Forecast 2000

Amid the prophecies of
turn-of-the-century disasters, DATAQUEST continues to exhibit that never-say-die optimism.
The prognosis: Business will be more than usual for the IT industry in the next fiscal.
Here’s a look into the crystal ball.

Nostradamus said the world would end
in July 1999, it did not. Economists predicted that the Indian economy would nosedive in
1998-99, it did not. MAIT said we had sold One million PCs in 1998-99, we did not. So what
is really the sanctity of any prediction or research? On what basis does one say something
will happen, or that something will not? After all is said and done, numbers tell only
half a story. The other half comes from the straws in the wind. Straws, which indicate
which way the wind is blowing. The numbers are then totted up, gut feels are factored in
and what we are left with are, to use a very clinical term, forecasts. Gut feels and
straws do not get equity from the populace, but the wise know that they are as important
as the numbers are, except that they must clearly transcend the distance between bias and
subjectivity-a distance which must be bridged to withstand the crucible for market
credibility.

Now, where does that leave us?
Crun-ched between numbers and ranks, crushed by the sheer weight of PATs and ROCEs and
trying to figure out the gap between intranet and internet! On the one hand, when the DQ
Top 20 Survey took place, there were numbers galore, performances to analyze, ranks to be
accorded and the industry totals to be factored in. On the other hand, our discussions
with the industry players also revealed the subjective, the gut feel part of the story.
When the totting up took place, the straws in the wind also revealed some gleanings. In
that sense, this is but an amalgam of the Top 20 Survey in its entirety, taking the past,
factoring in the present, to look into the future.

Just one last thought that came to
our mind (which we are sure is on your mind now): Have we always been absolutely correct?
Have all our predictions come true all the time? The answer is No. But then, neither have
Nostradamus’s.

Well will make a second attempt
this year

Not exactly a forecast. Fighting for
the #1 slot worldwide, it would be highly incongruous if the Indian PC market does not get
to see ‘direct from Dell.’ The pressure on Dell is that if it has to sustain the growth
rates that it has set for itself in India, then there is very little choice the company
has. The burgeoning Indian PC market, which will finally cross ‘the one million mark’ in
the current year, will be too large to ignore. Questions that beg answers are: Will Dell
go direct in India too? How will it lick the infrastructure issue? Where will Dell pitch
itself, in the MNC brand segment or in the VFM segment? Will it partner with locals here
or will it go alone? Having conquered the Dragon, will it ride the Tiger, by its tail?

Will the Apple season bloom?

Unlikely. Apple and Mac have lost
too much blood for too long. Despite iMac’s debut last year and aggressive pricing, the
end result was not very rosy. If anything, Apple’s market share is likely to dip further
as its unit shipments will grow slower than the overall PC industry. True, its global
fortunes are swinging, but the same replicating itself in India is a fantasy that even its
newly appointed high-profile chief, Naren Ayyar, may not like to have. The mandate for
Apple in Y2K: stop the bloodletting, retain old faithfuls like publishing and end up with
a black line. Not very ambitious, but realistic.

The iterations of internet

So what is the big crystal ball
gazing here? Sure, internet will boom, as will VSNL. The only issue is that with 400MB of
capacity by year-end, VSNL will be the major service provider as well as infrastructure
provider. Not that ISPs will keep silent. There will be a proliferation of ISPs in all
shapes and sizes and the big ones a la Satyam, will even set up their own gateways, to
escape the VSNL clutches. However, VSNL’s lead is likely to increase, what with the
company going for major expansion plans and its subsidiary, VSSL, getting its act in place
shortly. Internet costs will come down sharply, but with an eye on the bottomline, all
ISPs are likely to give preferential treatment to corporate customers. The latter will
also be the cynosure of cable modem makers for ‘internetizing the enterprise.’ The
much-hyped Power Grid and Railways carrying internet traffic may not be realized in the
current fiscal.

Channels will become the biggest
marketing differentiator

With cost lines pegged along some
perceived benefit chains, channels will make or mar a brand. The possible exception is
probably going to be Dell. Companies like GPTL, ERIL and Redington will grow dramatically,
with GPTL crossing the Rs1,000-crore mark! Channels will start impacting the software
business, too, as Microsoft, with very strong affinity to channels, will prosper. If
anything, ceteris paribus, channels may actually have a calming effect on margins which
have been heading Southward for the past two years. Most of the pure distribution
companies will need to up their investments in systems to push their costs downward. No
major new entrant is expected, as these three companies will neatly carve up the country
amongst themselves. So much so, that even some of the national vendors will have the need
to supplement their channel marketing efforts with pure distribution companies. Value
chains will go up. Much more sophistication will come into the channels as the basic
structure of the channels and the dynamics within the channels in India.

