Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business, and then another chunk, and then another until nothing is left.
Andrew S. Grove, Chairman, Intel Corp. ,in his bestselling Only The Paranoid Survive
AT a 1996 revenue of $20.8 billion (Rs 74,880 crore), and 75 per cent of the market in its pocket, it would need a lot of doing for "people" to take away chunks of Intel Corporations business until nothing is left. But Grove, rated as one of the best managers in the world, apparently sees his business as much more than mere numbers on the companys balancesheet. Caught in a cycle of needing to create a demand for computers so that Intels microp roces sors sell, and manufacturing superior microprocessors as everyday newer uses for computers are discovered, Intel has embarked on a massive computer promotion campaign the likes of which the global infotech ind ustry has perhaps never witnessed.
Intel is the obvious corporate to do this. It invented and is the worlds leading manufacturer of microprocessors, the hardware heart of personal computers. Three-fourths of the worlds PCs run because theres an Intel chip be it the 386, the 486 or the Pentium taking care of basic functions.
Intel has earmarked a potential investment of $100 million (Rs 360 crore) over the next five years to develop the Indian market and a subsidiary to develop software. Globally, Intel has earmarked $2.4 billion (Rs 8,640 crore) in the current year for research and development, a part of which will be carried out at its centre in Bang alore. These are big figures. For instance, investments in India by Microsoft, which is to software what Intel is to hard, is less than a quarter of Intels. In a major image-building exercise, Dr Craig Barrett, Intels new president who took over from Grove last month (Grove retains chairmanship), visited India the second time in a year last week (see box).
Says Atul Vijaykar, recently promoted as Intels dire ctor, South Asia, from country manager, India. "Intels market potential in India in the current financial year is over $200 million before duties. And we will play a very proactive role in this market." Adds Arnold Vlas, marketing manager, corporate marketing group, Intel Asia: "India gets a disp roportionate amount of our marketing budgets compared to other countries in southeast Asia. About half our total investment for marketing in the south and south-east Asian markets is earmarked for India."
The investment is not unjustified. India is behind Indonesia, Philippines, Thailand, China, Taiwan, Malaysia, Japan and Singapore in infotech spending as percentage of per capita GDP at less than 0.5 per cent. Malaysia, Philippines, Indonesia and Thailand have a higher per capita PC penetration than India where less than 2 per cent of households have a PC. Rob Eckelmann, till recently Intels dire ctor, Asia-Pacific Emerging Markets, points out that more people live in the Mumbai area than in entire Malaysia. And India has shown that its potential can be capitalised: it moved from 386 PCs to PCs based on the Pentium chip faster than any other country in the world.
So the strategy is pretty clear: three marketing campaigns for three end-user segments home and education; small and medium businesses; and large enterprise and government and an overall branding campaign. By Intels own estimates, the small and medium businesses, and the large enterprise and government segment account for about 40 per cent each of the total market while the remaining is held by the home users. Yet it is this market that seems to be most promising. Says Eckelmann: "This segment is just starting to take off. The level of interest is unbelievable."
Intel has campaigns directed at parents, students, and teachers, Cyberskools for children in Mumbai and Delhi, with another coming up in Bangalore. It is ensuring that schools get special discounts on PCs; and that more local multimedia educational software is available.
More importantly, in a price-sensitive market like India, Intel has built a network of about 500 Genuine Intel Distributors (GIDs) across the country to provide the latest Pentium chips for unbranded PC assemblers who constitute about 40 per cent of all PC suppliers. It is subsidising advertising campaigns of about 50 top assemblers where the Intel Inside logo sells the unbranded PC. As a result, an unbranded computer with the recently launched Pentium MMX microprocessor comes for Rs 56,000. Thats at least Rs 20,000 less than its branded counterpart, Indian or foreign.
While the marketing extravaganza zips around and the Intel Inside campaign attacks cyberIndia from hoardings, TV screens and print ads, a gnawing doubt exists: is Intel pushing the IT industry and, as a con-sequence, users, faster than they can cope with? "Certainly there has been concern that we push companies," agrees Vijaykar. "But the reality is that from an end-users standpoint, all this technology is making things much easier, much more capable. The end-user is not interested in technology for the sake of technology. He is interested in end-user value and thats what we have to provide." Justification indeed, after all its a question of $100 million.