Spreading The Net

It all started in October 1998 when Rediff-On-The-Net man

aged to attract Intel. Today, the number of Indian companies with Intel

investments has swollen to 19, while several new partners are in various stages

of negotiations.

To quote Siddhartha Das, director, strategic investments,

Intel Capital, India, "India and China are the most significant areas in

the Asia-Pacific region for Intel. Normally, companies find these two countries

attractive due to the huge market. We at Intel are looking beyond." He

adds, "India not only offers a vast market, it also has a huge intellectual

capital that makes investment more attractive here.

So how would Intel actually benefit from these investments?

Das is clear about it, "Given that India has one of the best intellectual

capital and training facilities at par with developed countries, we find a huge

potential for actual technology to be incubated here. These ventures have all

the potential of emerging as commercial entities."

Financials and beyond

Though the primary purpose for Intel’s investment program

is strategic, experts believe that the company is also looking at generating

financial returns. The reason is tied to Intel’s strategic goals: if a

portfolio company is successful in improving PC products or in drawing new users

to the PC, it is likely to be financially successful. And the Internet is the

new driver of the PC market, in India and abroad. Though officials at Intel are

tightlipped about Intel’s returns from these investments, it is nevertheless

believed that the Capital program has generated reasonably well financial

returns.

According to Das, "The companies in which Intel invests

can gain in ways that go beyond Intel’s financial contribution. Intel brings

significant technology expertise in and around the PC that can be helpful to a

portfolio company." Both Intel and the companies it invests in gain

exposure to fresh ideas in areas such as the Internet, multimedia and

e-commerce.



Begun in the early 1990s, Intel’s corporate business development program has
become one of the largest investing programs in corporates in the technology

sector. Intel typically takes small, minority stakes–generally less than $10

million each–in private and some public companies. Today, Intel’s portfolio

includes more than 300 technology and related companies, valued at about $5

billion–26 of them being in the Asia-Pacific region.

New media tools and technologies

Enabling creation and delivery of next generation content and

media is another longstanding Intel strategy. The company claims to have a wide

array of developer programs in these areas. Das says that Intel is interested in

ensuring that the tools and technologies to create scalable, broadband-ready

content are ubiquitous. After creation of content, it is critical that the same

rich streaming content be delivered at high-quality levels to consumers and

businesses. Hence the decision to invest in the media delivery infrastructure

through technology companies like Ind Telesoft and Silicon Automation Systems (SAS).

While the Bangalore-based independent services vendor, SAS,

develops technologies focused on communications, multimedia and speech

compression, Ind Telesoft provides soft-switch solutions to service providers

and OEMs building the next-generation converged voice and data networks.

Net services and new business infrastructure

While Intel’s own Internet services businesses are actively

looking for channel and technology relationships that can bring mutual benefits,

the company has also been investing in companies like Bharti Telespatial,

Network Solutions and Banyan Networks. According to Das, the investments are

aimed at ensuring that the next generation of Internet services takes full

advantage of the reliability, scalability and price performance advantages of

Intel architecture servers and devices.

Content and commerce

Intel has also been investing heavily in a few major content

and service providers in India–providers of online trading, B2C and

e-commerce, and software infrastructure for SMEs.

The company’s investment in CIOL and Avigna Technologies

reflects its interest in promoting content and commerce that would increase the

Internet adoption rate and provide rich consumer experiences that scale up with

the availability of broadband services. The company also seems to be serious

about promoting B2C and e-commerce in the country and feels that small

businesses can benefit greatly from the integration of the Internet into their

existing business models. What this means is that Intel would be investing in

those services and technologies that readily enable small businesses to realize

the growing potential of the Internet–its investment in TSNShop.com, a B2C and

e-commerce company, illustrates this.

Enterprise applications

One of the highlights of Intel’s investment program in

India has been its decision to back Eastern Software Systems, a Delhi-based ERP

solutions provider that recently became an ASP to increase its market base

amongst its essentially-SME clients. Das says, "The rapid increase in the

outsourcing of services and applications has created numerous new market

segments and opportunities for nimble innovative companies that sell to larger

businesses. Intel is interested in ensuring that the next generation of

applications and services take full advantage of Intel architecture."

Software infrastructure

Another key area for Intel has been the software

infrastructure business. It has already invested in five Indian companies in

this category, Amoeba Telecom being the latest. Intel has also invested in

Ritechoice Technologies, Persistent Systems, Bharti Telesoft and Indus Software.

While Amoeba develops innovative traffic management solutions for

next-generation service providers, Ritechoice is engaged in developing back-end

software solutions for large stock brokerage houses in India. Similarly, Indus

provides solutions for retail financial service companies like banks, while

Bharti is into providing telecom software. And Persistent is setting up the

Konark IA-64 porting and competency center for Intel’s Itanium processor

family. Das reiterates, "Intel is investing in software companies to help

promote the growth of



the Internet and data services in India. These investments are being made with
the strategic intent to help promote usage of computing technology to improve

business efficiency and to support the adoption of e-commerce, at large."

SHUBHENDU PARTH



in New Delhi