Dell’s Entry in India

Dell International started in India about seven or eight years back by opening a customer contact center at Bangalore in 2001. In 2003, the

second contact center was opened at Hyderabad. The company operates its services from four centers based at Bangalore, Hyderabad,

Chandigarh and Gurgoan. Dell started in Bangalore providing customer support to English speaking countries and later also began providing

technical support, procurement of financial back office and Knowledge process outsourcing. After the U.S., Dell India is the second biggest centre

with 13,000 employees. The strategic importance of India to Dell is evident from the fact that India was one among three locations (the other two

being US and UK) where Dell’s Latitude E series and Precision notebooks were launched.

Manufacturing – The first Dell ‘Made in India’ desktop

“The Chennai operation reaffirms the strategic importance of India to Dell, providing significant impetus to our growth plans and prospects here,

where we are already among the fastest growing computer systems suppliers.“- R Anandan, VP & GM, Dell India

In July 2007, Dell began production at its new manufacturing facility in Chennai (Dell’s third manufacturing location in Asia-Pacific and Japan

region and eighth overall). The Sriperumbudur plant (50-acre site with a planned five-year investment of about US$ 30 million) was chosen for

manufacturing in September 2006. The planned initial capacity was around 400,000 desktop computers per year. The company has doubled its

production capacity since then from 400,000 in 2007 to the 1 million units in June 2008. Infosys, one of Dell’s largest customers in the country,

was presented with the first ‘Made in India’ desktop computer system.

Dell’s Market Share in India

“India is the fastest growing market for Dell worldwide and laptops have emerged as the fastest growing form factor.” – Rajiv Ahuja, Director

Communications of Dell APACS

“By 2015, the number of PCs in India will grow 10 times and in the last year our personal computer sales in India grew by 99% compared to the

previous year” ” – Michael Dell.

“We have gone from zero to 10 per cent share in the government segment and we’re the largest player in the large enterprise space” – Sameer

Garde, India General Manager for Dell.

In March 2007, Dell was roughly a half a billion dollar enterprise in India and has expectations to touch revenue of $1 billion within the next year.

(Within three years of launching its products in the Indian market, Dell crossed the $1-billion sales mark in India.) In 2008, Dell ranked third in the

Indian market with a 7.6 percent market share compared to about 4 percent market share two years ago. In Q2, 2008, Dell had a 16% share in

the Notebooks segment and 6% share in Desktops segment as compared to 8% and 4.5% share in Q2, 2007 respectively.

Dell’s new retail strategy and Direct-only model

Dell’s innovative direct- sales model with good sales growth had been successful until the mid-2000s when the company’s profits and share

prices began dropping considerably. Dell was selling PCs directly to customers by phone and online. On May 24, 2007, Dell disclosed its plans to

sell PCs in the US, Canada, and Puerto Rico through Wal-Mart and Sam’s Club retail stores. This announcement came soon after Michael Dell

returned as CEO replacing Rollins.

In India, as part of the retail initiative, Dell tied up with Tata Croma (the Tata-owned electronics retail chain) in July 2008 and with select Staples

stores. By the end of 2008, Dell planned to increase its presence to100 Indian cities by increasing its channel partners. In October 2008, Dell
announced the opening of the first Dell exclusive stores in India at New Delhi and Coimbatore. Dell also tied up with 600 systems integrators all

over the country who could take orders on its behalf.

Dell’s New Marketing Strategy in India

Dell is targeting the small and medium businesses (SMB) in smaller towns in India as its main driver for growth as the company believes this

market sector is growing rapidly and is not exposed to global shocks making it a much more stable market. Dell India is focusing on simplification

of the business processes (basic areas to improve cost efficiencies) as part of its new rollout plan. It has even tied up with Tally to offer

accounting solutions online. For an initial period, customers get a Tally subscription free along with select Dell Vostro systems. Dell has also

increased its SMB team to 200 and expanded its presence to about 600 tier-II and tier-III cities. Dell will also introduce a portal titled “Dell

360″ (with discussion forums) where SMBs can educate themselves on benefits of IT to their businesses.

Dell’s New Advertising Campaign for SMBs

First launched in India, Dell’s new advertising campaign is titled – “Take Your Own Path”. The campaign targets Indian SMBs with a new

range of laptops.

Testimonial Advertising instead of Transactional

In December 2007, Dell partnered with WPP (after withdrawing its advertising responsibilities from over 800 different agencies worldwide) which

launched its own specialist unit Enfatico with Dell as its only customer. Enfatico’s first international campaign for Dell targeted SMBs featured

successful Indian faces (like P Rajendran – NIIT’s co-founder and COO, Raman Roy – CEO of Quattro among others with their testimonials) and

aimed at establishing an emotional connect with brand Dell.

Dell plans to up focus on India biz

BS Reporter / Chennai/ Bangalore October 24, 2008, 0:24 IST

Anticipating some softness in the demand in the wake global financial downturn, world’s second biggest computer maker, Dell, is now increasing
its focus on emerging markets including India, China, Brazil and Russia.

