the primary layer. Channel patrons like HCL and Wipro who were the early adopters, emphasized distributors as an alternative solution. The idea was the vendors would have a national distributor who would buy in bulk and also act as stockist. In turn the national distributor would take care of the reseller network below him. This saved vendors the trouble of personally reaching out to all the major metros and beyond even as it gave them greater reach.

The competition from MNC brands also pushed Indian vendors to focus on ‘reach’ as a key word. Capturing greater user mind-share in the metros became key. Reaching metro customers was not the bigger challenge. Reaching the small and medium sized businesses that were major IT spenders was.

Although the need was clearly there, it wasn’t until two years later, in 1994, that Unicorp and Thakral Computers became the first branded national level distributors in the country. Others like Tangerine, Melstar, Microtek, Tech Pacific, Ingram Micro and Redington also joined the bandwagon. At the same time channels began to morph from being "exclusive" partners of a single a vendor or brand into multi-product and multi-brand partners. At the same time, ‘customer centric solutions’ became the new buzzword for channels.

The segmentation becomes clearer
During 1996, channels were clearly demarcated into solutions providers, distributors, resellers and retails. Other segmentation in the channel network like Systems Integration, ISVs was also formed. Today channel has evolved to a specialized solution providers for clear areas and technologies. The need to value-add pushed channel partners to adopt technical and SI skill sets apart from innovative marketing strategies.

All said and done, consolidation in the form of business is forecasted for channels. Going further, smaller players getting together should be the common trend. This should become an acceptable practice given the complexity of technology and market trends. Lastly, the focus on niche areas to build a multi-location presence will tend to gain.

TEAM DQ