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HARDWARE: All About Frontiers, Reached and Crossed

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DQI Bureau
New Update

One could start with the first recorded use of the symbol ‘0’ in India in

876 CE. But it is probably best to start with 1966–India had just been through

two wars–with China and Pakistan respectively. China had exploded a nuclear

device in 1964. And the US had cut off electronic equipment sales to India in

1965.

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Prime

Minister Nehru needed a policy for "self reliance" in defense and the

Bhabha Committee on Informatics was formed to figure out how IT could further

that end. In that backdrop, the report’s central theme inevitably was "indigenization".

A word that was to drive the course of the industry for over a decade. At the

time, there were no local IT companies. There were a few MNCs like ICL and IBM–largely

selling old, refurbished systems in India with a substantial mark-up.

The first government response to the report then was to ask existing

multinationals like IBM and ICL to divest part of their equity to local

companies. When IBM flatly refused, saying it preferred to leave rather than

divest–the second response was to try and set up alternate channels.

The government took the monopoly route. The Electronics Commission of India

Ltd was set up in 1967 under the aegis of the Bhabha Atomic Research Center. Its

brief was to tie up with international companies for local manufacture of

computers–and to increase the local content to a point of "self

sustenance". At the same time, the Department of Electronics and the

Electronics Commission were established and later in 1976, Computer Maintenance

Corporation was set up. Import of computers was carefully regulated, depending

on ECIL’s production capacity, and the entry of the local private sector was

controlled. When the government felt the time was right, it re-exerted pressure

on IBM to divest. This time, when the Big Blue threatened to leave, the

government let it go in 1978.

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The beginning of history



In a weird kind of way, that ignited the local Indian industry. CMC used the

opportunity and government protection to expand its skills quickly and,

eventually, found itself servicing 40 foreign platforms. It also developed a

reputation for unorthodoxy and elan.

The private sector–which had been pulling at the leash for an entry into

the industry–suddenly found the field all to itself. IBM was gone and ECIL,

despite its highly popular S-16s and S-32s, had other problems. For one, it

often took 18 to 24 months to deliver systems and there was a dreadful lack of

applications on its proprietary operating system. Importing computers was

expensive and painful–import clearances were difficult to come by and in any

case, the DoE clearance took at least six to eight months.

At the time, companies like DCM-DP (Delhi Cloth Mills-Data Products), Nelco

(headed by JRD Tata) and Microcomp (a breakaway of DCM) were making desktop

electronic calculators. They seized the moment to move into selling computers.

Others like CMS, Wipro, Blue Star followed...

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Satyen Parekh



country head, Borland
I wanted to get into the IT industry after I finished my BSc statistics. The problem was that I’d never seen a computer before and had no idea where I could even look at one. In 1982 even getting to see one was a big thing. Thankfully my father was a bank manager and he’d heard that one of the bank’s customers — Garware Synthetics — had a computer. So he arranged for me to meet Garware’s EDP manager who took me to show the Nelco Force 5000 that they had.

So I listened to the guy, read up some stuff on my own and applied to HCL for a job. To my big surprise they actually offered me one! I remember that during our induction at HCL Delhi in August 82, NIIT was doing the “introduction to computers” session and RS Pawar, Mrs (Shiv) Nadar, Vijay Thadani had all come to talk to us. My first job was Installation coordinator at a princely salary of Rs 850. My big consolation at the time was that even people like Sanjit (Sengupta) who’d come from places like IIT Kanpur or Jamnabhai Bajaj management institute, were also earning about the same

Energy…



This was the time the Indian computer industry really took off. It was a

time of immense activity and the era had an energy that fairly leaps out through

the 20-year-old black and white issues of Dataquest. There was suddenly a

plethora of companies and products of various specifications, mostly run on

proprietary OSs and atrociously priced.

After IBM’s exit, ICL had divested part of its stake to become ICIM and was

selling its hugely popular 101s for around Rs 6 lakh. HCL’s first computer

came in 1977. Satyen Parekh–now the India head of Borland–joined HCL in 1982

and remembers selling the HCL 8C and later the HCL S-2. He prefers not to

remember the HCL S-4 that was a disaster and landed the company into a lot of

trouble including a huge issue with Nabard. Bhaskar Pramanik, now the India head

of Sun Micro, was at Nelco and started his career selling Nelco’s desktop

calculators for Rs 50,000 a piece. He remembers the Nelco 3000 and later the

Nelco 5000 that was selling at upward of Rs 5 lakh.

