Weaving a Dream Foray

The $336 million Macromedia Inc., a global leader in Web-related graphics and

development tools, plans to make a big foray into India over the next 6-12

months. There are a number of key initiatives in its agenda: for one, to move a

part of its development center here, next moving some of Macromedia’s

back-office processes like accounting and HR either into a captive or a

third-party BPO operation and lastly to have a global call center that would

generate and verify lead calls from all over the world.

In an exclusive interview with Dataquest, Peter O’ Connor, VP-South Asia,

further emphasized that Macromedia’s India plans are perfectly in sync with

the global strategy to position the company as a provider for mobile application

developer over and above its Web-focused identity.

That Macromedia is extremely serious about making India as one of its main

hubs is evident from the fact that both its CEO and CFO have been scouting

across the country looking for ideal locations to set up these facilities.

Though nothing has been finalized yet, chances are that the different operations

would be spread between Bangalore and Delhi. Macromedia’s planned India

venture, however, does not come as a surprise since over the last few years a

number of global computing giants have set up their development centers in

India. These would include Intel’s India Development Center in Bangalore where

most of the Centrino work is going on or Microsoft’s India Development Center

in Hyderabad that was responsible for the Windows Services for UNIX 2.0 (SFU)

development. Even HP ISO, Oracle or more recently SAP has set up their

development centers in the country.

Game plan in India Set up an India development center to develop product and solutions Moving some chosen back-office processes like accounting and HR either into a captive or a third-party BPO operation  Set up a global call center to generate and verify lead calls from all over the world Why India Cost arbitrage for business process and software expertise Huge potential in the telecom market and Macromedia’s products Sees a potential market for its e-learning market, as India is picking up momentum in this space

The Road Ahead



All these are leading to one single conclusion: India has today really moved

up the value chain and its brand equity does not only start and end with

software services and BPO. In that respect, Macromedia is just another addition

to the growing list of MNCs flocking to India, primarily driven by two factors:

one extremely skilled technical manpower and two the cheaper labor arbitrage.

However, where Macromedia’s move differs from its predecessors is its decision

to shift its own back-office work simultaneously into India. Except Intel, none

of the other MNCs have never even mentioned of any plans on this line. But

again, keeping in mind the tremendous cost arbitrage BPO offers, this was just

about to happen and Macromedia in this case has been first to bell the cat. For

the development center, Macromedia already does some development and quality

assurance work for Director through HCL Technologies–a relation they could

initially very well leverage to their advantage. Therefore, it only needs to

increase its footprint in the country through its development facility.

However, it would be premature to conclude that manpower and costs coupled

with Indian branding are the only factors that are attracting Macromedia to

these shores. For one, Macromedia is seriously attempting to shift its identity

from only a Web development tools company to one offering tools for mobile

application developers. And as O’ Connor admits India is one country where

mobile applications would be growing in geometric progression in the near

future. Its new product, Flashcast, scheduled to be launched in this JFM

quarter, is primarily targeted at the mobile service providers. This

server-based application works on both GSM and CDMA and can be fully integrated

with the billing solutions. Subscribers can register for these services and even

customize the frequency of wanted information and accordingly download the

requisite items. Macromedia would have both license revenue sharing model with

the service providers as well as sharing content subscription revenues. Within

six months of the launch, O’ Connor expects to rope in telcos like Reliance

and BSNL with whom negotiations have already started.

Apart from Flashcast, Macromedia’s Indian gameplan has other pawns too,

some of which have already tasted success in other APAC countries. One is Flash

Player that is primarily being deployed in different devices like LCD monitors,

TVs, set-top boxes, professional videos, mobile devices, electronic dictionaries

and PDAs in countries like Taiwan, Japan and Korea. In fact, NTT DoCoMo has

already shipped 8-9 million phones with Flash Player, while car manufacturers in

Japan and Korea are embedding Flash Player in the car computers. Macromedia

expects to repeat this formula for success in India too.

The third area where Macromedia is betting big in India is in the space of

e-learning tools. Its current e-learning product Breeze is already getting good

responses in India, thanks to a host of customers in the education domain like

the IITs, IGNOU, Anna University and Sardar Patel University. It plans to beef

up this domain further once it completes its acquisition of Preside this

December, whose product portfolio includes tools like Robohelp and Robodemo and

who has blue-chip clients like Novell, Avaya and 3D Labs.

Justifying Strategies



Macromedia India currently contributes 10% of its APAC revenues and is

slated to grow by 25-30% this year. This makes it pretty clear that Macromedia’s

India bets stand on solid financial grounds. But O’ Connor agrees still it

would require an aggressive sales and marketing strategy and for that the

company already has certain initiatives in place. It is announcing a new

reseller program this January whereby it is adding 10-12 strategic level

partners for different regions. So while Tech Pacific and Sonata would continue

to remain its main distributors, it is adding more partners like Softsell and

Trifyn to its portfolio.

Even branding Macromedia would be a rigorous exercise to be taken up in right

earnest. While Dreamweaver and Flash are now established brands, Macromedia

wants to come out of its Web world and aggressively position itself in the

mobile space. However, piracy still remains a sore point. While Macromedia in

India has 125,000 trial downloads every year, revenue generation out of it

relatively insignificant. Though it managed to bring some culprits like

Delhi-based Astell Infotech into book, the revenue loss is still substantial. O’

Connor laments that this revenue lost on piracy could have substantially

bolstered Macromedia’s bottomline in India. However, industry analysts argue

that of all the BSA partners, Macromedia has been one of the most reticent ones

to take the Rs 9,000 crore piracy market by its bulls and never even budges on

rationalizing its prices according to Indian realities.

This is one area where Macromedia should take a lesson from Adobe, another

company dealing with different graphics tools. After rationalizing its India

prices, Adobe saw a marked rise in its direct revenues from India. Maybe once

Macromedia emulates Adobe in developing some products in India, even the pricing

policy would become more flexible. If all these pieces of the puzzle fall in

place, Macromedia would be flashing its name in golden letters in India by this

time next year.

RAJNEESH DE in Mumbai