Intel in India

For a product that no user will ever see, this brand beats most out there.

But it is at the heart of the computer. It’s under a fifth of the PC’s cost,

but users still say: ‘A Pentium PC’. It often carries zero margins, but

dealers must stock processors. And that puts Intel at the heart of the Indian I

market–at over 7% of India’s Rs 14,000-crore hardware sales (DQ estimates

for 2001-02).

So, with near-zero competition, what’s the Intel team’s objective in

India? Not growing market share (over 85%), but growing the market. Its

education initiative, for instance, aims to push PC usage in schools. The ‘Intel

Inside’ campaign was an impressive branding story. And the GID (Genuine Intel

Dealer) program was a big channel programs’ success.

"Building the brand, awareness and channels," says Avtar Saini,

director (South Asia), about Intel’s sales objectives in India. The branding

is less for competitive differentiation than for helping a consumer decide to

buy a PC. "I like to drink red wine, but I have no idea about the finesse

of the grapes, the vintage," says Saini. "So what do I do? I trust a

certain brand. The brand brings in confidence in the consumer. Even with little

competition, the brand gives the first-time-user the confidence to buy something

that he has never possessed before."

Saini is an Intel veteran, with seven microprocessor-related patents over the

past two decades under his belt. This Bombay University graduate has worked on

the 486 team, the Pentium design team which he co-led in 1989, and as GM in 1994

for the group developing the IA64 architecture.

Globally, the 1968-born memory-maker graduated to processors in the 1970s,

getting serious with the x86 family in the 1980s. Today, it sells chipsets,

boards, software, network and comms equipment and services, positioning itself

as a major "building-block supplier to the networked economy".

"We’re not looking at the world from the computing industry point of view

any more, but from the Internet perspective," Saini says. "That

changes everything: the products you develop, the services you provide–they

all become Internet centric."

India is bigger as a tech and HR pool than as a market. Over a sixth of Intel’s

80,000 employees worldwide are reportedly Indian. "India is an engineering

and software resource for us," Saini says, "It can become a powerful

development hub for the world." While his high-profile predecessor Atul

Vijaykar built much of Intel’s sales and marketing (and channel) presence and

visibility, Saini’s first major task was to build up the Intel India

Development Center from a tiny operation to what is now an 800-strong center.

Development apart, Saini says the IIDC drives the entire "100% e-enabling

of Intel worldwide", and also "powers most of Intel’s new

micro-electronics division that enables other companies to design chips".

It’s also the main center for the development of end-to-end switches and

router products.

Intel’s sales and marketing team is leaner, with 80 people including a

dozen outsourced staff. Significant market development groups include education

and Intel Capital, which helps Intel make strategic investments in technology

and online startups–close to 30 of them, to date.

DQ estimates annual revenues from India to Intel Corp at over Rs 1,000 crore,

not including any attribution for IIDC’s (internal) projects. Revenues don’t

directly come to Intel in India, though. "Only a miniscule amount comes in

by way of services, for instance at our solutions center," Saini says.

Sourcing and supply is direct–distributors and OEMs import directly.

"What we do is get a feel of the market to help it grow, educate users, and

raise awareness." How are budgets planned and allocated for India, if not

as a percentage of revenues? "They’re not related to sales, marketing and

revenue targets at all," Saini says. "In a flat market, there would be

a small outlay…in high-potential markets like India, it could even exceed

revenues. We’re building for the future."

Some vendors say Intel’s projections for India are over-optimistic, the PC

numbers exceeding Dataquest estimates by over a million. "Your figures are

way too conservative," Saini says. "The unbranded market is not

properly taken into account." So what are the India figures according to

Intel? "South Asia (Pakistan, Sri Lanka, Bangladesh and India) consumes

about a million units a quarter, and India is about 80% of that." That puts

India at over three million units annually, compared with DQ and IDC estimates

of about 1.8 million.

"Even in the slowdown, there are many segments still going strong in

India," Saini adds. "For instance, infrastructure. There’s so much

being done all the time, and so much more to be done. It’s great,

fascinating..."

A Dataquest report.



Analysis by Asim Raina