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ORG, which was essentially a market research company, got into the business

accidentally. It had tied up with Dansk Systems for a computer for in-house use

and then decided to sell out. The ORG 60 cost about Rs 7 lakh in the early 80s.

Others in the fray included PSI’s Omni, at Rs 10-20 lakh, and Usha’s Alpha

series, at Rs 3-10 lakh.

These were mostly 8-bit or 16-bit minis running on the 8086, 8088 or Motorola

68000 series chips. A few were working around the Digital’s architecture.

Essen Computers of Gujarat was making the SN-73, based on Digital’s PDP 11/73,

and the SN-23, based on the PDP 11/23. Both were being sold through Hinditron.

It was a mad world out there.

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When chaos ruled



It was also a time of immense confusion. For the Indian HW sector, the early

80s was frontier-time. Vinay Bharat Ram of DCM, Shiv Nadar of HCL, Dr Ravindran

of PSI and Azim Premji of Wipro–these were pioneers with no precedents and no

real role models.

So some of them made up rules as they went. The minis of the time were not

really locally "manufactured". Mostly components were imported and

assembled here. But imports meant government permissions under the Phased

Manufacturing Program, import orders and custom clearances. It took time.

After a prolonged battle, striking bank employees and bank administrations

had struck a deal on computerization by the end of 1983. Suddenly, the

government and the public sector were eager to computerize and the demand was

high.

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So, all sorts of things happened. Late deliveries were almost the rule.

Delivered Systems not working was fairly acceptable. Sometimes systems had to be

delivered on schedule, though the components had not yet come. So empty boxes

were shipped. He won’t go on record for this now, but a senior industry person

recalls how a company once shipped empty boxes filled with bricks to give it a

feeling of weight. In government departments, most systems would go into the

stores till someone found the time and a person to install them. Within 15 days,

the components arrived and with no one the wiser, the company went and replaced

the systems quietly.

Today, such acts of effrontery are unthinkable. But that was a different age.

Everyone was learning as they went–improvization or perish was the rule.

Then came the PC...



This was boom time. Rajiv Gandhi’s New Computer Policy had liberalized a

whole lot of things, including foreign equity participation. The government was

planning to install 755 large and medium systems and 15,000 small systems.

Prices fell. An 8-bit micro with a hard disk and printer was selling for Rs 2

lakh. And then came the PC. In 1982, IBM had introduced the IBM PC. Two years

later, Microcomp launched the first PC-compatible in India called the Neptune

and it sold for about Rs 1 lakh. What followed then was a series of price wars.

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Pawan Kumar



chairman, vMosksha
As as student at IIT Kanpur, I was pretty good at operating computers and had shown a flair for management. Seeing this, the faculty offered me the job at the computer center. At that time, IIT-K was one of the largest computer centers in India with IBM systems such as IBM 1620, 1401, 7044 and a process control computer–IBM 1800. When they quizzed me about the salary I would expect, I did not know what to quote. I proposed a sum of Rs 720 and when they said yes, I was thrilled.”

“Back in the seventies, there were very few systems around. For example, IIT-K was supposed to be one of the best computer science labs in the country.”

“When people talk of BPO today, I am really surprised. In 1978-79, I was with Tata Consultancy Services and I had the opportunity of doing a total process outsourcing for Colgate when they went for their initial public offer. Nearly 500,000 applications were processed in a matter of 60 days. Around the same time, I also remember processing UTI’s issues

Usha Microprocessor Controls (then a big name) launched the Usha Eagle PC for

Rs 79,000. Breaking the Rs 1-lakh barrier at the time was big. Then HCL launched

its Busybee in 1985–a runaway success–at Rs 50,000. Wipro came out with the

Wipro PC at Rs 39,000. Then a phenomenon called Sivasankaran of Sterling

Computers happened. He launched the Siva PC at an unbelievable price of Rs

29,000 and took the bottom out of the market. That was to become a habit with

Siva–he did the same in 1997–till he eventually faded out of the PC scene

altogether.

A later episode of the price wars had a completely new theme. PCs were

advertised with prices that often did not include the monitor, the keyboard,

sometimes even the hard disk! Excise duty laws also contributed. To circumvent

the high excise duties (in addition to the high customs duties), some companies

often shipped a PC AT and then billed the monitor, keyboard and hard disk

separately. In retrospect, it was all very hilarious.

