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Digilink Acquisition: More Positives Than Negatives


5 Aug 2011
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Many partners believe that recent acquisition of network cabling brand Digilink by Schneider Electric has more positives for them than negatives. They have received assurance from Schneider that it will be business as usual and feel that there is no need to be worried about Schneider doing any alterations to Digilink’s partner network.

Partners feel that Schneider’s MNC tag would benefit the Digilink products in gaining better acceptance in large projects. “So far Digilink was lacking an MNC tag and I think Schneider’s acquisition would help Digilink in gaining better market acceptance. Since Schneider is very aggressive on its power management business and was looking for a product portfolio in the structured cabling business Digilink’s acquisition would help the company globally in this segment,” said Milind Choure, MD of Nagpur-based Unilogic Systems and a Digilink partner.

Agrees Edward Jeevan, Director of Bengaluru-based Binary Systems, another Digilink partner, “Schneider has presence in the structured cabling business with its product Clipsal—which is not a strong brand, Digilink will help Schneider in fulfilling this gap globally. The company was also looking at a volume product which Digilink brand provides it.”

According to Digilink partners, Schneider has assured them that there would not be any change in the distribution structure and partners would continue to sell their products. “We are comfortable with the acquisition and also by the fact that for another year or so, the Digilink business will continue to be run from Smartlink's office. The entire Digilink team will move to Schneider but operate under the stewardship of KR Naik. We have complete faith in KR Naik that our interest would be taken care of,” added Choure.

Another benefit for Digilink partners is that they will now have access to Schneider’s wider portfolio. “The acquisition will give us an opportunity to distribute Schneider’s various products like their wired networking and video transmission products,” said Kshitij Desai, Director, Shani Peripherals, an Ahmedabad--based Digilink distributor.

There is apprehension that post acquisition prices of the product could increase. “Prices of products would definitely increase considering that MNC vendor like Schneider will try to create a premium positioning for the brand. Also cost structures of MNC vendors are usually higher than Indian companies and this will push up prices. In this segment pricing is an important factor and has been one of the reasons why Digilink has done so well over the years vis-à-vis companies like Tyco and Commscope,” opines Jeevan.

Choure however has a different view, “Even if Schneider increases the prices of Digilink products I do not think it will be unreasonable as they have acquired the Digilink brand for its market leadership which is due to its better price-performance than competitors.”

The sell-off of Digilink business, some partners believe, will benefit archrival D-Link. “With the Digilink brand sold, the parent company Smartlink will now have only the active brand Digisol which is a six-month old brand. With D-Link having an established active networking business and its soon-to-be-announced networking cabling business, it will be in a stronger position,” believes Jeevan.

Choure informs, “With the exorbitant money made from the Digilink brand, KR Naik is already planning to enter into components and peripherals space and this will ensure good business for partners.”

source : crn
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