Widening windows

Bangalore: Microsoft chairman Bill Gates’ romance with India keeps getting hotter and hotter. From his first visit in 1997, when he met Andhra Pradesh Chief Minister Nara Chandrababu Naidu, he has slowly increased his investments in India and correspondingly increased his donations to charities within the country (see the table below).

Microsoft’s recent pledge to invest $400 million in India is the first major investment plan in India by a multinational corporation. The money will go towards expanding software and product development operations in India and make the Windows operating system and application software widely available to the new generation of computer users in India.

The company will spend $20 million to increase computer literacy in the country, with the target of 80,000 teachers and 3.5 million students in the next five years. Ten centres will be set up around the country to work with computer labs in 2,000 schools.

Microsoft will also more than double the size of its product development centre in Hyderabad, adding some 300 employees. Within the next year, Microsoft will introduce versions of Windows XP and Office in Hindi, and offer support for Windows XP in two more local languages, Bengali and Malayalam.

The response so far has been good. Sample some:

• Col. (Retd.) M Vijay Kumar, director, Software Technology Parks of India (STPI), Hyderabad: “Microsoft’s enhancing its investments in India is a testimony to strong international public relations.”
  
• B V Naidu, director, STPI, Bangalore, which is considered to be India’s Silicon Valley: “This will motivate other MNCs to look at expanding their projects and presence in India.”
  
• Dr J Satyanarayana, IT secretary to the Andhra Pradesh government: “It is a good sign for India. Microsoft is the first one to identify the potential in India.”

By now, Andhra Pradesh and Bill Gates have a history together, and Gates’ increasing investments in India have strongly benefited this southern state. Look at this:

Targeting a growing market
Microsoft’s increasing focus on India has gone hand in hand with an increased focus on the rest of Asia. The software czar’s $400-million commitment in India came close on the heels of its agreement to invest $750 million in China. The money will go towards education and training, manufacturing and strategic investments in software companies in China.

On 27 June 2002, Microsoft signed a memorandum of understanding with China’s top economic planning body, the State Development Planning Commission (SDPC), promising to form a committee to review and discuss Microsoft’s investment strategy.

Microsoft is currently seeing growing revenues in Japan and the Asia Pacific region. Its revenues here increased 24 per cent to $860 million from $692 million in the September quarter of the previous year. Its gains occurred against the backdrop of an industry languishing from tightened technology spending, internal strife and even accounting irregularities.

In November, the year turned bleaker for Microsoft rivals, who had hoped a federal judge, will opt for harsher sanctions against Microsoft for illegally using its dominance over the desktop operating system to hobble competition. The region’s revenue increase was driven by the sales of localised versions of Microsoft Office XP, particularly in Japan.

The game plan in India
An important target for Microsoft’s growth strategy in India is the public sector. The company has been actively soliciting state governments to put some of their functions online. In Karnataka it helped computerise land records and in Andhra Pradesh it set up a system to help minimise losses from droughts and natural disasters.

Its main rival for such work is not a competing company, but rather the government agencies’ own do-it-yourself experiments based on “open source” software like the Linux operating system. Unlike proprietary software like Microsoft’s, open source software is provided along with the source code, which can then adapt to their needs.

Governments in several developing countries have tried to encourage open-source software development to keep technology costs down. In some countries like Mexico, Microsoft has responded with donations, investments and educational initiatives like the ones planned for India.

According to IT observers, India has an estimated half-million individual software developers. Part of Gates’ mission appears to be persuading as many of them as possible to concentrate on developing programmes that work with Windows and not Linux. Microsoft has had a presence in India since 1987.

Along with Microsoft, Intel and Apple India are also focusing on product development in India. If all goes well, India could become a hub for product development for MNCs.

So is India ready to cash on this opportunity? Watch this space.