border="0" hspace="2" vspace="2">Will the PC shipments cross
the one-million mark?:
Currently, all PC shipments, including servers, stand at 620,000 numbers.
One million PCs would mean a 61 percent growth in numbers. While the Indian industry has
grown in the past at this rate (of 60+ percent), whether the growth would happen this
fiscal is doubtful. There are several hurdles in the path. First, the US government
sanctions that could choke off FDI to infrastructure sectors, which are catalysts to the
growth of IT. Second, question marks on the current government's longevity. Pessimists are
predicting an election later this year; while optimists say it will be early 1999. It
might be better to have early elections, as the chances of one party coming to power are
strengthened then. The more this coalition sticks to power, the longer is the FUD factor.
Third, the economic growth will slow down due to the first two reasons. In a dull economic
climate, propensity to invest in IS may be dampened. Finally, will the PC shipments cross
the one million mark? Unlikely.
hspace="2" vspace="2" align="left">NT penetration will increase
further:
This is obvious. However, from the indications that are there presently,
the casualty will be Unix primarily, and NetWare to a lesser extent. One place where NT
will make significant inroads is the Small and Medium Enterprise (SME) segment. Microsoft
will be aided and abetted in the NT battle by hardware vendors such as HP and Compaq. As a
result, it will not be surprising if the 'file and print,' once NetWare's stronghold,
starts getting a strong whiff of NT. Unix will get affected in key accounts. DATAQUEST
estimates that this year, the mindshare of IS managers will start becoming distinctly NT
friendly. The launch of NT 5 will only add to the sound and fury of the enterprise battle.
NetWare will fight back with the impending NetWare 5. Unix may not. NT will be Home dry.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/3695432abd7b32d7dbf6cf359906475b092974fdc9f72869ee0c600be2da8258.jpg (23098 bytes)" border="0" hspace="2" vspace="2" align="right">SME
is the next port of call:
Talk to any IT vendor and the first thing he talks about is SME. With the
Top 500 shying away from buying systems as enthusiastically as they used to and government
sector also playing truant, the SMEs will be the target of most solution vendors. By sheer
numbers they are a majority and in markets such as India, their relative immunity from
global impacts does shield them from the kinds of shocks that other countries and their
markets go through. Most vendors are devising, or have already devised, SME strategies. If
the Homes came to the industry's rescue last year, SMEs may this time. If they do, the
systems vendors will smile.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/c8c454166a74492d3e7e2369d62ce42a3b2aac1b258873fc8a01243a22880ec4.jpg (12546 bytes)" border="0" hspace="2" vspace="2" align="left">Will
TCS remain the # 1 company in India?:
The difference between TCS and the # 2 company is just about Rs 30 crore.
If the economy continues the way it does, then software exports will grow more rapidly
than domestic industry. While Wipro too is in software, the sheer bulk of TCS, as far as
exports are concerned, might help it retain the # 1 slot. However, the most important
issue is: What will happen to HCL? With HCL Insys amalgamating with many of the Group
companies, it is possible that the combined revenues of HCL Insys (post-amalgamation with
HCL Infosolutions, Frontline, OA, FECL etc.) might be equally, if not more, heavy. What
remains to be seen is whether HCL will give company details next year. Like the last two
years, if they do not, then TCS just might retain the # 1 slot.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/673828e83a5f9b0e0f78b41ab3173599a85f503457f643a89a021c987378a481.jpg (15012 bytes)" border="0" hspace="2" vspace="2" align="right">HCL
Group will edge closer to Tatas in software exports:
The way Nadar has turned around HCL, currently, roughly 62 percent of its
revenues come from software and services. Post-consolidation, all the three constituent
companies in the HCL Group fold-HCL Insys, HCL Technologies (aka HCL Consulting), and
