Tough Times

It is rocky going for Microsoft India's Server Business Group
(SBG). On one hand, it has to deal with competition from Linux that is fast
becoming the de facto backbone for applications on servers as well as vendors
like IBM and Oracle. On the other, it's yet to gain confidence of independent
software vendors and solution providers to port their applications on SQL
servers, and recommend the product and services to their own customers. Pallavi
Kathuria, director, SBG, Microsoft India candidly admits that the going is tough
but the company is going out to change this ratio in its favor.

Rough Waters

According to IDC, the x86 market grew by 18% to 1,05,254 units in 2006 as
opposed to 89,193 in 2005. In factory revenue terms, it grew by 16.9% to $333.19
mn in 2006.

There is no denying that Linux has top-of-the-mind recall when
it comes to server deployment, especially in high performance clusters, blade
servers and a growing presence in Web application hosting and messaging. It is
estimated that Linux server shipments totaled 6,200 units in Q3 2006, up from
4,000 in Q3 2005, though there are no firm figures available.

This growth is faster than the growth of the x86 server per se,
and has come because several vendors have pledged their allegiance to open
source.

Undoubtedly, this has put Microsoft in a spot because not only
is it unable to match the growth rates of the server market but is also losing
its existing market share. Adding to this, Microsoft still has to create a
partner ecosystem that will proactively recommend SQL servers to its customers.

"Currently, we have a good network of ISVs and solution
providers, but we need to work closely with them to increase their own
confidence in porting their applications on the SQL. We have made good headway
here and will soon have some success stories to share with partners,"
remarked Kathuria.

Another challenge is building strategies for future growth
business especially in management and security applications for servers. Here,
Microsoft will have to weather competition from IBM Tivoli and Symantec,
largely.

And the cherry on top of this scoop of difficulty is the
declining customer demand. With the concept of virtualization gaining ground,
customers are not going for more server units, preferring to create mirror
images of the applications on a single server. This is especially true in
enterprise companies that see great cost savings and easy management in the wake
of virtualization. Even SMBs are waking up to the reality of virtualization,
which adds to the existing hurdles Microsoft is facing in this business stream.

	"We are trying to create an economic differentiator close to what our competition is offering so that our partners have a level playing field when they go to their customers"
	-Pallavi Kathuria, director, SBG, Microsoft Corporation India

Turning Odds in Favor

While Kathuria admits she has a tough job to make SQL the most preferred
brand in the server market, she is not daunted by this task because she believes
she can turn this business around. She outlined some of the initiatives the
company has already undertaken in this regard starting with training more
partners on its products, offering them certifications, support, generating
business leads and providing good margins, especially the latter.

Currently, Microsoft offers partner margins in the region of
14-15%, while its peers offer 23-30% on the discounted price, which makes a
substantial difference. "We are trying to create an economic differentiator
close to what our competition is offering so that our partners have a level
playing field when they go to their customers," Kathuria pointed.

Microsoft is also investing in SI readiness to train partners
and ISVs on its technology and enable them to port applications on the SQL
server. "Partners have been historically working on other proprietary
platforms and a shift to SQL will mean rewriting the entire code again. They
need to have trained manpower in place to do this, which is why we are extending
training to their technical team. And, we are also adding technical people in
our own team who can hand-hold partners for pre- and post-sales support
issues," Kathuria noted. The vendor will also have proof of concept centers
operational shortly in addition to referential case studies that partners can
leverage while pitching Microsoft to their clients.

Talking about building enterprise product credibility, she said
that the challenge lies in building confidence in CIOs that they will not lose
their jobs due to downtime or an infrastructure breakdown, if they deploy
Microsoft applications. "This is because most CIOs are comfortable working
with Oracle or IBM on the database level and are not very keen on experimenting
with other applications, even if it is a stable one like the SQL server,"
Kathuria noted. She added that her company is working hard towards changing this
perception, and will soon release case studies highlighting the ease of use
after SQL's deployment, and on the scalability and security aspects.

Vinita Bhatia

maildqindia@cybermedia.co.in