Name the top Indian companies in each of the segments of the IT industry. Think peripher als and names like HP, Samsung, Seagate, Epson and Canon spring up. Talk servers and we have HP, Compaq, Sun and IBM. Think about the channel segment and it’s the MNCs—Tech Pac, Ingram and Redington that make the top troika. Where are the Indian companies in this space? Barring the domestic services and training segment (NIIT, Aptech, SSI) and HCL Infosystems and Wipro in hardware, it is difficult to find Indian IT companies that are among the top three players in any other segment.

Also, MNCs make up a good chunk of the Top 20 Indian IT companies. In FY01-02, there were nine MNCs in the Top 20 list but their share slipped marginally to 40% of the overall Top 20 revenues. Also, while the top 20 companies grew at the industry average of 13%, the MNC players grew slower at 10%. Compare this with the Indian companies (predominantly software players) in the Top 20 list, which grew by 18%. This shows a reversal of growth rates in FY00-01 where MNCs grew by 67% while the Top 20 companies grew at 56% and Indian companies at 49%. Some more statistics—the MNCs are strong in the Top 100 list with about 44 of the total 47 odd MNC falling in this category. Together, these MNCs constitute about 50% of the total Top 100 revenues. However this dominance of MNCs is no different from any other country in the Asia Pacific rim barring China where homegrown Legend commands the # 1 slot in the desktop business.

Top of the line
Compaq, with its subsidiary Digital Globalsoft retained its top slot with a total of Rs 2122 crore in sales. Thanks to the stupendous performance by Digital (80% growth) and Compaq also marginally moving ahead of its last year revenues, the combined entity grew by 9% and held on to its top position. However, there were some changes down the line. Channel giant Tech Pacific slipped to # 3 due to a negative growth rate. IBM was back in the # 2 spot after a gap of two years. When IBM’s hardware business slipped, services paid off for IBM. As a result of the slowdown, Hewlett Packard’s revenues dropped by 13% and even the 40% growth by HP ISO could not stop HP slipping to the fourth place. FY01-02 saw the entry of a new player in the list—Intel. Together, Intel and Intel IDC grossed Rs 1298 crore to be at # 6, just below Redington.

Ups and downs
FY01-02 being one of the worst years for the Indian IT industry, most of the players catering to the domestic market saw a reversal of roles. While the domestic Indian IT market fell by 2%, there were players who showed an above industry average performance in such a bad year. Ingram, Samsung, Intel and Cisco were among the star performers in the domestic industry. Samsung, with its branding of an ‘IT essentials company’ continued to ramp up Y-O-Y growth. While slowing down from previous year’s plus 50% growth rates, the company added about 225 crore to its FY00-01 revenues. This is amongst the highest revenue additions and is next only to Ingram’s scaling of revenues.

At a time when the other two channel majors showed negative or flat growth, Ingram was the other star performer. It crossed the magical Rs1000 crore mark and grew 31%. Part of Ingram’s success has been due to the ramping up of its channel network and adding about 2000 resellers in FY01-02. Among the major disappointments has been HP. HP was down by 13%. Enterprises witnessed avid discussions on Compaq, Carly Fiorina, the HP-Compaq merger and the future product line rather than about HP products. Systems were the worst hit and dropped 36%. Now that the companies have merged and there is no Compaq and with the Compaq team leading HP, this fiscal should see HP reversing the trend of falling growth rates. IBM, too, would have been in bad shape but was bailed out by services.

Channels: Good channels management has become the critical success determinant as 80% of the total IT products are routed through the channel market. However, it was a tough year for the MNC channel players. Numero Uno Tech Pacific retained the top position but could not outperform its FY00-01 revenues as it dropped 3%. Packaged software closed the gap for other segments like systems, peripherals and networking. Redington showed flat sales with a Rs 5 crore increment over its previous year’s sales. System revenues dropped by about 20% and the gap was closed by growth in packaged software and peripherals. Ingram was the star amongst the channel players and claimed a double digit growth of 31%. The mantra – increase market reach (the company added 2000 resellers and a direct presence in 33 locations) and consolidated product lines.

Systems: In FY00-01, Sun Microsystems saw handsome gains in server sales – 105% growth. This year, the collapse in segments like data centers saw revenue from servers tumbling by 24% but its leadership in the RISC server space remained unscathed. Its market share dropped to 33% from the previous year’s 37%. Compaq retained the top system vendor status with its continued leadership performance in the PC server business. In fact, Compaq has increased the gap between itself and the #2 player (Sun Microsystems) by over 91%.

In other segments like networking, printers and packaged software, the rankings were the same as the previous year. In the networking segment, Cisco remained the undisputed leader with a revenue of Rs 930 crore, followed by Bangalore-based Enterasys and D-link. In the packaged software segment, Microsoft, with revenues of Rs 665 crore remains way ahead of Oracle (revenues of Rs 250 crore). For Microsoft, the channels have become an important source of revenue.

Looking forward: The new HPQ
It has been a bad year for the MNCs. But the biggies have managed to hold on so far thanks to services (IBM and Compaq) and peripherals (Samsung, HP). This year too, with the shadows of slowdown continuing, MNC system and channel players will have to resort to services to break away from the slowdown specter. However all eyes will be on the new HPQ. Will it emerge as the # 1across segments— servers, desktops, services, printers and consumables. Or, will other players nibble away at its marketshare?

Yograj Verma

Page(s)   1