Dell Rings a Bell

At a Confederation of Indian Industry meet some time ago in

Mumbai, speakers, almost unanimously, had pounced on a single devil policing

manufacturing in the country: mindset. Internationally, it was said, global

players preferred China to India as a manufacturing base simply because the

Chinese have been able to successfully adapt to the new global business

scenario. So, to take to the new way of thinking, India had to create huge

capacities, upgrade the quality of its engineer-managers, develop technologies

and exploit those to create world-class products.

Easier said than done, but this year's budget has

provided glimpses of hope and the talk of a semiconductor fab had the government

making the right noises. In the IT arena, a growing economy and robust growth in

PCs across the country have made many think of healthy contributions of

manufacturing to the Indian economy. Easier said than done again, because India

generally remains an assembling hub. Logistics, inventory and supply chain

management are, therefore, major bottlenecks in systems development or

manufacturing-also reasons why most PC and notebook companies have so long

kept the magic 'M-word' out of India. This may change if Dell's bell

strikes a chord with a state government or visa versa.

Dell has been in discussion with a number of state

governments regarding various key points. The discussions roughly revolved

around how to ensure a rapid and efficient flow of materials into and out of the

factory; and how to ensure that logistics, roads and infrastructure capability

are also there as incentives. “The discussions are taking longer than we like.

We see there is a long range opportunity and so are happy to take our time and

make sure we get it right,” Michael Dell, chairman of the Board of directors

of Dell, said on his visit to Bangalore recently.    

The company's focus in India was on enterprise products

when it started server and storage. It now plans to double the size of its

India-based product development team during the next two years. So the focus of

Indian R&D in servers and storage will continue along with software

development. A new effort now is expected to be around hardware engineering, and

hardware design. There will be investments in terms of recruitment, labs and

equipment.

While Dell has the number one share in the computer market

in the US, globally, only 15% of its revenues come from consumers. About 85% of

the revenues come from businesses, governments and institutions. In India, the

percentage will obviously be higher because of the company's concentration on

the enterprise market. But, over time, as and if it grows its manufacturing

infrastructure here, a wide range of products at various price points may be on

offer.

But, the size of the Indian market will dictate the need

for an industrial policy around these capital-intensive investments, such as

semiconductor fabrication, Dell implied. So, even if his bag of other goodies

include doubling of India headcount from 10k to 20k in three years, a

successfully set up manufacturing facility could be his greatest

souvenir-singularly because it can set a trend other MNCs might want to

follow. The noises, again, are right. And it's direct from Dell.

Goutam Das



goutamd@cybermedia.co.in