In any case, the upshot was that in 1985 alone, the number of PCs sold went

up from 1,200 in the previous fiscal to 2,600–a phenomenal 116% growth. Most

of them came installed with CP/M or a version of the PC DOS and a few basic

packages like Wordstar and Lotus 1-2-3.

Unix, JVs and boomtime



The same year, the Rangarajan Committee decided that all bank

computerization would be standardized on Unix and the Motorola 68020 chip. That

led to a mad scramble among Indian companies to come out with Unix systems. HCL’s

16-bit system called Horizon that ran Hicix (its own version of Unix) was among

the first off the block. Others followed.

Suddenly, a whole lot of things were happening all at once. At one end, the

Meteorology Department wanted to import a mainframe for weather forecasting that

the US state department nixed. So it settled for five DEC Superminis instead and

paved the way for DEC’s entry into India. Digital would fill in the vacuum

left by IBM and its Microvax would service an entire generation of high-end

computing requirement in India. ECIL had tied up with Norway’s Norsk Data for

manufacturing Medhas, but this giant’s heydays were coming to an end.

At the other end of the spectrum, 8-bit systems were falling in popularity

and India was playing catch-up with the rest of the world in the PC space. The

8088 PC was being replaced with the 8088 PC-XT–it came with a hard drive. And

later, the 80286 PC-AT. By the time the 80386 was introduced, India was in-step

with the rest of the world. Wipro’s 386 on Unix V3 was the probably the first

386 Unix system in the world.

As MNC entry norms became further liberalized and the local market looked set

to boom, the late 80s and early 90s saw a sudden spurt in joint venture

operations. First came the agency operations–Hinditron selling Digital

machines, Blue Star selling HP machines. And then came the JVs proper.

By the early 90s, almost every major Indian company had a major MNC tieup.

Digital came in with Hinditron; HCL tied up with Apollo and then with HP (when

HP took over Apollo); PSI with Bull; Modi-Olivetti; DCM-DP with Control Data

Corp. Wipro was to later tie up with Acer and bring the Sun Sparc to India.

Finally in 1992, IBM returned to India in partnership with the Tatas.

This was boomtime. In 1980, the Indian computer industry was a handful of

people and gross revenues of Rs 75 crore. Before the end of the decade, in 1989,

HCL became the first company to cross the Rs 100-crore mark and the Indian IT

industry crossed Rs 1,000 crores in overall revenues.

A new paradigm



For a while, it looked like the industry was stagnating and would be

consigned to minor technology tinkering for a long time. But two events of the

80s were to set off an entirely new industry–Unix, a multi-user OS, and

Novell.

The era of local area networking had begun with the 286 itself. Novell’s

Network OS–Netware–was based on the 286 and was introduced in the late 80s.

It supported the Ethernet–a networking protocol that allowed 10 Mbps transfer

rate compared to the 19200 prevalent at the time.

But there were glitches. The cabling cost was enormous. The 286 was a good

machine but it was a 16-bit system with limited computing power. Besides, few

applications were available on Novell.

When the 386 was introduced, things changed. It was a 32-bit machine capable

of some serious applications. Case in point–ECIL’s first 386 was used to do

the entire fingerprinting project for the police in 1988. As a result, people

were looking at running Unix on the 386, connecting up terminals at a fraction

of the PC cost.

Networking product sales went up enormously. Almost all hardware, including

the printer, now needed to have drivers for Novell Netware or Unix. Among other

things, this would lead to the creation of entirely new industry–the

networking and communications sector.

Power, more power



Meanwhile, other developments were taking place. The PC servers were fine

for their time, but not entirely reliable as the backbone for a corporate

network... till Compaq came up with the Proliant range of servers based on the

486. The Proliant offered a level of redundancy not seen before on the PC.

Others like IBM and HP soon followed and PC servers finally broke into the

server space. A new era of computing began. Not long after, came the Pentium,

which had the computing power to run relationational databases comfortably. This

fueled the ERP boom, which in a pleasant cycle, fueled PC and PC server sales.

Other changes were taking place. By 2000, for one reason or another, most JVs

had broken off and almost all MNC and hardware companies were once again on

their own. The Internet era and the multimedia boom had sparked off the home PC

segment. The dot-com boom had begun, with no apparent end in sight. By early

2000, the hardware sector had plenty of reasons to celebrate–Rs 13,837 crore

worth of celebrations.

Ouch!



...And then the bubble burst. It was heralded in October-November 2000, with

companies in the US warning of sales slowdown. Then 9.11 the Indo-Pak standoff,

the squeeze on margins...

TEAM DQ

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