As a part of this strategy, the company is rolling out its first brand campaign in India roping in real-life business heros and entrepreneurs to
endorse its products, especially targeting the small and medium businesses (SMBs).

This is in a slight change in its marketing strategy which was earlier largely focussed on the large enterprises.

“Yes, we are already seeing softening demand. However, the current economic slowdown can either be a problem or an opportunity for us. But
we are strategically focussed on gaining market share by conveying the message to the people to invest in right products and technology,” Mark
Jarvis, chief marketing officer, Dell told newspersons here on Thursday.

Starting from next week, Dell plans to launch the brand campaign across 22 cities in India showcasing the success of real life Indian
entrepreneurs including Raman Roy, CEO of Qattro BPO who is also known as the father of BPO industry in India; P Rajendran, co-founder of
NIIT and national award winning filmmaker V K Prakash.

The new campaign will run on newspapers, billboards and mobile SMS to start with, which will gradually be taken into television advertisement
campaigns.

“Dell is a well-known brand in India, but among the SMBs we are not the brand leader. Our competitors have chosen Bollywood stars who are not
real life heros. However, our campaign will convey the SMBs the stories of real life Indian business heros who have used IT and have become
successful in their own business,” said Jarvis.
Dell, which leads the large enterprise market in India cornering 22 per cent market share in the personal computer market, has also improved its
position last quarter to no-2 in the consumer segment. However, the company still lags behind its competitors in the SMB segment with a mere 3
per cent market share.

According to industry sources, Hewlett Packard is the number one player in the SMB market in India whereas Dell has been pushed to the fifth
position. Over the last one year, Dell had been systematically preparing itself to tap to the opportunities in the SMB market as a part of which the
company opened its manufacturing centre in India last year.

This helps the company in reducing the lead time for delivery of products from 21 days to about a week’s time. In April this year, the company
went for a channel strategy when it realised that the most SMBs don’t have in-house IT departments.

The company has now more than 300 channel partners in 150 cities who work as the IT advisors to the SMBs thus pushing the sale of Dell
computers.

In August this year, the company has launched its Vostro range of products (laptops) which are specifically designed keeping in mind the interest
of the SMBs and the users in emerging markets.

“Earlier, we were shipping the products from our factory in Malaysia which was taking at least 21 days to deliver the order in India. It was not
much of a problem for large enterprises who plan their investments ahead and in a phased manner. Having our factory in India has reduced the
lead time to about 7 days, which will help us better in catering the small businesses who don’t go for a planned purchase,” said P Krishnakumar,
Director - Marketing, Dell India.

There are close to 8 million SMBs in India. According to a recent survey, about 12-13 per cent of the Indian SMBs use technology in their
business operations. India is presently the 13th largest country in terms of PC usage. According to a report by research firm IDC, with
phenomenal increase in the number of users, India is set to become the third largest PC market by 2015.

The Rs2,000 crore company says it has chalked out an ambitious indirect sales strategy of selling through the traditional distribution
network. The company's parent, US-based Dell Inc that Michel Dell started in 1984 while still at college, is famous for its direct
sales model that made news when he decided to distribute through retailers in the US, the UK and Japan.

The Indian company will also go beyond direct sales in six months time, says Rajan Anandan, vice president and general manager,
Dell India, in line with the global policy of selling through retailers. The company is studying the computer retailing industry in
depth so to eliminate inefficiencies in the system.

Globally too, the $57 billion turnover Dell is taking measured steps in its indirect strategy even as the company has sold 70,000
units in two months time through Wal-Mart chain in the US. The company does not supply to all the retail outlets in the US, as it is
choosy, says Kip G Thompson, vice president, global facilities and strategic growth. He also says that the new channel strategy
would not erode the company's margins, as the product offerings will be different. The one big challenge faced by the company is
building up the capacity to cater to the needs of the new channel.

"For Dell, going indirect is not a big issue unlike other computer manufacturers who went for direct sales from being indirect. We
have the customer data, brand equity which will be leveraged advantageously," he adds.

In India, the indirect channel strategy gains importance as Dell India is targeting the small and the medium enterprise and the
individual segments. The company has launched new models under the brand Vostro, XPS and Inspiron targeting these segments.
The company has also launched notebooks in five colours.

Aug`10
Jim Merritt, Dell’s VP for Large Enterprise in APJ, applauded Sameer Garde’s contribution to Dell's success in India.

“Sameer has led India LE through a remarkable six quarters, including amid very difficult economic environment. He has driven cost reduction
initiatives while successfully driving margin growth and working through the Dell strategy to transform the company into a successful solutions
provider to some of its largest customers,” said Merritt.

Meanwhile, Sameer Garde said Vikas and Suraj have been key parts of the Indian leadership team, playing an important role in Dell being the leader
in the large enterprise segment. 
“I am confident their experience and insight will help them drive Dell’s customer experience based on principles of open, capable and affordable
solutions,” he added.
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