February 24, 2020
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C:\≫ Enter India

The year is AD 1997.The planet is entirely occupied by Microsoft.Well, not entirely...India can definitely buy millions more of Microsoft products. It's time for a visit from William Gates III.....

C:\≫ Enter India

THE most promising welcome, the most rousing applause, the most celebratory prelude to perhaps the most hyped-up business event of 1997 came strangely from the stock-markets. Almost as if sensing the sweet sound of cash registers, the values of the three most visible computer software stocks—Infosys Technologies, NIIT and Aptech—have been hitting their 52-week highs virtually every other day. Starting last month, on an average, the values have risen by almost 20 per cent. The only way to explain this extraordinary show of confidence in Indian software stocks is to credit it to one statement William H. (Bill) Gates III made at the World Economic Forum at Davos, that India has the potential to be the world's largest software producer. And then he announced that he would soon be visiting India.

But there's more to Bill than hot stocks and hype. With a personal net worth far in excess of $29 billion—over 1.5 times India's foreign exchange reserves, around 9 per cent of the country's GDP—this living legend is the world's richest man ever. Try this for size: on an average, his personal wealth increased by $30 million (Rs 105 crore) every day through 1996. What makes his wealth even more incredible is the fact that he has been able to generate it within one generation—about 20 years, or so.

WILLIAM THE INVINCIBLE: Wealth is not all. The texture of this wealth is. Gates is the epitome of the information age. He has made his billions not by manufacturing products or rendering services; the source of his money has been in being able to market successfully an abstract concept, a superswarm of electronic impulses. As the world moves on from the patterns set by the steam-and-plastic industrial age, information has emerged as the genesis of the next revolution. The information age is what planet earth is hurtling towards at the speed of light.

At the hub of this bloodless revolution sits geek-turned-God Gates. Through products like MS-DOS and Windows, Microsoft Corporation, which he co-founded with friend Paul Allen in a garage, controls over 80 per cent of the market for operating systems (OS)—the software that runs basic computer functions. Which means, four out of every five computer users on the planet use a Microsoft OS to be able to even log in. And that's a big, big market.

OS is not the only product that has given the most famous Harvard dropout his power. He has systematically (see 'Software, Hard Feelings') extended his control over the lives of millions of personal computer (PC) users, by leveraging OS power into the area of application software—word processors (Microsoft Word), spreadsheet (Excel), presentation packages (Power Point), among others. Nearly two out of every three users of word processors and spreadsheets use software developed by Microsoft.

Thus, while OS gives Gates power over users even switching on their PCs, his application software lends him control over what they do with their PCs. And when these forces synergise, the result is perhaps an unrepeatable phenomenon called Bill Gates.

No wonder, he is the world's most famous businessman—ever. His success also points towards a trend whereby manufacturers of goods and providers of services have taken second place, with abstractions like information, as in Gates' case, and knowledge, as in the case of the world's second-wealthiest man, investor Warren Buffett—a close friend of Gates—fuelling the trek to riches. In an interview with Fortune, Gates had said: "We both feel lucky we were born into an era in which our skills have been so remunerative." As the 500th year of Vasco

WILLIAM THE EXPLORER: daGama's discovery of a sea route from the West to India begins, Gates arrives on Indian shores. Following the conquest of the West, Gates has already flown over India and planted his standard in the Pacific Rim countries, South-east Asia and China.

In fact, India's archrival for global investment, China, seems to have taken Gates' fancy. In 1995, two years after setting up the Beijing office, he had taken a vacation there, launching a Chinese version of Windows 95 on the way. Five years before that, he had set up the Hong Kong office. The response from the latter has lived up to Gates' expectations. No doubt, he's gung-ho about China. He is particularly excited about the fast rate of modernisation there.

The crucial question, however, is: just what does the physical presence of Gates imply for India? Answers Srikar Reddy, vice-president (India operations), Sonata Software, one of the oldest distributors of Microsoft products in the country: "He is the most influential infotech personality alive. His coming to India to share his perspective and ideology is significant." Says Pradeep Kar, CEO of networking company Micro-land: "Gates' visit signifies the recognition India is getting on the global scene."

But is Gates slightly late in going ballistic on India? Other global leaders like Oracle, Novell and Digital have been ploughing the market hard for some time now. Microsoft's late start, though, could have been a strategic waiting period for the market to reach a critical mass. India has reached the two-million mark in PCs, which Gates may be interpreting as what's often referred to as the 'firecracker point'—the temperature at which a market explodes.

WILLIAM THE CONQUEROR: And if the numbers are to be banked on, then the entry is going to be grand. For 1997, Gates has committed $2 billion (Rs 7,000 crore) towards the Microsoft research and development (R&D) budget. Which is 1.3 times larger than the total $1.5 billion (Rs 5,250 crore) worth of the Indian software industry—Microsoft could buy out the whole industry and not even burp. Plus, Microsoft has another $6 billion tucked away in cash for a rainy day. Considering Gates' belief that India could be one of the top five offices in the world, "within a relatively short period of time", that spells big bucks for a country where there is less than one PC for every 1,000 people—the developed world average is 10, while the number stands at 300 in the US.

