IBM E-Systems And E-Services

This

was a good year for IBM in India. Most systems areas got in strong revenues, and

services helped fatten the bottom line. Notebooks, PC servers and RISC servers

did well, while the company struggled to grow up in desktops.

The Tata-IBM joint venture became IBM

India in September 1999. The Rs 707-crore company remained separate from the Rs

476-crore IBM Global Services. However, the two work rather like divisions

reporting to CEO Ranjit Limaye. For example, the former sells systems, and the

latter services them. With a merger on the cards, DQ agreed to consider the duo

as one company for all practical purposes, including revenues and ranking.

IBM Global Services grew 34% to Rs 476

crore, over half of which came from service exports. That’s a lower growth and

smaller revenue than IBM India, but with healthy service margins. IBM’s own

systems maintenance got in about Rs 50 crore, and systems integration over Rs

110 crore. IBM is strong in these areas, helped



by several development and support centers in Pune, Bangalore and now Gurgaon,
near Delhi.

Systems

made up four-fifths of IBM India revenues, down from the 90% of the previous

year, as software and peripherals grew faster (the integration of Lotus revenues

helped). IBM’s ThinkPad remained a bestseller, topping numbers and revenues as

IBM sold 7,073 units grossing over Rs 95 crore. The NetFinity Intel-based

servers were another success area, selling 4,648 units for over Rs 80 crore as

IBM pushed low-priced server packages hard, mostly with NT and a handful with

NetWare and UNIX.

Desktop PCs remained a puny 3% of the

market, though those 41,000-odd units probably got in the best average revenue

in India. But that is also the problem: pricing that misread the Indian market–as

in the US, overpriced IBM PCs took a beating. That could change, as Rs 50,000

desktops roll off its

new Pondicherry assembly line, and it

fulfils a massive contract to supply PCs to skumars.com franchisees. Finally,

IBM may be able to grow up from its negligible PC market share in India. But the

overpriced Aptiva home PCs still flounder (selling only 515 units last year).

Netfinity, RS/6000 and AS/400 servers

did very well. The non-PC high-end servers brought in Rs 138 crore. Multi-crore

deals with Telco, Tisco and UTI bank, and strong small-ISP buying helped the

RS/6000s gross Rs 54 crore. Four S/390s got in



Rs 30 crore, and over 100 AS/400s, Rs 54 crore. The latter could jump as IBM’s
big-blitz ebiz campaign reaches SME buyers in smaller cities, and as AS/400s

move through the reseller channels for the first time. IBM also got nearly Rs 20

crore from printers, and over Rs 26 crore each from storage and from cheque

sorters.

This year, IBM will go all out to drive its PC market

share up a few notches, giving up margins for numbers, pushing large deals and

channel sales to SMEs. It will build up on its ebiz and integration services,

and continue its aggressive AS/400 push into ebiz for SMEs, as the Netfinity,

AS/400 and RS/6000 servers continue to be hot. But will it reach a tenth of the

desktops market? Not for several years–but watch this space. DQ