What is a strategic window?
The term strategic window is the limited periods during which the "fit" among the core requirements of a market and the specific skills of a firm competitor in this market is at an optimum. In this article we will use the case VXL Instrument to develop the concept.
What's the deal VXL?
VXL Instruments has enabled companies worldwide to build a flexible, secure, manageable and cost-effective IT infrastructure. Its range of thin client devices helps enterprises beat the cycle of obsolescence desktop, free internal resources from the non-productive functions, and save millions of dollars that are spent on fixing systems. The thin client is a server-centric computing model where application software, data power, and CPU resides on a network server rather than on the client Instruments computer.VXL won "Maximum IT-Hardware Exporter Award non-SSI category "for 06-07.
Dilemma of VXL
VXL Instruments is a leading manufacturer of thin client devices and commands 11% share in the global market. Its major chunk of revenue comes from export to US and EU. The company is trying to explore new markets in India for its thin client devices. Competitors like Wyse and HP offer wide range of products, not only in the West but also in India. Therefore, it is high time that society starts thinking about Indian market.
How TC market in India?
The company's products as TC23xx and TC73xx are reliable and affordable. L '(thin client) TC can help in eradicating various pain in server-based computing. It 'very useful in the case of SMEs (small and medium) where the processing requirements are quite specific. In the case of sectors such as hospitality, we need to explore the various features of the unlock value so they can charge a premium. The main challenges are as follows:
1. How to provide maximum utility product without making too complex?
2. How to convince existing change by fat clients to thin client customers?
3. How TC market in India?
Actually the answer of third question will give us a frame work to find the answers to the first two questions.
it will consider VXL a minimum risk taking company. And 'more focused customer-centric product. Therefore, its products are world class, but market penetration is not so impressive. Currently, VXL markets its products through customer interaction and third party distributors like Priya Limited. This approach reduces marketing expenses but the approach has its limitations.
In 05, the Mumbai-based distributor Priya Ltd invested $ 2 million (about Rs 10 crore) in equity in VXL Instruments. The investment is part of the trade finance arrangement that gave VXL $ 9 million (about Rs 45 crore) to finance its growth.
VXL chalked out expansion plans and growth strategy in order to increase its thin client market share to 25 percent by 07-08. He made foray into various vertical markets such as ERP, Health, Telecom, Education and Banking with SAP client list including Belgium, Birmingham City Hospital in the United Kingdom, India DOT, British Telecom, IIM Lucknow, IIT Roorkie, Jakarta Haga Bank and HDFC India etc. But presently its market share is well below its target.
product knowledge and Customer Perception
We can roughly divide customers into two categories:
* Techno Savvy customers with financial muscle: This type of customers, already know the products (TC) and we need to convince them that thin client is a better choice of fat clients. For example, the upcoming opening of Velankani Group 5 star Electronic City, Bangalore. The Velankani to have in IT and infrastructure and they are aware about the technology and its implementation. According to Mr R. Shiva Kumar (Information System Manager, Velankani), these types of customers should better be addressed when the product is in its embryonic stage. Once you acquire fat clients (FC) for their project, they will not be interested in TC due to switch charge. Here we need to market TC as a device that not only reduce the total cost of ownership, but also provide a simple solution for all comfort requirements.
* Less Techno Savvy with medium-range investment capabilities: These types of customers do not have their own IT department. Generally play safe and go for the fat client technology used by other players in their segment. More over they consider their computing needs are minimal and do not find IT investments very attractive. Here, we need to educate them about the various benefits of server-based computing and the TC lead over FC. These types of companies should be approached to provide a total solution.
Redefining the market
Frequently, as markets evolve, the fundamental definition of the market changes in ways that increasingly disqualify some competitors, providing opportunities for others. The "" trend system to the marketing of products than the single piece of equipment provides many examples of this phenomenon. We will discuss this point with the help of the case Docutel.
Docutel: This manufacturer of ATM (ATM) supplied virtually all of the United States until the end of 1974. In early 1975 he found Docutel is losing its market share to large computer companies such as Burroughs, Honeywell ATM, and IBM as these manufacturers began to look EFTS total banks (electronic Fund transfer System) requirements. They offered the bank a package of equipment that represents a complete system that the ATM was only one component. Essentially their success can be attributed to the fact that they redefined the market so that always seemed to rule Docutel as a potential supplier.
Conclusions
Market redefinition is not only limited to the banking sector; similar trends are underway in scientific instrumentation (steel, cement and aluminum industries), process control equipment (Siemens, Vesuvius and SMS redefined the market); the sector of machine tools, office and household equipment (VXL is already a player) and electronic gear like some of the other examples. In any case, manufacturers who base their approach to the marketing of individual hardware are seeing their "strategic window" close as producers move into computer systems to take advantage of emerging opportunities. HP has capitalized sufficiently market TC under some aggressive M & A. In India, companies like HCL Technologies and Satyam are planning to enter the TC market as a supplier of complete solutions. Wipro is also exploring opportunities in SMEs. We can expect Wipro to venture into this segment in the near future.
As the competition grows the SMEs are becoming thin. Most companies are following make-to-order manufacturing philosophy. All these need free flow of materials, information and finances imperatives. Since practices are changing, many new applications of networking technology have evolved. Here, we can see a scope for VXL being a consultancy provider and not just a manufacturer of product.
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