There are quite a few players in the enthusiast PC components market in India so what is ADATA doing to carve it's own piece of the pie? We talk to Ashu Mehrotra, National Marketing Manager, ADATA Technology India Pvt. Ltd. about what the enthusiast segment wants, why products don't launch in India in sync with their international launch and some of the programs ADATA is coming up with.
How is ADATA’s business model different from other SSDs and DRAM manufacturers?
It cannot be different because if you’re in the same boat you have to do the same business. In terms of DRAM, we are very strong in India. Our distribution segment is multi-faceted, like we have a couple of distributors who push out the products and then there are Channel partners. The major difference is the availability of the products in terms of SSDs. We have a range entirely from 128GB, an entry level product, to 1TB, at a server level. We also have external SSDs and M.2 SSDs which is the new form factor. So, that way, providing the whole gamut of products in SSDs is something that we have as a differentiating factor over others. Wherein, in case of the competition, they would either have mid-range or entry-level and not Server level, that is one important factor. In case of products in DRAM, we have a whole range of products, 2 / 8 / 16 GB modules and the XPG product series, we have DDR4 products. In DRAM, what we provide is Lifetime Warranty – lifetime being around 10 years – till the end of the product cycle. When a customer buys the product he doesn't need to bother about saving the invoice. He needs to take it to the distributor and it will be tested and within 15 days he will have a replacement. That is one area where it is an advantage to get ADATA products. The warranty on SSDs are 3-5 years. All entry level SSDs have a 3-year warranty, which is quite nominal. Server and high-end products it is 5 years. 5 years for a storage factor becomes a differentiating factor. The cost is very high right now. 128 GB costs around ₹3,500. On the higher side, 1 TB costs ₹25,000. That is a huge investment and you have a surety that the investment will give you the life cycle also. These are the differentiating factors.
You talked about the XPG brand products. That is focused on gaming. How is the state of the enthusiast segment in India?
Enthusiast segment in India is slowly improving after the advent of tablets in India. The reason why I’m saying so, is because once you experience gaming on a handheld device or a tablet, you think you should do better. Because of this factor, the high end gaming segment – it may not be very openly visible that someone can talk about – sees an increase of 3-5% every month. People are coming back to desktop machines. Bulky desktops have slimmed down a lot and more innovations have come up in keeping the product cool, which is something essential for the gaming segment. Recently, we concluded an activity with Taitra, that was a gaming expo wherein around 1,200 gamers from all over India had joined together to play games and the prizes up for grabs were huge, up to ₹7,000 - 8,000 worth prizes for a winning team. If you take it in perspective, that is quite a lot. Unless vendors like us see the value in this segment, we will never put in such an investment. The growth is there, but is not very significant that we can talk about and the segment is very niche. They know their products and you can't just bluff your way across them. More consumers are trickling in and probably in the next two to three years with the launch of newer products and the introduction of newer technology and the shrinking of all their sizes, we’ll see more.
In terms of sales, how do XPG units sell versus your normal ADATA modules.
Not more than 20 per cent. And interestingly, these are all going all geographies. About 5 - 10 years ago, it was only into the metros. But with better internet penetration, consumers are learning more about these units and there are more queries coming in from the B and C cities. Our partners are now ready to stock the products. Earlier they used to buy only when they got an enquiry. And now our partners in places like Nasik, Pune, Satara, Vijaywada etc., hold ready stock of these products
ADATA entered the Indian market quite late compared to others. Why so?
ADATA has been in India since 2009. There have been a couple of ups and downs, we came in 2009 and in 2010 they’d gone down. Only distributors were doing business and apparently since 2011, ADATA came back to India with a liaison office and we have a proper India office now. And we are the only DRAM manufacturers in India who have their own office in India. We’ve invested quite a lot of resources in this office to make sure that we see India as a long term market and have long term goals and accordingly growth is there. Month-on-month, year-on-year, we see a 25-40% growth. Last Year we did 40% growth over previous years. That way things have been pretty good for us
In the SSD segment, there was a performance difference between different SKUs back when controllers were yet to mature but now almost every SSD has hit the ceiling with transfer rates around 550-560 MB/s transfer rate. At this time, how do you differentiate your products from competitors. The numbers game is almost even.
