'At least 50% of the people in India pirate unknowingly'

-Neelam Dhawan, managing director of Microsoft India

Neelam
Dhawan, managing director of Microsoft India took over the reigns of
the Richmond-based software giant in India in March last year. Nearly a year
later, she speaks to Bhaswati Chakravorty of Dataquest about challenges
for Microsoft in India-software piracy and Linux, Microsoft's focus segment
for growth, and the contribution of the India Development Center to
Microsoft's R&D initiatives.

SMBs have
emerged as a big focus area for Microsoft. What is the company's strategy on
that front in India?

SMB is one of the fastest growing segments today, with an estimated market
size of around $1.8 mn. But, it still remains largely untapped, making it a very
exciting proposition for us. The challenge, however, is to deliver consistent
quality and streamline processes at the right price.

We are looking to
extend our reach in the SMB segment to smaller towns and Tier-II cities because
there is tremendous potential in these places. We have penetrated eight such
cities so far. The target is to reach 18 cities by the quarter ending March, and
32 by the end of the year. Our strategy is just not just to target resellers and
partners in these cities but to also conduct workshops to make prospective
customers aware of our technology and solutions.

We are also looking
to position our technology in micro-verticals in case of SMEs. Auto ancillary,
for example, has a lot of potential. We are also looking at increasing our
partnership coverage to penetrate SMBs.

After being in
India for over 15 years now, Microsoft has not been able to get its act together
on software piracy. What has gone wrong and what do you propose to do from here?

I think the basic problem is the lack of awareness of the end user. Studies
conducted by Microsoft have revealed that at least 50% of the people in India
pirate unknowingly. So, the first and foremost step is awareness building. An
informed user would always understand the advantage of using legal software and
try and restrict usage of pirated copies. Customers need education. We are also
talking to resellers to make them provide only legal software to customers.

Pricing is another
issue that we are trying to address to combat piracy. We have come up with a
good-better-best strategy that would offer the best of the price-product
combination to the customers. This redefined pricing strategy tries to segregate
products according to a pyramid model that addresses starter, middle and
expensive software separately. For the starter level, we launched the Windows XP
Starter edition last year, in Hindi and Tamil. We tried to test the market with
this launch. We are also planning to launch the English version by the end of
the year.

What is
Microsoft's endeavor to promote low-cost computing in India?

Microsoft is aggressively trying to promote low-cost computing as this would
only help increase PC penetration in India. There's Windows XP Starter which
is one of our most important initiatives in the low-cost computing front.
Localization of Office is another important initiative. Today, Microsoft Office
is available in Indian languages. We are also offering our small business server
solution at attractive prices. In a nutshell, we are trying to provide the most
cost-effective combination of operating system, Microsoft Office and service.

How big is the
Linux threat to Microsoft in India? Microsoft has significant presence in the
Government space globally. Why then is Linux ahead of Windows in that space in
India?  

In the first place, we do not consider Linux to be a threat to
Microsoft. If one does a serious cost-benefit analysis with respect to Linux
vendors, it will work out to be far more expensive than Windows. This has been
proved by a large number of independent studies conducted worldwide.

Secondly, it is a
misconception that Microsoft has not been able to make significant headway in
the government space in India. If you look at the top 10 e-Governance projects
in the country, seven are on the Microsoft platform. The key to success in the
government segment is to provide the best technology for a particular
requirement. We provide the best technology with a commitment to provide the
required support.

We are working with
a number of state governments on a variety of e-Governance projects across the
country. We are funding and administering Centers of Excellence for e-Governance
applications. The centers showcase an array of Microsoft products and solutions
and demonstrate the interoperability of Microsoft products with other platforms.
These centers also facilitate the government to conduct technical training
sessions for its officials to create a large pool of professionals well versed
in software development for e-Governance projects.

There is also lot
of excitement in the government with regard to the Windows Vista.

How important is
the hardware business to the world's largest software company, especially post
the X-Box?  

Hardware is an important part of our business, but we would
essentially like to be identified as a software company. As an organization, we
are profitable with software, not hardware.

Gaming, we believe,
has huge potential in India. Unfortunately, we were not able to launch the X-Box
in India because of serious issues with supply. We are hoping to launch the
X-Box 360 in India in the next 12 months. 

What is the
contribution of the India Development Center to Microsoft's global R&D work?

MIDC, Hyderabad is a strategic software development center for Microsoft
with focus on strategic, IP sensitive, long term-oriented software development
projects. Commenced in 1998 with two products and 20 people, MIDC has now grown
to 900 people and 35 products. MIDC is well integrated into key product families
at Microsoft, with teams at Hyderabad serving as true extensions to project
teams at Redmond.

Recently, Microsoft
launched Visual Studio 2005 (Team Suite), SQL Server 2005 and BizTalk 2006. The
IDC contributed to significant components of these new products. For example,
IDC owns end-to-end development of Visual Studio for Devices and SQL Mobile.
Some of the other key development initiatives from MIDC include Data Protection
Manager, RFID Platform Technologies, Office Mobile, Windows SFU, Features of
Longhorn or Windows Vista, Office Live Meeting and Microsoft-CRM. The MIDC has
also embarked on incubating new products and technologies-both for developed
markets (eg.RFID) and for emerging markets. The MIDC filed 40 patents in FY05,
and is on track to file 70 patents in FY06.

What will be the
priority areas for Microsoft in the next six months?

We would be launching several new products in the next six months-the
Microsoft server suite, Windows Vista and Office 12.

We would be also
expanding our reach into smaller towns and cities. We expect to penetrate into
over 20 such destinations by the end of June. As I have already mentioned, we
are looking to reach 32 cities by the end of the year.

We would also be
focusing extensively on the enterprise customer. Microsoft is going to deepen
its engagement across verticals with a sharp focus on sectors like
manufacturing, banking, and ITeS. We are also looking to consolidate the
Microsoft Dynamics market with ERP solutions and services that would help
organizations scale up better and faster. Consumers or the end users would also
be our focus area for growth in the coming months.

We have also begun
to work on our agenda of better engagement with ISVs. We have launched the ISV
Empower Program to deepen this engagement.

Bhaswati
Chakravorty

bhaswatic@cybermedia.co.in