Surviving Recession : Trend Micro Takes Retail Route, Despite Recession

Trend Micro India is all set to take a plunge into the retail space. This
daring step has been taken at a time when many companies are shying away from
investing into the retail business, seeing the negative impact that the
recession has left on the number of footfalls in any retail outlet and fewer
business conversions happening there.

The company has decided to tap the consumer business with its five pronged
strategy. It will start by showcasing its products in large format retail (LFR)
outlets like Croma, Reliance, Staples, etc. It will also sign up around 400 IT
retail partners across 42 cities, besides leveraging on its vendor alliances who
can offer its security programs as a default solution on their machines.

“Besides, we will tie-up with Internet service providers (ISPs) who can offer
security to the customers they sell broadband to,” informed Amit Nath, Country
Manager, Trend Micro India.

However, as has been noticed in the past, the channel have not taken kindly
to vendors' decisions to work with LFRs, because the latter can offer products
at almost the cost price because they buy in bulk and enjoy economies of scale.
Nath said that he was aware of this status and mentioned that Trend Micro was
working on a strategy to avoid a face-off of this nature between the IT retail
partners and LFRs. However, he was unwilling to elucidate more on these plans as
of now.

Currently, the company has announced two sub-distributors, namely Raksha
Technologies and ACPL Systems, while two more are being shortlisted in the West
and East.

However, Nath was quick to point out that these partners would not be mere
box pushers. “These players have been in the security business for a long time
and they understand our product road map and strategies for the country. They
will have access to our online tools, technology information and policies which
need to be funneled to their customers. From our end, we will help them build
scalable business models to reach smaller cities,” he explained.

What's in it for sub-distis?

Some of their partners are not sure what to make of this decision of Trend
Micro to get into the consumer space as well as the appointment of new
sub-distributors. According to a software dealer, Trend Micro will pass on all
leads to the Affinity partners, while the sub-distributors will be responsible
for supply logistics largely. “I don't see what value addition they can do
beyond ensuring timely availability of products and being the front end of the
vendor,” he stated.

But creating a service infrastructure to cater to the retail market is
something that even vendors find daunting, so how will ACPL be able to manage
this challenge? Bindra claimed that since ACPL has been in the security business
for several years, it knows the scaling points for every customer complaint. “We
understand the nature and criticality of the service issue, and know which ones
can be tackled over e-mail or phone and which ones need a personal intervention.
We will build on this expertise to offer timely service to our customers and
Trend Micro will also pitch in its technical strength behind us to make this
successful,” he opined.

Move to deal with recession?

Partners feel that Trend Micro's decision to turn towards the consumer
business area, especially with a retail foray, is its endeavor to come up with
new ways to cope with the business slowdown. “This current decision to appoint
sub-distributors is one way for Trend Micro to move into the packaged software
selling business. I would have preferred if they had stuck to offering better
services around security solutions than move into the box-pushing mode, where
indigenous brands like Quick Heal are much more popular,” one Trend Micro
partner said on conditions on anonymity.

The consumer market is dominated by several indigenous companies like Quick
Heal, K7 Computing, Micro World Technologies or even Kaspersky, who are placed
at very attractive price points, which is lucrative for the target customers.
So, is Trend Micro too thinking of dropping its price points. “No,” comes the
quick reply from Nath. “We want to work with those customers who do not mind
paying a premium for quality, because security is not something where customers
want to do penny pinching,” he explained.

Trend Micro had acquired Provilla, a data leak prevention firm recently, to
help it integrate data theft prevention features into its own solutions. Nath
noted that the company was working on educating the channel and customers about
the threat of data leakage. “According to a survey we had undertaken, the top
CIO concerns are data leakage, business continuity and compliance. Data leakage
is not just about protecting USB ports but about securing multiple threat
points,” he stated.

The vendor had introduced 'SecureCloud', a platform that offers messaging
gateway security, hosted e-mail security and botnet identification services in
2007. This year, the company is focusing on offering its services over cloud
computing. But it does not expect great uptake for the concept of offering such
services around security in India and plans to go slow on it.

Later this week, the company is taking 50 of its top partners from its
Affinity channel program to Kuala Lumpur, where it is holding its annual channel
gathering. This is where the company will outline its business strategy for
2009, will discuss its product road map for the year and educate the gathered
partners on the technologies they can pitch to different industry verticals.

Vinita Bhatia

vinitavs@cybermedia.co.in