Financial Daily from THE HINDU group of publications
Tuesday, Nov 12, 2002
MS looking for huge share for Windows
Vipin V. Nair
NEW DELHI, Nov. 11
WHEN he first came to India in March 1997, Mr Bill Gates, Co-founder and Chairman of Microsoft, counted each cow he saw lazing around on Indian roads.
"I have already counted 14 cows on Delhi roads," he commented when asked about his first impressions on India.
That was five years ago. India had just begun to make a mark on the global software arena with its low-cost, talented engineers writing software codes
and fixing Y2K bugs. Computers were not selling much here and probably Mr Gates had nothing better to ponder over than counting cows on roads.
What a change since then! Mr Gates came to India again in 2000 and is now on his third visit. He is not talking about anything else but millions of dollars of charity for the country's fight against AIDS. He will announce Microsoft's business plans for the country soon.
Surely, India is high on Microsoft's agenda for the future. The software giant is betting big on India, eying a huge market in the making and the supreme software talent that is available in plenty.
According to industry experts, though India is a tiny market for Microsoft at present - they say the company earns just about $150 million from India out of its over $28 billion revenues - it will explode in the coming years, giving Microsoft billions of dollars in revenue.
"They see it as a large, growing market. The PC sales in the country may be too low for them now, but at some point, it would reach the size of say 20 million units per year. They want to control this market right from now," says Mr Arjun Malhtora, Chairman of TechSpan India and co-founder of HCL Group.
According to a report by Ernst and Young, PC sales in India would reach 22 million units by 2010, up from 1.8 million this year. "Let's assume 50 per cent of that projection happens and Microsoft gets about 70 per cent market share. That gives you a sale of 7.7 million Windows software and it's not a small number," says Mr Vinnie Mehta, Director of MAIT.
A major source of business to Microsoft would come from the Government, now hurrying to computerise its departments. Microsoft is leaving no stone unturned to get business from this segment, announcing local language software and support to the country's e-governance projects Government purchases currently account for 18 per cent of PC sales in the country.
But the company faces a major problem in tackling the rampant software piracy in India. It is estimated that 50-60 per cent of the software running on PCs in the country are pirated.
"Checking piracy and lowering software prices would be crucial for Microsoft in the coming years," said an industry official.
According to Mr Ganesh Natarajan, Deputy Chairman and Managing Director of Zensar Technologies, India's emergence as a destination for offshore software development and back office operations also adds business to Microsoft.
"All those multinational companies setting up software development centres and call centres are buying computers in large numbers and that is giving Microsoft a huge business... They are doing very well here," Mr Natarajan said.
Apart from the market potential, another aspect of India is its software talent. As much as 20 per cent of Microsoft engineers are Indians and Mr Gates stated recently that this factor also contributed to the decision to provide the $100 million charity.
Microsoft has already set up a development centre in Hyderabad, besides outsourcing work from many Indian software vendors such as Infosys. "I think in the coming years, all new versions of software will be developed from India," says Mr Natarajan.
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