India's best System Builders

While analysts predict that assembled systems are losing out to branded PCs due to falling prices and changing customer preferences, the growth performance of nominees suggests otherwise.

Growth drivers

A majority of the nominees recorded 30 percent or more unit growth and 15-20 percent value growth in their white-box business. It wasn’t just the home and the SOHO segments that were buying assembled systems, as is believed. Large enterprises and SMBs have shown a preference towards white-boxes, whether servers or desktops.

For instance, Mumbai-based CDP India, winner in the Advance Markets category, bagged an order for 3,000 white-box desktops from the ICICI Group last year. The company sold 4,200 units, 90 percent of which were to large enterprises and SMBs. It boasts of an installed base of 20,000 units in a client list that consists of large BFSI companies such as ICICI Bank and Kotak Mahindra Bank.

Nikesh Sakaria of CDP India rubbishes market analysts who predict doom for assemblers. However, he admits that system builders just selling boxes will perish, and only those providing service and support will survive.

Business innovation

Companies such as Xpress and Acma have taken an entirely different approach. Fearing stiff competition in the large enterprise space, these companies have taken the solutions approach targeting the burgeoning SMB segment with customised solutions. For instance, Acma Computers has tied up with software companies with affordable ERP and CRM solutions, and is providing server-based solutions to emerging SMBs.

Nominees in Emerging Markets have targeted segments including education and small businesses like jewellery and cloth merchants, colleges and shopping malls.

Opportunities and challenges

However, to say that these companies haven’t faced challenges will be wrong. They admit that the branded PC onslaught has been fierce, but with business innovations they have overcome the odds. Xpress has created an e-store promoting built-to-order servers and desktops. B D Computronix floated a unique scheme for new customers, promising money back if the implemented solution did not deliver the committed RoI.

To stay competitive in the marketplace, enough thought and effort have gone in, and these are aimed at cost-cutting and customer satisfaction. Xpress, for instance, has appointed an internal auditor who keeps a check on costs, while Acme introduced a customer feedback cell to reduce repeat customer calls and enhance satisfaction. The six companies profiled here have proved that with the right focus, it isn’t difficult to take on any challenge.

System Builder - Advance

CDP India, Mumbai

Nikesh Sakaria

The company grew by nearly 23 percent to record a turnover of Rs 21 crore in 2005-06, with nearly 30 percent unit growth in its white-box business. Its own brand of desktops and servers contributed Rs 10.5 crore, while the IBM business generated Rs 5.5 crore. The rest came from a combination of networking solutions, peripherals, facilities management and AMC services.

Last fiscal, CDP ventured into the networking and security solutions, and vertical-based customised SMB solutions space. With BFSI being its stronghold, it bagged an order to supply 3,000 CDP desktops to the ICICI Group. With this the company has an installed base of 15,000 own-branded systems at ICICI. Other large BFSI customers include Citibank and Kotak Mahindra Bank.

Another large contract, this one for IBM products was from Ismart BPO for 500 nodes and eight servers. The company bagged several deals for providing server-based solutions to SMB customers. It zeroed in on the diamonds segment and provided customised solutions for this segment.

CDP has a branch presence in eight cities, and employs a franchising model for providing countrywide support to its large clients. It has tie-ups with resellers in 80 different cities and towns for providing support to its AMC and FMS customers.

“From the start, we were clear that our USP lies in providing the best support to our clients. We ensure that partners we sign up as service franchisees share the same belief and passion for customer service. In fact, this is what has helped us bag contracts from large BFSI clients,” explains CEO Nikesh Sakaria.

Next year, the company expects a 25 percent growth in its core segments of BFSI and the service industry. Moving up the value chain, it wants to provide networking and server-based solutions and beef up facilities management capabilities across the country to win large accounts.

System Builder - Advance

Acma Computers, Mumbai

The company registered a turnover of Rs 12.5 crore in FY 05-06, growing by almost 56 percent. Nearly 65 percent of this was contributed by sales of white-box systems, while the rest came from solutions, networking and services.

A large chunk of growth came from Acma’s concentration on small businesses. It partnered with software vendors to provide ERP and CRM solutions to mid-sized companies. The company also took the strategic decision to focus on its bottom-line. It consciously avoided taking orders that did not contribute to its net margins. Anticipating high growth in wireless solutions, Acma created a Wireless division in the middle of 2005, and has since recorded 60 percent growth in that business. The company bagged a Rs 18 lakh order for a CRM implementation, and another order worth Rs 18.5 lakh to provide an intranet solution for a finance company.

Acma implemented a CRM solution in order to streamline its customer response mechanism. Using this, it launched a special service feedback cell. “There was no feedback mechanism after a service call, which resulted in repeated queries and customer dissatisfaction. After the creation of the cell, customer calls have come down by 20 to 25 percent,” explains Biren Selarka, Acma’s CEO. The company expects 15 to 20 percent growth. It has identified growth drivers such as gaming and business applications like CRM and ERP for the SMB segment. Acma plans to have multiple branches across the country.

