Elcot offer impacts laptop sales in TN

NR Sethuraman

Chennai

July 28, 2008

With Electronic Corporation of Tamil Nadu (Elcot) announcing a dream
configuration laptop for a relatively low price to the state's students, the
state government departments, boards and autonomous government bodies, the trade
of notebooks has come to a virtual standstill in the region. Having conducted an
extensive roadshow for laptops in 20 plus districts in Tamil Nadu, Elcot's
scheme has garnered a very good response.

But dealers in Tamil Nadu fear the worst for their laptop business. As
awareness of the Elcot scheme rise, dealers feel they will soon not be able to
sell even a single laptop.

“Though few dealers are pretending that they have lost nothing due to the
Elcot offer, it is a fact that sales have dipped across the state and I am being
approached by many small dealers in upcountry regions for a solution to the
ongoing problem. The problem is becoming severe,” said a channel partner, who
has been monitoring the situation closely, on the condition of anonymity.

He also opined that the impact of the situation would not only be felt by
Tamil Nadu but by neighboring states as well, since laptops being sold in Tamil
Nadu can easily be liquidated in Kerala, Andhra Pradesh, Karnataka with whom
Tamil Nadu shares its borders and cities like Puducherry (earlier called
Pondicherry) .

Ironically other partners in the remaining South region were ignorant of the
problems regarding Elcot's offer and its impact on partners in Tamil Nadu.
Partners in Andhra Pradesh informed that the sales of laptops are happening on a
regular manner. “The sales are happening on a regular basis and partners in
Andhra Pradesh needn't be worried about what is happening in Tamil Nadu, as
the laptops are being offered to students and not the channel,” said Prashant
Lahoti, CEO, Access 2 Future, Hyderabad.

Dealers in Karnataka expressed their apprehensions about the Elcot offer. “This
offer is not only ruining the business of Tamil Nadu dealers but is also having
an adverse impact across the country, as slowly other vendors would start
operating on two different strategies and would completely ruin the market,”
said Mohit Hegde, CEO, Creative Infotech, Bengaluru. He also said that vendors
have become opportunistic and are doing things according to their convenience.

However, the case with dealers in Puducherry seems to be quite different.
This may possibly be due to its proximity to Tamil Nadu. “We are getting the
same newspaper advertisements on Elcot offers that the Tamil Nadu people are
getting. There are high chances that people in Puducherry will procure the Elcot
laptops from Tamil Nadu, as we are closest to the districts of Tamil Nadu. We
foresee a great threat to our business in the coming month,” said Rajesh Jain,
CEO, Indica Computers. M Magesh, CEO, Magnanim Systems informed that he had
received a few enquiries on the scheme. “We are getting few enquiries on the
offer that is available in Tamil Nadu, however currently, we don't see any dip
in our sales. We are confident about pitching the products on its qualities
rather than the price factor. We have to continue this, as we don't have an
alternative,” claimed Magesh.

Read full report in The DQ Week, July 21-28 issue.