W(hat) 2K After Y2K?

15 Feb 1999 00:00 IST

New Update

Heard of the man
and his golden goose. The man killed the golden goose out of greed but
ever wondered what he would have done if his golden goose was to die
a natural death? Chances are that he would have started looking for
a 'new' golden goose or moved into fresh ventures with the capital from
golden eggs.

Come January 1, 2000 and it will bring an end to an era which most of
the Indian software companies will fondly remember. Nothing to do with
the end of the millennium, but the end of the Y2K projects. And if you
have not guessed already what this golden goose is, it is the end of
Y2K projects after the year 2000. As anybody in the industry would agree,
the real push for the Indian software came from the booming opportunity
that the millennium bug offered. Relatively low on IT value chain, the
activity made sense to the low-cost Indian software companies and most
of them took little time in jumping on to the Y2K bandwagon, including
today's biggies like TCS, Tata Infotech, Infosys et al. Says Naresh
Nagarajan, Director (Projects), Cognizant Technology Solutions, "We
were one of the first to identify opportunity in the area of Y2K and
as early as 1994, we had a Y2K strategy in place. The maximum revenues
came in from Y2K, about 40% during fiscal 1996-97 and 1997-98."

Y2k projects provided the
much needed base and revenue for the Indian software companies to establish
their contacts and earn respect for their produce. They played a very
important role in changing the negative mindset commonly related with
the 'made in India' label and leverage it in other areas. As Abhishek
Mitra of Infosys says, "Y2K has been very successfully used as
an opening by us and we have successfully leveraged it to enter more
value-added businesses like applications development etc."

So what will happen post-Y2K to the stupendous growth rate that Indian
software companies are used to. As per NASSCOM estimates, Y2K business
contributes about 40% of the total software revenue. Cut out the Y2K
business, and the pace slows down drastically. According to K Padmanabhan,
VP, TCS, "During the first-half year ending September 1998, the
company has maintained its workforce and revenue percentage in this
area." However, at the same time he admits that the amount of new
work is reducing now.

So the solution-what else, other than searching for a new golden goose.

Enter euro

The good news is that euro is all set to become the next big golden
goose on which Indian companies are pinning their hope for the next
couple of years. The Gartner Group identifies Euro-currency conversion
as a $100-billion opportunity. But the bad news for software companies
is that Y2K and Euro are two different ballgames, both requiring different
skills. European Monetary Union (EMU) will require sound functional
and business knowledge as compared to the mechanical treatment of data
fields needed for Y2K projects. Says Deepak Garg, VP, SQL Star, "In
the euro problem, there is an addition of functionality to the applications.
Euro-based projects need a much higher level of value addition from
consultants/service providers." Echoing a similar sentiment is
Nagarajan, "We do not think that in terms of skill-sets there is
any direct correlation between Y2K and euro work." No wonder that
barring a few, a majority of the companies are still putting strategies
in place to exploit the euro opportunities. Agreeing with the duo is
Ventaka Rao, VP, VisualSoft, "We are expecting to launch few euro
products very shortly to address some of the euro issues."

Cashing on Y2K

The biggest advantage that the Indian companies have-apart from the
low-cost quality manpower-is their Y2K experience and contacts made
in the international market to gain a sizable chunk of revenues from
euro. Says Rao, "There are a few clients who after seeing our Y2K
work have signed us for their euro projects work as well. We are looking
at 15-20% revenue from euro in the fiscal 1998-99." Availability
of the excess Y2K workforce for euro projects is another advantage that
the Indian companies have. Agrees Garg, "To some extent we can
deploy the Y2K resources. No doubt we will need to upgrade them from
business applications knowledge point of view as well as add consultants
to the team having domain knowledge."

So with just a year to go, as per the half-yearly figures (see charts),
many companies still accrue plus-15% of their total revenues from Y2K
projects. To offset the drop in revenues due to the loss of Y2K business,
euro forms only a part of the big plan for Indian software companies.
Companies are looking up the value chain. As Mitra says, "We have
started de-emphasizing on Y2K business and have already taken concrete
steps in moving up the value chain by successfully entering value-added
services like internet consulting and ERP implementation." The
same holds for TCS. As Padmanabhan puts it, "After Y2K we plan
to leverage the factory model to other software applications. We have
identified euro conversion projects, web-enabling legacy applications,
reengineering, product testing and maintenance as areas where we will
extend the streamlining of operations based on the factory model."