NIIT-will be involved in software and services business, particularly Systems Integration
(SI) business. As a result, the growth rates clocked by the Group in the services business
are not expected to slacken. If the consolidation gets completed and the companies are
able to work seamlessly, as is envisioned, then the post-reorganization pangs will be felt
minimally.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/962a88c46185201ffdc110762b112fdefcc7dd0b05345a8734f17caa6a72729d.jpg (36077 bytes)" border="0" hspace="2" vspace="2" align="left">The
year of ERP:
More in practice, and not so much in rhetoric. This year, more and more
companies will embrace across-the-enterprise solution more readily. In fact, studies
conducted by DATAQUEST suggest that ERP is on top of many large and medium enterprises'
wish list. And with global pressures continuing to mount, corporates will try and get that
additional edge. This is also a good year to implement ERP solutions as and when the
sanctions etc. are withdrawn; the price that the Indian economy will pay will be mainly in
further opening out the economy for global players. The state of readiness of Indian
companies will be much higher in such a situation. There will be casualties, but the
degree of competitiveness will be higher for companies who have their processes clearly
spelt out and are ready after eliminating inefficiencies than for companies who have not
done so. The biggest gainer will be Baan, which has already created cost-effective
modules. SAP will continue to do well. As a rule, smaller players will occupy a niche
while the big boys will hold the bulk of market and mindshare.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/4a061147869bde0fd78485b27c1becff71e522be9b4470aa77540bdfd1eddde6.jpg (16125 bytes)" border="0" hspace="2" vspace="2" align="right">The
Comdig impact:
With the Compaq-Digital merger now cleared, this new entity will be raring
to go. However, DATAQUEST does not foresee any major change as far as Indian market is
concerned, at least till the Q3 of the current fiscal. Both companies will continue to
operate independently, given their relative strengths and weaknesses. There is a
possibility of some synergy taking place, where Compaq will focus on PCs and PC servers
(its current focus) and Digital will defocus on PCs. Even this is unlikely to happen by Q3
of the fiscal. Toward the end of the year, there will be some concrete synergy that might
be implemented. In India, DATAQUEST expects Compaq and Digital to operate separately, with
Digital being a subsidiary of Compaq.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/832544ff220a55e3f90b63602756879512156e44d4bf113869086d17ddcb426a.jpg (16522 bytes)" border="0" hspace="2" vspace="2" align="left">IBM
GS will power ahead faster than TATA-IBM:
Again obvious. Tata-IBM's fortunes are within the country, while IBM GS'
are outside. The former will focus on domestic solutions on IBM hardware, while IBM GS
focuses on software and services solutions, domestically and globally. With IBM forming a
significant portion of total Indian exports, IBM GS' success is a fait accompli. In fact,
DATAQUEST also expects IBM GS to go in for domain-specific acquisitions to enhance its
capability in fulfilling the mandate. Tata-IBM will continue to grow, but the behavior of
the large enterprises, which is the bulwark for their success, will determine their
revenue growth. Will the combined revenues touch Rs 1000-crore mark? Probably shy of the
figure, but hovering around the Rs 850-crore mark.
will gain, so will Wipro:
No, there is no puzzle here. With Wipro back with a dual-brand strategy in
the PC market, both the brands will grow-this is the beauty of the synergy. Wipro-Acer
will grow in the high-end desktop market and the notebook market. However, the real growth
might just come from the Wipro brand. DATAQUEST's understanding of the reseller sentiment
reflects continued and pleasant memories of the Wipro brand name. This time around, Wipro
must take advantage of the goodwill that it continues to enjoy amongst the channels and
capitalize on the same. The company will position its own brand in the volume segment
(hopefully) and will compete with old rival HCL, and others like Zenith, Compaq, and GIDs.
