ELCOT Builds Bridges With Channel

Last year ELCOT struck a wrong note with the local channel community when
it tried to sell branded laptops at 50 percent discounted prices. After facing
the channel's ire, this time around the agency is interested in working closely
with partners to take branded machines to educational institutions

The Electronics Corpo- ration of Tamil Nadu (ELCOT) has started an initative
to work on crea­ting a better IT environment in the state.

Over the past few months, it has been trying to further its e-governance
projects, promote the Linux open source operating system and also create more
interest in the upcoming IT parks in tier-2 and 3 cities. Besides this, it has
also put in lot of effort to increase the PC penetration in the state.

In two separate incidents, some months ago, the nodal agency had the channel
up in arms because of its policies. But this time around, Elcot is trying to
soothe the frayed channel nerves and even try to work with them.

The story so far

To those who came in late, the channel had two run-ins with ELCOT in the
last year. In one instance, ELCOT had claimed to provide high-configuration
laptops at 50 percent discounted to MNCs. Tamil Nadu resellers had a tough time
with custo­mers, who accused them for having more than 50 percent margin per
laptop.

Things came to a boil when some customers threatened to return the laptops
they had purchased to the channel partners. The latter in return put tremendous
pressure on vendors, condemning their double standard for selling to the
government and the channel. In the end, the local associations banned the sales
of those brands.

As a result, the vendors had no option but to retract the offer made to ELCOT.
Few weeks back, there were reports on the leading dailies that ELCOT has decided
to supply fully loaded desktops and laptops from reputed manufac­turers for just
Rs 20,000. Again the channel community was dissatisfied.

But this time around, things did not take a drastic turn like before. Some
quick thinking partners felt that this proposition could be turned to their
benefit and tried to engage with ELCOT. They wanted ELCOT to include them in the
loop of supplying PCs to the educational institutions.

ELCOT plans

When ELCOT decided to announce the availability of sub Rs 20,000 laptops and
desktops, it was primarily gunning for the educational institutions within Tamil
Nadu and extending this offer to students too.

Said C Umashankar, MD, ELCOT, “This move from ELCOT is to bring down the
digital divide and offer the best quality products to Tamil Nadu. It is also an
attempt to increase the PC penetration. Already we are topping the charts in
this process and by this move, we would further enhance our position.”

Gaining from the previous experience, this time ELCOT has planned to play it
safe. “This time we are going to have our own brands. We will procure laptops
and desktops from MNCs and sell it in ELCOT's brand name,” said Umashankar.

However, if the vendors want the products to display the OEM's name, ELCOT
would allow that. But the model will be specific to ELCOT and it wouldn't clash
with the open market model.

“For this purpose, we will come out with exclusive tenders and will not club
it with the present offer that we are giving it to government offices and
organizations,” Umashankar informed.

Currently ELCOT is offering fully-loaded desktops to govern­ment offices and
organizations such as Life Insurance Corpora­tion of India and General Insurance
Corporation and it is also thinking of supplying those machines to the
educational institutions.

Roping in the channels

This time around, ELCOT is also willing to work proactively with the channel
to make this product mass-market. Umashankar said that ELCOT has no qualms if
partners are willing to settle for five percent of margin.

“If ELCOT supplies at a five percent margin, we can take a conscious call and
give a two-three percent margin for the channel partners, and they can add
another three-four percent and sell it,” he said.

The government agency is willing to convene a meeting of local channel
associations and partners to discuss the modalities of this proposal. “If the
channel is ready, we will host a one-day workshop in Chennai, Coimbatore or
Madurai and show them how open source software can be beneficial for them and
the students. ELCOT would provide centralized technical support to the
customers,” Umashankar informed.

The Tamil Nadu channel community is overwhelmed by this response from ELCOT.
Confed-ITA, the apex body working for the IT associations across Tamil Nadu,
welcomed this decision. Said, S Karthikeyan, President, Confed-ITA, “This is an
excellent move from ELCOT. We are interested in working closely with them.”

PN Prasad, VP, Confed-ITA, said, “We are not worried about the margin that
ELCOT is offering, as other vendors too offer the same margins. This is really
excellent news for the channel community. With our reach and experience, we can
do a better job in distributing ELCOT's computers and help the PC penetration
increase further.”

He also added that people are apprehensive in buying compu­ters without
having a feel of them and dealers can display them at their showrooms and also
help the customer in the after-sales support. S Subramonian, President,
Kanyakumari District Computer Dealers Association noted that dealers can also
come in handy for providing post-sale support. “We can provide a good service
support to the customers, else we have to depend on the support from vendors for
everything.”

B Kuberan, President, Trichy IT Association claimed that this move would
further strengthen the PC penetration in the state. “We have never been against
ELCOT or any of its motives and we have always considered and respected this PC
penetration process. We have only been against the dual standards of vendors and
their price policies.” He also said that apart from widening the PC penetration,
this move would also create more value and brand image to the ELCOT brand of
products.

What's on offer

The price of the desktop is Rs 19, 500, which includes core two dual
processor, 1GB RAM, 500 GB hardisk, 19-inch TFT monitor with strapped-on
speakers, optical mouse, standard keyboard and DVD writer, built in modem with
three year warranty.

For the fully loaded laptops, the price is expected to be Rs 18,000 to Rs
20,000. There is a three-year warranty applicable with a one-year warranty on
the battery and other parts. Apart from that, ELCOT will also offer
international carry in warranty for one segment and domestic carry in warranty
for another segment. Umashankar was unwilling to comment how it was possible to
offer the machines at these low prices with such a warranty policy.

The machines will be fully loaded with Linux and software called virtual box
using, which can be installed in any operating system. ELCOT will also be
providing 100 percent technical support to them.

Right now, ELCOT will rollout a tender to procure the machines. “First we
have to identify the vendor and we have certain people in our mind. As for
government organization selection would be done through the open tenders. More
than that the quantity is large and open tender would be the ideal platform for
selecting the vendor,” Umashankar noted.

The profit ratio for ELCOT in this is said to be around five percent, which
would be inclusive of the service tax. There is no VAT for certain categories of
machine and he didn't disclose the names of those brands.

The delivery time for this machines would be maximum for four weeks. This
also requires the submission of certificate from the student and it is eligible
only for those students, who study within Tamil Nadu. ELCOT also has plans for
rolling out laser printers at Rs 3,900 with an additional cartridge.

NR Sethuraman

sethuramannr@cybermedia.co.in