From two to three tires, oops,
tiers

The year 1998-99 has shown clear
evidence of corpo-rates and the government realizing the need for IT applications to
enable business productivity. As the deployment of applications continues into 1999-00,
supported by resurgence in business activity, systems architectures will exhibit
increasing maturity. The medium and large enterprises will move from two-tier client
server to three-tier client server architectures. Those with existing three-tier client
architectures would be deploying applications across the web and web-enabling their
existing applications. This will also tie in with the enterprises’ dream of finally
tapping the web for commerce and not just for kitsch.

Low on cost, high on
acceptance-AS/400

The IBM AS/400 server will continue
to be a strong competitor through its lower cost of ownership against Unix competitors. As
deployment of applications like ERP, data warehousing and messaging continues across the
Indian enterprises, this requirement will become increasingly important and apparent,
especially in medium-size organizations. This is also the year when IBM’s strategy of
demarcating the market for AS/400 might just bear fruit. Peddling the ecommerce route, IBM
and AS/400 might just surge ahead in the corporate web-enablement space.

Swear by SAP

SAP will continue to be the dominant
ERP player in the domestic market. The product continues to enjoy unprecedented top of
mind recall, acceptance and demand in spite of its cumbersome and prolonged
implementation, high cost and the somewhat exclusive approach taken by the vendor. Bulk of
SAP’s customers will be the large enterprises, while at the lower end, Oracle will set a
pace which might become a tad tough for others to emulate. With Oracle Applications
certifications increasing at a faster pace than Baan, the penetration of Oracle
Manufacturing and Financial Applications may soon exceed Baan and QAD in terms of user
licenses. Oracle is likely to give QAD and Baan a run for their money for the second
position. At the lower end for the typical SME segment, few of the above will find
acceptance. Holding a sway on the market at the low end will be companies such as Eastern
Software Systems and Radix, which enter at a much lower cost and are faster to implement.
In fact, pressure on the middle-tier vendors such as Baan and QAD will also be from these
vendors.

Web, web and webs in the
enterprise

After all the above predictions,
this is only to be expected. The top technologies for the Indian enterprises would be web
application development, mail and web server management, extended ERP across the web,
e-business and e-trading applications, OLAP, data warehousing and mining and other related
technologies. While the prognosis does appear good presently, exactly how many get real
benefits and how many get carried away by the rhetoric will be the acid test for the
industry. This is probably one opportunity that has the potential to put the Indian
IT-both suppliers and users-on to a new trajectory of growth. It is possible that some of
the early birds might become the harbingers for the new globalized Indian corporate
future. Nonetheless, a shared responsibility.

You are now entering Microsoft
country.

With the huge number of Microsoft
certifications in the country, Microsoft software would be the preferred application
development environment. Independent software vendors would continue to develop
applications across SQL Server, Exchange and NT environments. In medium and large
enterprises, NT would continue to edge out Unix and Net-Ware. However, in the small
enterprise user segment, NetWare appears to be holding its ground. This is likely to get
stren-gthened as and when NT 5 (Windows 2000) comes out.

Lotus 5, 4, 3, 2, 1…take off

The share of Lotus Notes in the
messaging, groupware and collaboration space will increase through growing acceptance of
Release 5. For much of the year, Lotus may be the preferred collaboration platform, with
MS Exchange being unwieldy in comparison. That is only half the prediction. The other half
is if Microsoft reads this prediction and decides to take corrective action. Not exactly
known for defending its turf against Microsoft, Lotus may just capitulate the advantage.
Nevertheless, the crystal ball seems to be spinning the Notes way furiously. Lotus will
try and forge stronger OEM relationships for Notes in the current year to take advantage
of the bundling deals that may tilt the market balance in its favor.

Second harvest of the networking
crop

There is now a second wave of demand
for networking professionals in the country. The first was with the advent of licensing in
the telecom raj in the early nineties and the dismantling of technology import regimes.
But this time around it also involves the sheer demand for internet professionals. This
has been thrust upon the industry with the opening up of ISPs and the internet application
market space. To realize this, consider the 50%-plus revenue growths reported by most
networking majors in 1998-99, in comparison to single-digit-and even negative-growth
figures of the previous year. Spells great opportunity for the Novells and Microsofts,
besides the quintessential training vendors such as NIIT and Aptech.

There is now a second wave of demand
for networking professionals in the country. The first was with the advent of licensing in
the telecom raj in the early nineties and the dismantling of technology import regimes.
But this time around it also involves the sheer demand for internet professionals. This
has been thrust upon the industry with the opening up of ISPs and the internet application
market space. To realize this, consider the 50%-plus revenue growths reported by most
networking majors in 1998-99, in comparison to single-digit-and even negative-growth
figures of the previous year. Spells great opportunity for the Novells and Microsofts,
besides the quintessential training vendors such as NIIT and Aptech.