Amongst this lot, Wipro has both the potential and the opportunity to make maximum
inroads. DATAQUEST also expects Acer to go multi-distribution route for PCs, a la HP, in
the current year. However, this will not affect Wipro-Acer as the JV will be the one
assembling the PCs in the first place.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/9c193cacc4320db14c3f71729ff23991fce5bdebf5a489a566c34b3ca61831a9.jpg (15220 bytes)" border="0" hspace="2" vspace="2" align="left">ISP
policy will benefit Sun the most:
In fact, DATAQUEST is foreseeing a Sun resurgence as and when the ISP
policy is cleared by the courts. With the inherent advantages that the platform offers,
coupled with the fact that Sun has taken the leadership in this arena, the Wipro-Sun
alliance may yet grow tremendously with the opening out of the ISP policy. From all
indications, Sun is gearing up to face this demand. One thing that might be useful is for
the company to evangelize the Net more aggressively so as to increase mindshare, which
might be lower than anticipated.Â
Â
border="0" hspace="2" vspace="2" align="right">Homes will bloom,
Home offices may not:
Till the ISP policy comes out and ISPs get their act together, Home office
segment will remain muted. In the meantime, thanks to the hard work done in the last
decade, Homes will continue to be one of the largest buyers of PCs. This will have a
direct impact on the education segment. Result: CD ROM sales will skyrocket and multimedia
developers will have a field day. One manifestation that will still take time in India is
the emergence of a market for Games. While this market is extremely vibrant in rest of the
world, due to the value-for-money mindset of many an Indian home, the Games market will
remain in the shadows. However, this will change in the next two years. Till then, PCs at
Homes will be used for edutainment purpose-which means that the stated reason will be
education, while the unstated reason may be entertainment.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/d067b9275bb73d6fe3961c6167dee3f2e175a7f7a2c9cc0a524de6f64bc4b922.jpg (13011 bytes)" border="0" hspace="2" vspace="2" align="left">NIIT
may go in for an ADR:
With a staggeringly superb performance in the stock markets, NIIT is likely
to go in for an ADR, to fund its software and services business, particularly exports.
With the decks cleared now for ESOP etc. NIIT, whose half the revenue comes from software
business, will need to provide additional resources to fuel this growth. Also, a
post-consolidated NIIT will have a significant revenue stream coming from overseas and if
the company has to sustain this stream and grow it, current funding sources may be
inadequate. The company's ADR will also enable it to go in for a NASDAQ listing and thus
play the US services market much more aggressively.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/598bec5c99ed3dddf609bc11f8a4e0ac56ec315dba97ac82cec1a7d5281a91bf.jpg (10554 bytes)" border="0" hspace="2" vspace="2" align="right">Tough
times will last:
No respite. In fact, there is a distinct possibility of elections in the
Q3/Q4 time. The US sanctions will continue, and despite the rhetoric put up by the
Government, ensuing hardships are foregone. Even if the current US government wants to
dilute the sanctions, its hands are bound by US laws. The key signal to look for will be
whether the US President's proposed visit comes through in September. While a thaw is
expected in the next one month, infrastructure projects will be hit. As far as the
domestic politics goes, uncertainty will prevail and, consequently, economic growth will
be affected. Q4 may see some welcome changes. Till then, cross your fingers and hope for
the best.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/25a0e5809d1050629120a05be489f2d6a43dfd17c1489e29f4bd444756201cce.jpg (27030 bytes)" border="0" hspace="2" vspace="2" align="left">CMC
will grow:
The current year might see this public sector company just shying away from
Rs 500-crore mark. If the current imbroglio over the CEO is resolved faster, then the
company may not even be shy of that figure. The subsidiary Baton Rouge has just started
delivering results and this year's Rs 70-odd crore from RBI is no flash in the pan. The
good thing about CMC is that the company has not allowed its top-level problems to affect
its performance beyond a certain level. Growth and, more importantly, profits are still
evident. The new CEO, whoever he is, will not have business handling as his biggest
challenge. Rather, he will probably spend most of his time handling the Union, which has
been playing a very active role in the past. It will be good if the company can make a
clean beginning, sans controversy, sans mud-slinging, and sans CBI cases. The potential is
there to be tapped.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/220f49322809550a94cd0ff47e9bc37755b6c38c1b8afc73918aa2617f8415e0.jpg (14829 bytes)" border="0" hspace="2" vspace="2" align="right">Dell
in 'darkness':
Where is Dell in India? PC players from overseas are often heard raising
this interesting question. A company which is such a dominant player in rest of the world,
and amongst the Top 5, continues to languish in India. A sub-terranean presence, few
partners, and little direct sales have ensured that Dell is not even amongst the minor
players in the Indian market. This is not expected to change significantly till the
company decides to make a big-bang re-entry into the Indian market. Perhaps, the pressure
of the scorching pace in the US market is telling on Dell India.Â
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/bed9530d8b75236a59f7d855f701b97cea8c4825a85f02c97c133973070a7afa.jpg (14583 bytes)" border="0" hspace="2" vspace="2" align="left">Banking
and finance will be the largest market:
With manufacturing customers busy trying the to figure out how to derive
competitive advantage, the banking and finance segment will surge. This segment has
already had one level of exposure to the global markets and the effect of that has been to
'informate' the corporation. Indian scheduled banks last year led the charge and with RBI
making it clear that the 'good' banks will be allowed more independence, they are free to
choose the IS model that fits them and allows them to compete with the competition, in the
form of foreign banks as well as Indian private banks. Their near-monopoly in the retail
market will help them to use that advantage and will also ensure that they fight to retain
the edge. Besides IS, they will have little ammunition to take on the competition with.
