Countdown To Cyberindia

Business success contains the seeds of its own destruction. The more successful youare, the more people want a chunk of your business, and then another chunk, and thenanother until nothing is left.

—Andrew S. Grove, Chairman, Intel Corp. ,in his bestselling OnlyThe Paranoid Survive

AT a 1996 revenue of $20.8 billion (Rs 74,880 crore), and 75 per cent of the market inits pocket, it would need a lot of doing for "people" to take away chunks ofIntel Corporation’s business until nothing is left. But Grove, rated as one of thebest managers in the world, apparently sees his business as much more than mere numbers onthe company’s balancesheet. Caught in a cycle of needing to create a demand forcomputers so that Intel’s microp roces sors sell, and manufacturing superiormicroprocessors as everyday newer uses for computers are discovered, Intel has embarked ona massive computer promotion campaign the likes of which the global infotech ind ustry hasperhaps never witnessed.

Intel is the obvious corporate to do this. It invented— and is the world’sleading manufacturer of— microprocessors, the hardware heart of personal computers.Three-fourths of the world’s PCs run because there’s an Intel chip— be itthe 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 nextfive 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 anddevelopment, a part of which will be carried out at its centre in Bang alore. These arebig figures. For instance, investments in India by Microsoft, which is to software whatIntel is to hard, is less than a quarter of Intel’s. In a major image-buildingexercise, Dr Craig Barrett, Intel’s 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 Intel’s dire ctor, South Asia, fromcountry manager, India. "Intel’s market potential in India in the currentfinancial year is over $200 million before duties. And we will play a very proactive rolein this market." Adds Arnold Vlas, marketing manager, corporate marketing group,Intel Asia: "India gets a disp roportionate amount of our marketing budgets comparedto other countries in southeast Asia. About half our total investment for marketing in thesouth 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 percapita GDP at less than 0.5 per cent. Malaysia, Philippines, Indonesia and Thailand have ahigher per capita PC penetration than India where less than 2 per cent of households havea PC. Rob Eckelmann, till recently Intel’s dire ctor, Asia-Pacific Emerging Markets,points out that more people live in the Mumbai area than in entire Malaysia. And India hasshown that its potential can be capitalised: it moved from 386 PCs to PCs based on thePentium chip faster than any other country in the world.

So the strategy is pretty clear: three marketing campaigns for three end-usersegments— home and education; small and medium businesses; and large enterprise andgovernment— and an overall branding campaign. By Intel’s own estimates, thesmall and medium businesses, and the large enterprise and government segment account forabout 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 segmentis just starting to take off. The level of interest is unbelievable."

Intel has campaigns directed at parents, students, and teachers, Cyberskools forchildren in Mumbai and Delhi, with  another coming up in Bangalore. It is ensuringthat schools get special discounts on PCs; and that more local multimedia educationalsoftware is available.

More importantly, in a price-sensitive market like India, Intel has built a network ofabout 500 Genuine Intel Distributors (GIDs) across the country to provide the latestPentium chips for unbranded PC assemblers who constitute about 40 per cent of all PCsuppliers. It is subsidising advertising campaigns of about 50 top assemblers where theIntel Inside logo sells the unbranded PC. As a result, an unbranded computer with therecently launched Pentium MMX microprocessor comes for Rs 56,000. That’s at least Rs20,000 less than its branded counterpart, Indian or foreign.

While the marketing extravaganza zips around and the Intel Inside campaign attackscyberIndia from hoardings, TV screens and print ads, a gnawing doubt exists: is Intelpushing 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-user’s standpoint, all this technology ismaking things much easier, much more capable. The end-user is not interested in technologyfor the sake of technology. He is interested in end-user value and that’s what wehave to provide." Justification indeed, after all it’s a question of $100million.