CALCUTTA, India, Nov. 25 (UPI) -- In his third visit to India in mid-November, Microsoft chief Bill Gates unveiled a three-year, $400-million investment plan.
According to Gates that amount would be Microsoft's biggest non-manufacturing investment outside of the United States and the largest share of it -- $280 million -- would be devoted to the development of skills around the "dot-'Net" platform in India and increasing business opportunities for Indian companies by leveraging Microsoft product development.
But for the Microsoft executives in India, even as that appears to be most important mandate as crafted by their chief, there is a different task in hand; that of capturing Indian software developers to adopt Microsoft's operating systems as the platform of choice for developing software, according to Dilip Mistry, Microsoft's director at the Bangalore office.
But why should Microsoft be worried about losing Indian software developers' mind-share when nine out of ten computers used in this country run on Microsoft?
The much discussed battle between Microsoft and Linux -- the free operating system -- that has been raging all over the globe has finally spilled over to India.
All around the country, the noise of the user benefits of Linux as an operating system -- the underlying layer of software, like Windows, MSDOS, Unix, etc., on which every thing else runs -- is deafening.
Here are a few examples of the Linux's increasing popularity in the country. The Indian government is planning a countrywide drive to promote the open source operating system, Linux, as the "platform of choice" instead of "proprietary," read Microsoft, solutions.
The Department of Information Technology has already devised a strategy to introduce Linux as a de facto standard in Ivy-league educational institutions like Indian Institute of Technology, Tata Institute of Fundamental Research and Bhabha Atomic Research Center, through their curriculum that encourages the use of such systems.
The Supreme Court -- India's apex judiciary -- has a few pilot projects underway. So have High Courts in Karnataka and Andhra Pradesh, and the government of West Bengal; the Delhi Road Transport Office has implemented a pilot to examine its viability; and C-DAC, the government's supercomputing arm, has moved lock, stock and barrel to Linux.
Then there is the National Stock Exchange -- among the early adopters who used Linux to implement a solution unique to stock exchanges anywhere in the world. Companies like Asian Paints and IDBI are cheerleading Linux and others like Reliance, Texas Instruments, the Times of India group, Raymond, Bombay Dyeing, Godrej Infotech, HDFC Bank, Hindustan Dorr Oliver, Central Railways and Air-India have deployed Linux to power at least a part of their backend IT system.
Some of those not on the bandwagon yet, but are being actively pursued. For instance, there are a few virtual user groups spread across the country, spending time at educational institutions, companies and individual users, spreading the gospel of Linux.
Clearly, Microsoft needs to control the beast before it gains too much attention in the country, because as Dilip Mistry puts it, "This country can affect our (Microsoft's) destiny."
Although, at the current year's revenue of about $330 million that India generated for Microsoft -- a company that is expected to notch $32 billion of global revenues by year 2003, the country's market size could be scarcely significant, the importance of India's market lies somewhere else.
Estimates put the present size of India's software developer population at anywhere between 450,000 and 600,000. That's about 10 percent of the world's developer population. Within 18 months, Nasscom estimates, India will probably have more developers than any country in the world.
And, this is why it is important to gain control of this country's developer population.
But why is the mindshare of software developers so important for an operating system product company, like Microsoft and Linux?
Developers actually build applications that run on operating systems. And if the developer community perceives that an operating system is gaining credence with the end-user community-like you and me, they shift attention there. Sales of an operating system software thus, are a direct function of the extent and number of availability of end user software that can run on it.
"The development center is of strategic importance to us," says Gates. "This center (in India) is playing a crucial role in developing products and technologies for three strategic areas for the dot-Net platform, Windows and enterprise storage."
However, for Microsoft, perhaps the developer community is not the only issue.
Although the present size of the Indian market is tiny for Microsoft, it still holds huge potential. At least theoretically. The country's shrink-wrapped software market is currently stated to be $409 million, in which Microsoft has a 90 percent share, but this is not its actual size.
For every licensed piece of software Microsoft sells in India, there are eight pirated copies doing the rounds. Which means, in an ideal world, Microsoft could have sold software worth $2.64 billion this year in India.
There is another factoid here. In 2001, while IT spending was being slashed across the world, the packaged software market grew 37 percent in India. Growth rates are expected to continue at this rate for a few years to come. Clearly, therefore, the numbers are compelling.
"We have a major bet on the Indian market," said Sanjeev Mathur, manager marketing, Microsoft India. "It is one of the fastest growing markets in Asia for us. This justifies the investment we are making here."
From another angle; the government picks up two-thirds of the shrink-wrapped software sold in the country. The rest is largely accounted for by the private corporate sector. India thus, would certainly be a different world for Microsoft if the government and companies make a conscious decision to move toward Linux.
Gates, however, refuses to recognize Linux as a threat in India.
Shrugging off Linux as serious competition, he said during his visit in India, "There are a few cases where Linux is used in some parts of India, China and Malaysia but it does not have a uniform acceptance. Moreover, Windows offer much better price point performance."
But he conceded that Linux is gaining popularity in the country. "There is a shift somewhat within the Unix space away from Sun and towards Linux, " he said.
But many do not see eye-to-eye with Gates.
Richard Stallman for instance, the founder of the free software movement -- called GNU/Linux -- who is challenging the might of Microsoft globally, was also in India during those four days of Gates' visit to convince the Indian government to abandon proprietary software.
"I have met people in (the Indian states of) Kerala, Karnataka, Andhra Pradesh, and some people in the government of India," said Stallman. "What they say sounded favorable."
However, most alarming for Microsoft perhaps is the fact that after focusing initially on the server market, Red Hat India, the country's No. 1 Linux vendor, is taking aim at the desktop computers.
According to Javed Tapia, director for Red Hat India, his company is aiming at mainstream Linux users to start with. "Down the line, it will go after everyday Joes," said Tapia adding, "we want to give people a choice on the desktop."
What is also making Microsoft India executives wriggle in their seats is the fact that Tapia's men have already gotten Indian developers working on the Linux platform for the country's local market.
"There are more offerings in the pipeline," Tapia said. "While there are popular applications that don't have Linux versions, porting is going on at a rapid pace. Red Hat is working with Indian developers to ensure that local applications are available on Linux."
But even as Linux is emerging as a challenge in India for Microsoft, it doesn't mean that future of Microsoft in the country is at stake -- at least not just yet.
That is because, for all its strengths, Linux has chinks in its armor.
The most fundamental problem with Linux, according to sources, is the fact that there is a lack of unity among the Linux vendors and developers. Moreover, fighting a giant like Microsoft in a country where Linux is still being explored as an operating system is not easy.
Finally, support and services of Linux in India are still nascent and have some way to go before they can catch up with those of Microsoft.
