Trend Micro forays into retail

Mumbai: At a time when most companies are shying of investing in the
retail business because of the effect the recession has had on the number of
footfalls in any retail outlet and fewer business conversions happening there,
Trend Micro India has decided to take a plunge into this space.

The secure content management company as Trend Micro would like to be known
as has decided to tap into the consumer business with its five pronged strategy.
It will start by working showcasing its products in large format retail (LFR)
outlets like those of Croma, Reliance, Staples, etc. It will also sign up around
400 IT retail partners in 42 cities besides leveraging on its vendor alliances
who can offer its security programs as a default solutions on their machines.
'Besides this, 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 the products at almost cost price because they buy
in bulk and enjoy economies of scale. Nath said that he was aware of this status
quo 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 right now.

This movement into the retail space seems to be a natural progression for
Trend Micro which was till recently focused more on enterprises and medium sized
customers in India. After all, though the enterprise is a more profitable
business vertical with better chances of selling more solutions with a product;
considering the present market scenario, by targeting the consumer business
Trend Micro is looking at a larger volume of business.'But with this opportunity
comes a lot of challenges, because the retail business is a totally different
ballgame,' pointed out Harish Tyagi of Taarak India. 'It will call for a lot of
investment especially for creating awareness, selecting the right partners,
creating the delivery model and the support mechanisms, if any.'

This is why Trend Micro is building a team of sub-distributors who can cater
to the needs of these partners, by selecting partners from its recently launched
Affinity program and upscaling them to the position of a sub-distributor.
Currently, Raksha Technologies and ACPL Systems are the two sub-distributors the
company has announced 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 out product roadmap and strategies for the country. They will
have access to our online tools, technology information and policies which needs
to be funneled to their customers. From our end, we will help them build
scalable business models to reach smaller cities,' he explained.

Sub-distis' role

Some of their partners are not sure what to make of this
decision of Trend to get into the consumer space as well as the appointment of
new sub-distributors. According to one 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.

Tyagi too agreed with this. 'I would explore opportunities in offering
service to my customers where their capex investment is negligible, but I can
upscale their security infrastructure and this is what I would security vendor
to help me take to the market,' he said.

However, Vishal Bindra of ACPL Systems, one of Trend Micro's newly appointed
sub-distributors categorically stated that he would not become a box pusher for
Trend Micro but instead is working closely with the vendor to select partners
who will be able to take these products to the end-customer. 'Distributing in
the sense of merely selling boxes is not something that is our competency.
Instead we will be working with Trend Micro to extend support to the customers,
which can often play a crucial role when they select or move from one security
vendor,' he clarified.

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 email 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 condition on anonymity.

Yet another partner termed this exercise as an experiment by Trend Micro to
be tap the hitherto untapped consumer segment, which is not surprising
considering that the company's global sales in the consumer segment saw the
highest uptake, growing by 19 percent in Q3 2008 over Q3 2007. This was followed
by large enterprise business which grew by 12 percent in the same period, while
the SMB customer segment sales declined by 14 percent.

Besides, the APAC region posted a negative seven percent growth in Q3 2008,
over the same period the previous fiscal. APac was also the only region where
the company's revenues slid down, as US posted a 10 percent growth in Q3 2008 as
against Q3 2007, with Europe following at four percent, while Latin America and
Japan posted one percent growth, respectively. This made it all the more
imperative for the company to start thinking of newer strategies to bring in
fresh business.

But the consumer market is dominated by several indigenous companies like
Quick Heal, K7 Computing, Microworld 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 its SecureCloud a platform that offers messaging
gateway security, hosted email 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 roadmap for the year and educate the gathered
partners on the technologies they can pitch to different industry verticals.