According to NASSCOM's projections, the industry will touch the Rs 31,000-crore mark ($8.9 billion) by the turn of the millennium, indicating an annual clip of 50 to 60 per cent. Microsoft is also looking at a PC penetration level of 10 PCs of every 1,000 population by AD 2000 with glee—a target set by the Department of Electronics (DoE). PC sales, which increased from 2.75 lakh in 1994-95 to 3.5 lakh last year, are expected to touch 4.5 lakh by the end of the current financial year.

This is the territory Gates plans to steamroll into. Microsoft claims it has an overall 75 per cent share of the Indian software market. Company officials say that in desktop software—Windows, Office Suite and the like—it has an even higher, 85 per cent, share, while in back office software, it controls 70 per cent of the market. In the Internet market, it claims a more moderate 60 per cent share of browsers. Industry sources, though, feel these numbers may be an overestimation.

WILLIAM THE COMPASS:Despite what's widely believed, Microsoft will not set up a software development centre in India. At least, not right now. Says Sanjay Parthasarathy, regional director, Microsoft (Indian subcontinent): "Clearly India has already provided us with some very skilled software developers and this will continue but our focus now is on building a strong local presence here, selling software and services to our customers." India's appeal is simple: the fast-growing market. There's money to be made here.

Correction. There's more to Gates' coming to India than markets or minds. The visit, like everything about Gates, will attain an iconic life of its own: it will flash the message across the planet that India figures as a high-priority area for the Fortune 500 company which makes things happen for the other 499. It would give a signal to the rest of the world that India is an important-enough business destination. Adds Bikram Das Gupta, chairman, Global Synergies: "Bill Gates' visit may have a ripple effect, with the chiefs of other infotech companies also making a dash for India. Intel Chairman and CEO Andy Grove is also expected to visit India three to four weeks after Gates." Intel is to hardware what Microsoft is to software.


While Microsoft's plans for India will ensure that high-visibility products like Windows 95 and Windows NT will occupy a large part of the company's business, its decision to focus attention on the Internet will reverberate in India as well. Industry sources reveal that the company has chosen the Internet as the peg to broad-base its presence in the country by introducing Net-use products. In addition, Microsoft has launched several initiatives for software developers in infrastructure, skills transfer and new technology. Agrees Nandan Nilekeni, deputy managing director of India's most admired software company Infosys Technologies: "It is great news that India is high on Gates' radar screen. His visit reflects the value he places on the Indian software industry."

Only last month, Microsoft hosted the first-ever site builder workshop series held in India to coincide with the launch of its dedicated Developer and Internet Customer Unit. This unit will support software developers and help them in their transition to the latest Internet technologies. And last week, barely a fortnight before the Man Himself arrives, Microsoft hosted its first professional developers conference in India. The aim of the conference, held annually in the US, Australia and in the Pacific Rim countries, was to provide developers with in-depth information of Microsoft technologies. Says Rajiv Nair, managing director, Microsoft Corporation (India): "The paradigm shift of Microsoft to focus on the Internet will lead to creation of incredible opportunities for software developers in India."

 According to Parthasarathy, these "incredible opportunities" are so widespread, it is futile to attempt to quantify them. On how much money Microsoft is investing in India, he says: "To give a direct response in lakhs and crores would be misleading because our investment here extends far beyond the buildings we use and the people we hire. We are investing in the Indian IT industry as a whole, and bringing a new business model to a country which we believe can have a tremendous impact on the world IT market."

The most important hurdle that Microsoft may face will be at the sales counter. In a country, where it is considered almost infra dig to buy software, where the latest versions of any software can be bought for a little more than the prices of the floppy disks—so there's simply no incentive to buy software—just how does Microsoft plan to open the market? Also, the real money in the software business is to keep upgrading your products and get users to keep buying the new versions as they roll out. The culture of buying newer versions of software every year—3.0 for 2.0, and Software 96 to replace Software 95—is yet to take root in India.

Slashing prices could be Microsoft's answer to the market conditions. This is an old Gates ploy, which he can use more and longer than anyone else simply because he's the biggest player. Indeed, last summer, he gave away a million copies of Internet Explorer3.0 free to wean Netizens away from market leader Netscape Navigator ($79 a copy). Once customers are hooked on to Microsoft products and the competition has slunk away to try their luck in safer businesses, the real prices are charged. Will this strategy be followed in India as well? Why not?

To be sure, computer software is one of the most cut-throat businesses in the world, where, as Intel chief Andy Grove said, "only the paranoid survive". According to Gates, there is no other industry that requires its people to work so hard to make their products so tightly compatible with their competitors' or offer its customers low-cost upgrades as part of product improvement. With the markets fast saturating, growth for the companies has increasingly been coming from being able to create new markets, largely on foreign shores. Today, about half of Microsoft's revenues come from international offices. The Indian thrust is a corollary to that.

To William H. Gates III, India holds the promise of a New World. For India, he could be the bringer of glad tidings to the world: that the nation is powering into the Info Age. At warp-speed.

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