This was an eventful year in Microsoft's India chapter. Bill Gates announced a $1.7 bn investment over the next four years to make India a major hub for Microsoft's research, product and application development; and for services and tech support for both global and domestic companies. Sales were robust, especially in the JFM '06 quarter (with buyers anticipating VAT from April).

Microsoft bet big on SMBs. Among other areas, its Dynamics CRM/ERP suites (Navision and Axapta are sold in India) nearly doubled in sales, focusing on manufacturing micro-verticals such as textiles and auto parts. Overall, manufacturing was a hot vertical for Microsoft.

Pricing was a focus, to boost sales and tackle piracy (which dropped 2 points to 72%). The redefined price strategy segregates products according to a pyramid that addresses starter, middle, and expensive software separately. At the entry level, Microsoft launched the Windows XP SE (Starter Edition) last year in Indian languages, and then English. It targeted the top of the PC user pyramid with the launch of the MediaCentre entertainment platform, which shipped on nearly 20,000 HCL, HP and other PCs. Office was launched in 13 languages by end-2005.

There was strong government engagement. It set up a center of excellence with NISG Hyderabad, against one of the six things IT minister Maran had asked for. The others included language support, a low cost OS, investment in 100 schools, and security solutions for government. Microsoft has delivered on most.

Entertainment and devices, a distinct entity in India, launched the much-awaited X-Box this year (pre-orders began in June). Launches ahead include the much-delayed and awaited Windows Vista, and Office 2007.

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