System Builder - Advance

Xpress Computers, Mumbai

The company grew by 15 percent, registering a turnover of Rs 7.8 crore in FY 05-06. An Intel Premium Partner, nearly 40 percent or Rs 3.55 crore came from white-box systems comprising 1,000 desktops, 100 Intel servers and 100 notebooks. In the last fiscal, the company bagged a large project from Intercraft Trading worth Rs 60 lakh; this included white-box servers and network connectivity solutions. Projects worth Rs 45 lakh for servers, connectivity and security were implemented at Mahendra Brothers. Xpress also implemented a WAN network with security features at Positive Packaging for Rs 30 lakh. To boost its bottom-line, Xpress has diversified into services such as facilities management, rentals, repair, Web hosting and limited liability AMCs.

The company has set up an e-store where customers can order BTO PCs and servers online. “Though we have had a catalogue on the Web with products and prices, customised quotes elongated the sales cycle. With this innovation we have substantially cut down our turnaround time for BTO systems,” says Chetan Shah, CEO.

Xpress has a custom-built CRM and an inventory management system. It has an intranet and a virtual training room enabling online training of staff. The company expects a CAGR of 20 percent for the next five years, and plans to keep enhancing its internal processes, get more Web-enabled, and increase operational efficiencies. Manufacturing, software, services and education are the key drivers of growth identified by the company.

System Builder - Emerging

Netcom Computers, Indore

Nitin Poddar

In 2005-06, the company registered a turnover of Rs 10 crore with a YoY growth of 19 percent. Of this, about Rs 4 crore came from the white-box business, Rs 3 crore from retailing, and the remainder from sub- distribution and institutional sales.

Netcom registered a growth of 20 percent in white-boxes, selling over 800 desktops, 100 Intel servers and 125 own-brand notebooks. It sells white-box systems directly as well as through its channel network of nearly 300 partners across Madhya Pradesh.

An Intel Premium Partner, the company was appointed regional distributor for Samsung MFDs, Epson inkjet all-in-ones, and Fujitsu desktops and notebooks. New product additions contributed 30 percent to overall revenues during the last fiscal.

Netcom claims to be the largest distributor of Epson DMPs in the region. Other key principals include Linksys, Esys and HP.

New products have contributed 30 percent to the turnover in 05-06. It bagged some large orders for white-box solutions. The company supplied 100 assembled desktops, five servers and network integration services to ShareKhan.com, a brokerage firm. Alliance Financial Capital ordered 100 assembled PCs, 80 notebooks and seven servers from it.

Although the company has servers and notebooks starting from Rs 45,000 and Rs 35,000 respectively, most of its sales are in the high-end segment. This pushes up its average price to Rs 75,000 per server and Rs 90,000 per notebook, both higher than its peers.

The company’s focus is the SOHO and education segments for its white-boxes. Backed by Intel and Samsung, Netcom organised technical seminars in 10 engineering colleges last year. The company ensured better margins for channel partners and provided technical training through seminars and roadshows. It expects a 30 percent growth in topline though the company fears that branded PCs will exert further pressure on prices and margins. Because of this, it pegs value growth at around 10 percent. The company plans to expand to other cities and offer AMC services.

System Builder - Emerging

BD Computronix, Jaipur

B D Computronix registered a 33 percent growth and closed FY 05-06 with Rs 7 crore revenue. The white-box PC and server business contributed Rs 3 crore and the rest came from sub-distribution. Assembled servers grew by 50 percent in value terms, and desktops by 20 percent, selling nearly 60 and 540 units respectively. Apart from being an Intel Premier Partner, it is a Seagate Partner-Enterprise, D-link Value Partner, and the authorised partner for Compaq and Acer. Last year it became a Canon Premium Partner and added Microsoft hardware such as keyboards and mice to its product list.

The company offers server, wireless and Intel voice recognition solutions, and photo editing and photo lab solutions. It focussed on customised solutions for small business segments such as educational institutes and jewellery and courier companies, and wireless solutions for hotels, forts and residential centres.

BD Computronix bagged a Rs 30 lakh project from the Jaipur Engineering College and supplied them with 250 white-box PCs, five assembled servers and branded notebooks. It also networked 400 nodes across the college’s five-acre campus. It supplied 130 assembled desktops and three servers worth Rs 15 lakh to Jodhpur Engineering College. It also bagged a Rs 15 lakh project from Dainik Bhaskar for assembled systems. It expects to grow by 50 percent and plans to enter the solutions space of IP communication, information security, network design and implementation.

System Builder - Emerging

Ocean Inc, Baroda

In FY 2005-06, Ocean recorded a turnover of Rs 2.4 crore, a 50 percent increase over the previous fiscal. Nearly 40 percent of its overall revenues came from white-box systems, the rest from network solutions, retail and AMC-based services. Last year the company sold around 500 assembled desktops and 40 servers.

In the last year, Ocean bagged an order of 50 white-box PCs and 20 printers along with networking peripherals from SVIT Engineering College. It also supplied 40 assembled PCs, a server and seven notebooks to a local school in Baroda. To another institute, Tejas Vidyalaya, it supplied 50 white-box PCs and two assembled servers.

Apart from being an Intel Premium Partner—the only one in Baroda—its other principals include HP, D-Link, Microsoft, Cisco, Canon and LG. The company has a 1,250 sq ft showroom with a service centre at a prime location in Baroda.

Last year it added Intel white-box servers and Lenovo notebooks to its product list. In the six months since the tie-up with Lenovo, the company has sold 50 notebooks.

In partnership with Intel, Ocean carried out marketing and sales initiatives. The company expects to grow by 70 percent this year, and is planning to begin assembling notebooks shortly. It will open a 400 sq ft showroom exclusively for Lenovo and white-box notebooks.