Lexmark puts its force behind AIOs

Lexmark is making all efforts to boost its All-In-One (AIO) business, by
evangelizing the product among corporate buyers and launching newer models. The
company recently launched a points-based 'Paanch ka Pachaas' scheme for its
partners, for the OND quarter. The main focus of this scheme is to push AIOs in
the market. Says Pradeep Kamath, GM-Lexmark India, "The scheme has been
created to differentiate AIOs from single-point printers and show partners the
recurrent value in selling the former".

According to IDC India, Lexmark retained the second position in the AIO
market share and registered an inkjet market share of 9.19% in the Q2 quarter in
India. AIOs contribute 20% of Lexmark's overall unit sales, while lasers will
be 12% of its revenues, by December, 2004. "We have managed to hold onto
this position as we introduced entry-level laser printers for just Rs 8,990,
with a three-year warranty, which was very lucrative for customers. We will come
up with more entry-level products to maintain our strong position in this
market."

Under the 'Paanch Ka Pachaas' scheme, every Lexmark printer, depending on
its model, is assigned different points. Resellers can earn anywhere between Rs
50 to Rs 150, depending on the accumulated points. They will also be given gifts
like bank debit cards or bank cards of a fixed amount which can be used
nationally.

The company has been rolling out partner programs regularly for the past one
fiscal, including 'Lexmark Becho Aish Karo', 'Do Aur Do, Paanch' and 'Printer
Becho, Printer Pao'. The reason why the company places such a great impetus on
channel promotions is to keep its partner invigorated about selling its
products. "Besides these schemes, we also offer our partners upfront
margins," says Pradeep.

However, he maintains that such promotions do not result in dumping products
on the channel. "We offer a wide spread and variety of products. For
instance, in the 'Paanch Ka Pachaas' offer, we have given partners a range
of five inkjets and six AIOs, which they can select and sell. This ensures
motility of the products."

Lexmark also tried to have a quick disbursement of scheme claims to keep its
partners satisfied. The company has a policy of getting all claims within 10
days after the scheme draws to an end, and these claims are processed and
incentives awarded within 30 days from this period.

Lexmark as a company has also grown from a two-men team two years ago to 20
members with three offices. It has also outsourced its Lexpress onsite warranty
and call center operations to third party partners. It has also evangelized its
products among corporates by engaging with partners while making sales calls to
organizations. "At the moment we have 25 dedicated corporate
customers," claims Pradeep. Lexmark is also planning to come out with
printers exclusively for digital photography by December, 2004.

Recently, Lexmark conducted a voluntary recall of 40,000 printers of the
E230, E232, E232t, E330, E332, E332n and E332tn models. This recall was done in
cooperation with consumer safety agencies around the world. Lexmark has not
received any reports of incidents or injuries involving these printers. However,
through internal reliability testing, the vendor identified a potential safety
issue in one printer after the equivalent of several years of normal usage. In
the unlikely event of a multiple component failure, the printer could present an
electrical shock hazard if it is connected to an ungrounded power source.

Talking about this incident, Pradeep said, "This recall has not affected
Indian customers, as we are still selling the E220, which is an entry-level
printer." He adds that the mechanical problems in these models have been
resolved and a fresh batch of these re-engineered printers will be made
available in India by November, 2004. "We are getting a consignment of the
E230, which is a slightly higher-end printer for corporates," Pradeep
added.

VINITA BHATIA