The companies are looking at niche segments like ERP, datawarehousing
and other areas. As Natrajan would describe his strategy for the new
millennium, "Now with just about a year left for Y2K, we have identified
other areas such as datawarehousing, ecommerce and componentware as
three areas of focus. This is our beyond the millennium initiative."

No doubt, the Indian companies will miss the Y2K projects, but then
life will go on with euro, ERP, internet and other golden geese.

Yograj Varma,

in New Delhi.

Battling
For Office Space

With the recent
launch of Lotus SmartSuite Millennium and Corel PerfectOffice, and Microsoft's
Office 2000 slated for release in April, the office suites market is
getting hotter.

With almost four
lakh office suites being shipped to the Indian market annually, it is
a hot market to be in. The market almost doubled to Rs69 crore in 1996-97,
from Rs37.7 crore in the previous year, according to an IDC report.
Last year, Microsoft's revenue share for office suites jumped from 58%
to 87%, while Lotus' revenue share shrunk from 29% to 12% and Corel's
from 13% to 1%. Microsoft's Office97 commands almost two-thirds of the
market in terms of volumes. This year, however, the battle is likely
to be contested with a renewed vigor. Competition is on many fronts-technology,
prices, features and, of course, sops for the dealer network.

The most conspicuous tussle is on the techno front. Lotus SmartSuite
Millennium, Microsoft's chief challenger, boasts of features which Office97
will have a tough time competing with. For one, its WordPro and spreadsheets
offer VR (voice recognition). You can now finally speak to your computer
or just dictate your documents to the computer. Corel PerfectOffice
too offers VR, but Manish Kapoor, Business Manager, Lotus, is quick
to point out, "The Lotus office suite offers you native voice integration,
while Corel's VR is not native to the software."

Karthik Padmanabhan, Product Manager, Microsoft, is, however, unfazed,
"We don't rush into a technology without substantial research.
Often, when a technology is introduced in a nascent stage, it eventually
fails to take off. Take OS/2, for example. A large number of protocols
have to be integrated before VR can be introduced. Right now, it is
just a fancy feature."

Apart from VR, the latest office suites also offer a high degree of
internet compatibility. "Now you can open an existing HTML document
in Word and save it again without messing up the formatting," says
Padmanabhan. Lotus offers a complete web publishing tool, FastSite.
"It lets you create a web site using your existing SmartSuite or
MS Word document. This can be published to any web server by converting
documents to web pages and sending it to the server," says Kapoor.
"The emphasis today is on seamless enterprise-wide integration
with back-end systems like Oracle, Lotus Notes etc," adds Kapoor.
And the office suites are geared up just for that.

On the marketing front too, much aggression has been in evidence. Lotus
SmartSuite was launched in October and offered on a trial basis at Rs6,999,
almost a third of the price of Office97, though the actual price is
Rs11,000. "The trial offer evoked a very positive response from
our three distributors and their 2,000-strong dealer network,"
says Birenjit Sachar, National Marketing Manager, Lotus. "We recorded
high box sales during this trial period. The response was really very
positive," says Virender Agarwal of Sonata Software, one of Lotus'
distributors in the country. He also explains the shrinking marketshare
of Lotus saying that it is more a shrink in revenue, caused by the price
slash, and that the volumes have remained intact.

Though Office 2000 is yet to be launched, Microsoft is already bracing
for the challenge that Lotus poses. Microsoft has launched a freebie
offer of two Timex watches with a pack of Office97 and reduced the price
by Rs 1,000, to Rs 16,000. "This is the first time we have launched
this FMCG-like promotion scheme. Soon we will be setting off a huge
promotion scheme to motivate the GID channel," says Padmanabhan.