And the Oracle book of gospel may
soon be no more

In the RDBMS market space, Oracle
will continue to maintain its leadership position, thanks to the tremendous brand loyalty
it enjoys in the Indian enterprise. However, with powerful ease-of-use features, lower
cost and large number of certified professionals, SQL Server will continue to make inroads
into the RDBMS enterprise space, eroding Oracle’s share. The real fight will again be in
the SME segment, where SQL will take on Oracle. This is a territory where Oracle does not
really have any distinct edge. Price will be the determinant, and if that is true, then
Redmond will triumph over Redwood Shores.

The networking industry will
continue its forward march

The state governments of Andhra
Pradesh, Maharashtra and Karnataka have shown keenness to invest in the networking
infrastructure. Close to 60,000 bank bran-ches are waiting to be networked. Private
companies are putting their networking infrastructures in place. All these activities will
see the industry posting a growth rate of 50%-plus. Higher brand recall and excellent
relationships with all the major vendors will see that Cisco continues to be the numero
uno player in the industry. It will continue to be the biggest player in the routers
segment though tough competition is expected from increased number of router players and
the Layer 3 switches.

The mainframe era-part II

With the global relaunch of the IBM
S/390 with inbuilt TCP/IP and Ethernet, the Indian business user and the GoI appear to be
determined not to be left behind this time around. The tremendous capability of this
machine to scale across the enterprise has made it a serious contender in corporate and
government decision making. What is also aiding and abetting this effort is the need for
large databases in the service provisioning business, both amongst the ISPs and the large
enterprises. As the internet adoption explodes across Indian businesses and homes, outlook
for mainframes will increase proportionately.

The middleware surge

With distributed computing becoming
the norm in these times, technologies like COM/DCOM, CORBA and Enterprise JavaBeans will
see tremendous growth. Companies like Advanced Technology Labs and organizations like the
Component Management Group and STPI have been working aggressively for some time now and
the number of professionals from India will keep rising in the coming years. The only
problem here is that while the demand is rather spelt out, there appears to be a big
shortfall in the number of people being trained in this area.

More deployments in the WAN
segment

The WAN segment will see the growth
in enterprise switches and routers. However, with internet growth, the hot product for the
coming years is the remote access server (RAS). Modems, too, are expected to ride on the
internet bandwagon as the current year will see the full impact of the few private ISP
operations. In the VSAT segment, the industry is expected to get out of the bandwidth
crisis with either the launch of Insat-3B or policy decision being taken on allowing the
Ku-band, as per the Telecom Policy. Add to this the expected increase in spending by
industry and government and the segment seems on a firm footing. However, the total
benefits are expected only by fiscal year-end.

Will Merced make magic?

While Intel is already setting off a
hype wagon extolling the virtues of Merced, the current year will not see any major impact
of Merced, for two reasons. One, it will come too late to have any significant impact on
the purchases in the current fiscal. Two, as it will be the first 64-bit processor from
Intel, there is a distinct possibility of some ironing out that might need to take place.
What will create magic will probably be McKinley, which will be the second generation
after Merced, with all debugging done, which will take 64-bit computing to a different
plane. The likely casualties: Alpha of Compaq and PA-RISC of HP. IBM may yet survive with
PowerPC with AS/400 and RS/6000 doing well and Apple playing a good second innings. Merced
will set the stage for the battle for 64-bit and, unquestionably, Intel will dominate this
scene for the near term. Impact on Indian IT: insignificant for 1999-00, marginal for
2000-01.

Life after Y2K

Growth will continue, although euro
is not likely to be the kind of revenue booster as Y2K was, simply because the US is far
less complex a market than the European Union. A handful of Indian companies will take any
advantage of the euro market, and those that do will be simply doing on-site development.
However, the momentum of the services export will continue, moving past the $3-billion
mark. Apart from vanilla services, IT-enabled services will become significant as an
opportunity for Indian service providers to tap into. Japan will emerge as a significant
market, especially for HCL and Wipro.

Long live the extranets, down
with intranets

The Indian enterprises have bypassed
the intranet stepping stone in its start and stopped progress along the application
deployment road map. With no strong drivers and enablers in the domestic workplace,
intranets have not been viewed as a necessary competency test bed. With reducing costs for
WAN deployment and corporate inter-net access, the Indian enterprises appear to be headed
for corporate extranets and associated e-business technology adoption.

Software management will be the
buzzword

The Indian IT market space has now
started showing signs of mature usage on the enterprise software front. With some
top-notch enterprises knitting their systems with high-end software applications, together
with the maturing developer movement which requires meticulous processes, the needs for
managing the applications and for a "factory approach" to development will be
felt. This will create more room for players like Computer Associates, Rational and
PVCS/Merant.

Leave a Reply

Your email address will not be published. Required fields are marked *