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Microsoft's IDC in Hyderabad now incubates business opportunities

So long, we have been hearing how teams at Microsoft's IDC in Hyderabad, its second product development center outside the US, have played key roles in the release to manufacturing of Windows Mobile 5.0, LiveMeeting 7.0, v1.o of Data Protection Manager and the release of Beta 2 Visual Studio 2005.

Now comes another measure of the innovation and strategic work that is happening out of the IDC in Hyderabad: last year, the center filed 40 world-wide patents. This year, it is on track to almost doubling that figure, having set itself an aggressive target of 76.

Understandably, it is nostalgic times for one of the highest ranking Indians in Microsoft-corporate vice president of the Developer Division, S Somasegar-he was instrumental in setting it up way back in 1998 with just about 20 people.  “At that time it was all about looking at if we can do remote product development and make it successful,” he remembers.

So the first few years were spent crawling, trying to understand if it can be done. The ball started hitting the bat only three years ago, and now, the IDC has over 800 people with plans to continue the growth at a healthy pace over the next two years.

The 800-odd employees are divided into groups that are aligned with all the seven businesses defined at Microsoft. “We have about 35 different products and technology groups that are either delivering technologies to be shipped as part of a mother product or will be shipped end-to-end,” Soma, as the Developer Division V-P is popularly known, says.

To be specific, there are three categories of things Microsoft expects the IDC to do. One is for the seven business groups that we mentioned earlier; it would like the Hyderabad guys to build bigger, broader capabilities for those seven businesses-which could be products or technologies. Then, Soma would like to think about any new business opportunity for Microsoft at a world-wide level. “I want the IDC to incubate and think about new opportunities,” he clarifies.

Such a thing, in fact, is already happening and there is a success tale to tell too.  “The work that we are doing for RFID support was incubated here. Srini Koppullu (IDC's boss) and his team worked with two or three customers around the world. He took about a year to do the incubation and then went to Redmond with a plan on what should be done. The plan was approved and, since then, we have built a team here. This is classic example of business opportunity for the company at a world-wide level, getting incubated here, that would eventually translate into deliverables,” he explains.

Likewise, emerging markets is an interesting place for the big M.  Since half the world's population lives here, sooner or later, technology adoption is expected to pick up in these geographies. “How can we act as an accelerator to make that happen?” Soma asks. “Should we be thinking about a new business model or a new product or an exciting product that can be customized for this market?”

These are difficult questions the IDC can answer. Some incubation work is, therefore, underway to understand what should be done. The answers will come in the next 12 months or so. “Today, if you look at the installed base of PCs in India, it is about three-four million. From an economical viability perspective, it can be a lot higher. So we are trying to understand if it is because people don't understand the value of the PC or is it that the PC needs to look and feel different, have new functionality or is it a pricing issue where we need to look at a new model. So, we are broadly trying to figure out how to go from three to 50 mn,” he tells.

Groups in Hyderabad are studying this in collaboration with other groups at Microsoft-the Windows Client Group in Redmond, the local sales and marketing subsidiary in Bangalore and Delhi, for example-as also with its hardware partners, Intel, AMD and ODMs in Taiwan, among others.

So, what's the next growth driver? Sub 5k PCs?

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