Financial institutions, already automated to some degree, will enter the next phase of IS.
The gainers will be companies like Infosys, TIL, and Kale amongst the software vendors and
HCL, IBM, and Wipro amongst the system vendors.
growth will sustain:
The base is too small for this market to slacken. With communications
somewhat reliable and messaging assuming prime importance, the mobile computing market
will once again witness heady growth. IBM, reigning supreme with ThinkPads, is getting
crowded out in this market by late charger Compaq. From all indications, IBM is head and
shoulders above anybody else as far as mindshare goes, but runs a danger of being
outpriced by Compaq and others. The key to this market is the individual buyer, who is
invariably price-sensitive and all things being equal, brand-insensitive. If IBM has to
maintain its lead, it has to drive home the point that 'all things are not equal' or else
come in with a pricing strategy that will make competition wince. The TINA (There Is No
Alternative) factor is very evident.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/a3337c864df4407819e1f42af67ad60dafb5be4e73cd3a99c7d917c32514e8a2.jpg (13235 bytes)" border="0" hspace="2" vspace="3" align="left">IT
Policy will be announced:
However, the real difference that announcement of IT Policy may make will
come only when the Government creates a Ministry of Informatics. No matter what the
Government might say, creation of an industry will galvanize forces, which are currently
resigned to the pulls and pressures from across the globe. The ministry will also be in a
position to provide strategic leadership and thinking, something that is sadly absent in
the country. Without any real visible changes, the policy will be another document on
which analyses will be done, but one that will remain between the dusty covers of GoI's
libraries
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/e9a30aacc4ad49a4b0e0f028df8c40270bb076d1d5391f82bd5df8496ed713ff.jpg (12598 bytes)" border="0" hspace="2" vspace="2" align="right">Rupee
will stabilize at 44:
Currently hovering around Rs 42, INR will depreciate by another 5 percent
to touch Rs 44. Imports will become more expensive but software exporters will get an
advantage. RBI, by itself, is unlikely to interfere with the Rupee movement. Financial
circles accept the fact that the Real Effective Exchange Rate (REER) is anyway around 44.
This depreciation will put a significant pressure on the Forex reserves and the cost of
money is likely to go up proportionately. Also, with dollar inflows drying, inflation will
rise, which the Indian monetary policy will attack through a credit squeeze and will start
another round of recessionary cycle in the economy. Scary? Check with the RBI
governor.
alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/e62296e960c388b6a1991911077abc88c809c9478c8db3db53d9e8662d318459.jpg (13245 bytes)" border="0" hspace="2" vspace="2" align="left">Watch
out for those Korean companies:
They are the real stars. Although the peripherals manufacturers have made
vociferous complaints to the GoI, Korean companies, especially Samsung and LG, are
intensifying their focus on the key peripherals markets in India. While the former is
focusing on monitors, HDDs, and keyboards, the latter is zeroing in on monitors. In the
bargain, the Taiwanese and the Japanese players have been dealt out of the market.
DATAQUEST expects that in the coming year, both Samsung and LG will expand their reach
into the Indian market. Result: Some of the local brands may start selling more Korean
products, while Indian brands in this area will be the casualties. But that will be after
the Taiwanese and Japanese brands are consumed.