The dominance of Microsoft's office suite seems to be under threat,
if Lotus continues to play its cards right and keep the momentum it
has gained. But, irrespective of whether Lotus is finally able to regain
marketshare lost to Microsoft, the slew of upgraded office suites in
the market simply ensures that the end-user has much to choose from.

DIPANKAR DAS,

in New Delhi.

Freeware?
What's Not To Like?

Not much. Open-source
programs may spur more choice and competition.

Ask a software
company what it regards as its most valuable asset and the answer will
probably be "our source code." The reason is simple: With
these instructions, written in a programming language such as C++, a
software engineer can clone the program, and copyright laws offer minimal
protection.

So why are some leading companies, including Sun, Netscape, IBM and
3Com creating 'freeware' by giving away critical source code? And what
does the open-source movement mean for us non-programmers?

To answer the last question first: A quiet revolution sweeping the software
industry could in time give us better programs, largely through more
competition and choice. The force driving the change, as it is in so
many areas of technology, is the internet. From the beginning, the net
has been based on standards and software that were open and freely available
to all comers. Even now that net traffic is overwhelmingly commercial,
such programs are responsible for moving nearly all email and for the
directory system that lets computers find each other.

Software companies are getting interested in open source for varying
reasons. For some, it's an experiment or a way to be in position if
the open-source movement takes off. For 3Com Palm Computing, it's a
way to get others to write software for its Palm handheld. Sun Microsystems
Inc is responding to pressure to loosen its control over its Java language,
which is supposed to allow programs to run on different types of computers.

The open-source movement was given a huge boost by the success of the
Linux operating system, a variant of Unix that runs on the same inexpensive
PCs as Windows. Linux was written in the early 1990s by Linus Torvalds,
then an undergraduate at the University of Helsinki, and is maintained
and updated by a loose army of programmers.

Linux makes the strongest case for the somewhat improbable claim that
the army of volunteers that updates and maintains it can produce better
software than Microsoft's well-paid minions. On the downside, Linux
has a mind-numbing installation procedure-it took me hours of work to
get a system running-and few off-the-shelf applications. But companies
that have tried it in a variety of server chores, such as running web
sites or acting as an email post office, have found it far less crash-prone
than Microsoft's $1000-a-copy Windows NT. When bugs do turn up, fixes
are quickly posted to the internet, sometimes within hours, and software
support for new hardware often appears within days, versus months for
NT.

Recently, a number of major companies have made significant commitments
to Linux. Intel Corp has taken an equity stake in Red Hat Software,
which distributes and supports Linux. Corel offers WordPerfect Office
for Linux, and IBM and Oracle say they will make database software available
for Linux.

The enthusiasm is definitely not shared by Microsoft. In an internal
document that leaked out at the end of October, Microsoft engineer Vinod
Valloppillil argued that Linux and other open-source programs are a
threat to Windows. The company, he said, should "deny (open-source)
projects entry to the market" by altering internet standards to
favor Windows.

Valloppillil's memo, which has become known as the Halloween Document
(available at www.opensource. org/halloween.html), argues that because
open-source programs are written by engineers for engineers, they "will
never provide the ease-of-use requirements of the average desktop user."
That may be about to change.

Free money

In early 1998, Netscape Communications Corp turned the source code of
its Navigator browser over to an organization called Mozilla.org and
invited developers to improve it. The results will be incorporated into
Communicator 5.0, scheduled for release in mid-1999. Mozilla.org has
already developed a version of Navigator that can run on just about
any platform, including set-top boxes and handhelds.

For open source to become a major force in consumer software, companies
will have to find a way to make a business out of giving products away.
One way is to charge for service and support for free software.

Another is by packaging and selling open-source products under a trusted
brand name. A third is by selling enhanced versions of open-source products.

These models may not appeal to companies used to Microsoft's gross margins,
but they could be very attractive for consumers. Open source has quickly
gone from campus curiosity to the object of intense corporate interest.
It remains to be seen how much this will change the software industry.
But if it puts better software on our desktops, I'm all for it.

By STEPHEN H WILDSTROM

Copyrighted

issue dated January 11, 1999.

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