AI-driven surge in memory prices, which has pushed up device costs across categories by 30-50 per cent, is resulting in softer demand in some segments but value growth is continuing, Rajat Vohra, CEO of key Apple products distributor Redington India, said in an interaction with . Redington is also evolving from a traditional hardware distributor into an “ecosystem orchestrator”, with cloud and services now contributing over 20 per cent of its India business, Vohra said.
Edited excerpts:
How has the disruptive geopolitical situation impacted your business?
The impact of geopolitics has been limited in India since most of the vendors that we distribute for have a domestic manufacturing presence. As for the imports, the lead times have gone up from about 6-8 weeks to 10-12 weeks but that has been fairly manageable. The bigger challenge now is the AI-led rise in memory prices, resulting in all device costs going northwards. There has been a 30 to 50 per cent increase in the average selling prices (ASP) across our portfolio, including mobile phones, PCs, servers, networking equipment. This has led to some flattening and even decline in unit volumes in certain device categories.
How have your customers reacted to these price increases?
Many of our channel partners have been stocking up on inventory to ensure that they are able to take the advantage of pricing today. On the other hand, some have also reduced budgets and have deferred spending on non-critical projects. Overall, enterprise infrastructure demand remains strong. Device consumption has weakened slightly in terms of the units but continues to deliver value growth because of higher prices.
How do you foresee the smartphone demand in India ahead of the festive season?
We primarily operate in the premium segment of above $600, which has shown strong growth and despite the price spike we expect to protect our unit volumes and grow the revenue drastically because of the ASP increase. The entry-level segments could see some deferred purchases and volume drops. Overall, despite the flattish volumes we expect revenue growth of 15-20 per cent.
Over recent years, Redington has expanded its scope beyond a pure hardware distributor. Can you talk us through the transition?
We started off as a distributor but are now transitioning ourselves to an ‘ecosystem orchestrator’. Cloud and services contribute more than 20 per cent of our India business today and with the tech landscape becoming broader we want to invest and grow the services business. AI is another strategic priority. We have seen strong penetration across the AI PCs portfolio and have also partnered with more than 40 AI related Independent Software Vendors (ISV). We are also investing in platforms that allow customers to design and procure solutions digitally while still offering human support where required. Around 30 per cent of our business today is fully digital.
What is your presence like in Tier 2/3/4 and other non-metro cities ?
Tier-3 and tier-4 cities are strategic priorities for us and we are aiming to expand to 41 such markets this year. The technology ecosystem is expanding a lot in these cities due to the lower real estate costs and improved talent availability. The demand in these locations is driven largely by SMEs, who may not have dedicated IT departments but increasingly require AI, connectivity and infrastructure solutions.
What tailwinds do you expect from data centre capacity additions in India?
Industry estimates point to an 8x increase in data centre capacity in the next 3-5 years. We see a humongous opportunity in this space and our focus areas are predominantly around power and cooling solutions, GPU servers and networking infrastructure and services around deployment and operations. We have also collaborated with some co-location data centre providers to offer capacity to SMBs through our channel network, going from just supplying to partnering with the data centre companies.