More or less it is about the brand availability, brand confidence and the brand focus. Like in case most of the brands, especially the larger bigger brands, you see a huge amount of penetration in the other segments in terms of storage. They are not yet focusing on one particular segment. In our case, we have taken steps towards focusing on SSDs particularly in the last two years. So that has been helping us, because when people see that we have a whole gamut of products, they understand that we, as a brand have the confidence to produce a solution, also you need to talk about the partners first. The partners need to have a solution that’s more than one or two products. Today we have 15 products including the internal and the externals ones and that gives us edge over the competition. Secondly, the differentiating factor until now has been, we have been able to give you 6-7% extra storage space across our range of products thanks to the controller that we're using. We have been using different offerings of JMicron, because of which we have been able to provide you 6-7% more storage space. It may sound very less, but when you factor in the prices, it works out to be a good deal. So, from an end-user point of view, you are buying 120 GB SSD for ₹3,000. In case of ADATA, you get 128 GB, 8 GB more and the cost would be somewhere around ₹50 - 100 more. So there’s added value with ADATA products and then the service comes into picture. Questions like How soon can a I can get a replacement? Whether it is available online? Who are the partners supporting? and Whether in case of any critical issue, wherein I need to get to the brand itself? So with ADATA being present in India with a good team, the end-user gets confidence and that way it helps us as a brand.
So what is ADATA’s future strategy for the Indian market in terms of DRAMs modules, Kingston has maintained the lead for a significant time, what is ADATA trying to do to increase its market share?
We’re definitely not a competitive brand as you say, they have a lead over us. So we definitely try to see that whatever market share we have, the regions that we are strong in, we try to maintain that lead and maintain that market share. Currently, we are number 2 or 3 in some quarters and we steadily maintaining that position, but apparently the market size for DRAM or the total market size has been shrinking and that is a cause of concern for all of us as brands. And that is a reason why we have changing our strategy from DRAM modules to SSDs and off late, we introduced mobile accessories and our power banks have been a huge hit in the market, specifically models like the PT100. To maintain the brand equity, the brand level and the product portfolio, we have strategized that we need to enter the end consumer product and mobile accessory market and this move has been reaping rewards for us.
So when it comes to product launches, sometimes we see Indian launches coinciding with International launches. But certain devices like the USB 3.1 external drive which was announced at CES by ADATA is yet to be launched in India. So why the delay when it comes to India?
Global announcements are followed up with market feasibility studies for a particular region and subsequently the product is launched in that market. A little more than a year back, quite a few people did not know the difference between a USB 2.0 and a USB 3.0 port. We then started educating then and have done a quite a lot of campaigns to showcase the features of USB 3.0 and how beneficial it could be. And once we see that the market is ready for USB 3.1, we will definitely launch.
These products are those which cater to the enthusiast segment, which is never going to be huge and voluminous and, they’re quite aware of new standards.
Yeah absolutely, but what HQ has found is that even the enthusiast penetration level is not good enough and putting in efforts for that miniscule number might be hampering other businesses also. So we take a call on the business needs, to grow the market and, when and where to cater to a very niche segment. And accordingly we decided that we will be introducing this within the next quarter rather than simultaneously introducing this product along with its International launch.
Since you do have enthusiast range products, do you have an outreach program so as to get a better connect with these people?
We are working on a new program with co-brands jointly. We’re focusing on providing a solution rather than a technology or a product. For the enthusiast range, what they need is a complete kit. So ADATA provides the DRAMs and SSDs and X-brand provides graphics cards, Y-brand will provide cabinets. So we are all working together and in a month's time you will hear about a new program from us. We will be doing roadshows and other activities like building test PCs etc. The basic thing is that people are not able to experience these powerful PCs. So we will build these machines and put it up at gaming cafes, places where partners are selling enthusiast products. Consumers will not be able to understand how an SSD works unless and until they've experienced them. But once they see how it works, they might invest in at least a 128 GB SSD to boot their PCs. We will be targeting, say, engineering colleges and help out these enthusiasts to know that we are there to provide you a solution and don't have to go to 10 different buyers to buy a product. You go to one partner and he will provide you the complete kit.
Is it just a personal outreach program or will there be a website where you can build your own rig?
Online programs will not help you understand what the performance is so it may just lead the crowd nowhere. Every other brand that we are talking about has a social media presence. So first, we will increase our social media presence to pull in the crowd and then we will have these locations where they can test the PCs.
More and more OEMs are trying to take a direct approach to selling in India, eliminating middlemen and passing the benefit to the end-user. We've seen TP-Link and D-link offer products directly, is ADATA going down the same road?
When you talk about directly reaching out, it is not directly reaching out because it is the partners themselves who are selling on Amazon and other retailers. So we help them with good pricing and good material availability. So the partners, instead of going through the offline mode, they offer it online. And they are the logistics partners. Earlier brands used to give support to the partners through offline channels by helping them build shops, but now they are helping out more in the online channel. So the model remains the same, but somewhere in the middle one or two layers are getting eliminated. We can never sell direct to the end-customer as per law, it has to be through distributors and partners.
We are there for a long term plan, and that is why we are not proactive in reaching out, we have been subtly present. Partners help us out to reach out a build a better network.