Changing face of IBM India

IBM India is realigning its operations to get closer to the markets. Will it bring the desired results?
The year 2000 will see IBM India displaying a new face. A face that is more open to experimenting with decentralized operations. To begin with, the man at the helm, Ranjit Limaye has shifted his base from IBM’s Bangalore head office to Nariman Point in Mumbai, the commercial capital of India and a market which contributes the maximum to IBM’s revenues. The MD’s office will be separate from IBM’s existing 200-man office in suburban Mumbai and it will also house the customer support center.

The move is a result of IBM India’s efforts at broadening its business thrust by focusing more on regions. This is in addition to the company’s vertical market focus, which it has followed since day one in India. Key people will hold dual responsibility for markets as well as regions. The attempt, which began soon after Limaye took charge in early January 1999, is supposed to have yielded good results for IBM India. And this, without taking into account the services revenue brought by IBM Global Services, which continues to be a separate legal entity. 

Alok Ohrie will move from IBM’s headquarters in Golden Towers, Bangalore to Mumbai as Channel Manager. He will manage channel movement of PCs and AS/400s, which have been consolidated for the first time. He will be joined by Murli Raman as VP, Marketing and Channels. Nipun Mehrotra, VP, Public Sector and Distribution, will move to Delhi. Vikas Gurugunti from the Personal Systems Division (PSD) will take over the server line of business, as Marketing Manager, Systems. Shashi Mal will move into the place vacated by Alok Ohrie as head of PSD. 

In keeping with the regional focus in addition to the vertical market focus, each region will have a Regional Manager too. This role will be fulfilled by Mehrotra in North, Ashish Kumar in South and Amit Sircar in East. Both Kumar and Sircar will continue to hold their respective portfolios as head of small and medium business segment, and head of industrial sector, respectively. In short, they will play dual roles. 

Just how well this change will hold good for IBM this year is debatable, since there are no company figures to validate its claims to good performance in 1999. In the PC business, going by IDC figures for the first six months ended June 1999, IBM is doing well in the notebooks segment. Though in unit terms, it is at number two behind Compaq–2,762 versus 2,910–with a market share of 25.3%, in terms of total value of shipments, it is ahead of Compaq–$11.3 million versus $10.8 million–with a market share of 28.2%.

In the desktop business, for the first six months, IBM, with 16,513 units, is at number five behind Compaq, Zenith, HCL and HP in terms of number of systems sold. This, however, is said to be strategic as, in terms of value, it is at number two with $24.9 million. It continues to sell desktops in the Rs1 lakh plus category. This is expected to change this calendar year, given that it has started manufacturing in Pondicherry. More than offering competitive prices, IBM will now be in a position to offer PCs with varied configurations, which it could not offer when it was shipping systems directly into India. Saving on inventory cost by reducing bill to order and product turnaround cycle is also expected to benefit IBM in the long run. In the PC server category, it has managed to be at number two both in terms of units sold, with 1,858 units, and value, with $10.1 million. 

Though market analysts have put Sun Microsystems a notch above IBM in the Unix server category, in the RISC category, IBM looks clearly in front. In fact, its RS 6000 range of systems is supposed to have had a good run in the market place. Its AS/400 systems, on the other hand, have only managed to hold on to the numbers and keep the revenue stable. 

IBM has decided to consolidate AS/400 with the PC business and drive its channel activity from Mumbai. Perhaps, this is with the intention of extending its reach beyond the first level cities and thus increase its market share. How much of this will hold true will be known only by June this year.

Latha Kuttappan-Chandradeep
CNS, Bangalore

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