The hardware market in India still hasn’t been tapped, says Vishal Sopory, CEO at IRIS Computers. When that happens, there will definitely be explosive growth. With support from Lenovo, growth is anyway on the cards but the objective is to grow by at least 50% over the next fiscal.
1. Tell us something about Iris Computers’ business, and your association with Lenovo?
Iris Computers is an IT distribution company for 16 years now, and we have reached the revenues of close to Rs. 3000 crores. We have a national network of distributers with more than 35 offices across India, with a team of more than 300 people and distribution relationships with all large OEMs. Our brands include HP, Dell, Digital, western digital, APC, LG, Samsung, and of course, Lenovo.
Lenovo is our largest brand partner. They contribute more than 40% of our revenues. We have been Lenovo distributors since IBM sold off their PC division, so we are partners since Lenovo was born in India.
Currently we are at a level that we are channel partners for all Lenovo’s consumer, commercial and enterprise products- servers, service packs or tablet, we distribute all the products, other than mobile phones.
2. ThinkPad is a new product, how is the market taking it?
As a sub brand of Lenovo, ThinkPad existed and continues to be there. What Lenovo has done with the brand is to maintain the customer perception with the brand. It has always been associated with steady, long lasting products, they have maintained the customer quality perception parameters from the beginning, and Lenovo hasn’t let the essence of the name reduce.
To top it, they have also given it upgrades, with launches around recent innovations- thin, flexi etc.
3. What is your market strategy for its market placement?
The way the industry currently operates; there is place for all OEMS in our brands. Especially in the commercial space, if you talk specific to Thinkpads of Lenovo commercial products. There is a set channel that Lenovo has been able to build over last 7-8 years. The good thing is, more than 70% of the partners that have been pitching them to customers remain the same. That tells you a lot about the brand. They would have lost very few partners across the country. So the channel loyalty that Lenovo enjoys is one of the biggest strengths of the brand. Their route to the market or their placement of products in the market should be the fastest.
Their product quality is available to everybody, the partners are able to pick up and showcase their products to everyone across the country. The strength of the Lenovo products is the channel loyalty.
As a distributor, there is a lot of value add we do as well. The first is, when Lenovo launches a new product, the kind of relationship and confidence that both companies have, Lenovo doesn’t have to sell the idea to us. This means that we are in a position to buying into their plans of launching a product, and we will ensure we will make those units available across 400-500 cities across the country, through Iris or Lenovo base.
This is about not wasting time in figuring out whether we should work with Lenovo or not or to figure out how we can send it across 100 cities within 24 hours.
4. How has the partnership with Lenovo been beneficial for Iris?
Almost 40% of our revenue figures are from Lenovo sales. It is one brand in Iris, where we are able to offer end to end solution to our partner and they can offer to the customer. Starting to a desktop device to server or pad…we offer and ensure end to end service to take to the customer. While we do all this for Lenovo, we are able to help our partners to build our businesses as well.
They are one of the most transparent companies, in terms of business. Lenovo is extremely sensitive to channel business, and very high on integrity- what is right is right, what is wrong is wrong.
5. What sort of equation do you have with your own partners?
As far as Iris’ partners are concerned, we are increasingly seeing that smaller partners are taking up bigger orders. At Iris we have an innovative approach to credit, we make sure we work on how we a smaller partner take 10 crores worth of products through a 2 crore financial arrangement. We also have extended financials which help our partners do these kinds of financials. With this kind of support, what we are actually offering is support to Lenovo to help get them into new territory y development. In Jammu and Kashmir, for instance, if we don’t have a partner for Lenovo, we will do partner development in the area or and ensure that the business happens in the remotest of areas.
6. How do you keep them motivated, as a partner you understand the challenges of the market. What strategies do you provide for your own?
There are various programs that keep happening – eg a lead generation program, we give benefit even if they don’t win. The partner feels that they are winning our support simply by bringing in an opportunity as well, even if they don’t get the business. Thus we help in enabling smaller partners to pitch in with Lenovo and win. I think unless these support points are offered, the business won’t run. We do it for our branches and sales teams as well.
7. India is better known as a software market. How do you see the future of the hardware industry in the country?
Externally, India is known as a software market for the world. However, our perspective is, the PC penetration is still lowest in this market. So, by all calculations, even a 2-3% change in PC penetration will exponentially increase hardware growth. Driven by the government’s new initiatives, more and more first time users are coming into the market, buying more PCs. So the penetration should see an increase in the coming years/ months, and that is enough to drive the hardware market in the country. The numbers are huge -it is less than 10% right now, so we are talking a large customer base, and explosive numbers.
8. What are Iris’s plans for the next financial?
We have two or three key plans:
- One is, from the revenue perspective, our objective is to touch Rs. 3000- 3500 crores.
- Secondly, we are also planning a foray into mobile distribution space. If we do that, we are looking at revenues crossing Rs. 4500 crore.
- The third plan is about value added distribution, so next year Iris is building value added distribution engine, or acquiring value added distributor.
9. What part does Lenovo play in them?
One is, to ensure I reach Rs. 3500 crores in my existing product line, I have to show minimum growth rates in all existing Lenovo business. There is no way Iris computer can grow from Rs. 3000 cr to Rs.3500 cr without support from Lenovo, being the largest contributor to this growth. We see it happening on tablets, PCs, servers and consumer PCs. We definitely will attempt to expand beyond PC servers and tablets and try and attempt into mobile distribution as well. That should assure our growth this fiscal.