Be where the market is

BANGALORE: The year 2000 will see IBM India displaying a new face. A face that is more open to experimenting with decentralized operations. To begin with the man at the helm, Ranjit Limaye, will shift his base from IBM’s Bangalore head office to Nariman Point in Mumbai, the commercial capital of India and a market which contributes the maximum to IBM’s revenues. The Managing Director’s office will be separate from IBM’s existing 200-man office in suburban Mumbai and it will also house the customer support center.

This change is a result of IBM India’s efforts at broadening its business thrust by focusing more on regions. This is in addition to the company’s vertical market focus, which it has followed since day one in India. The difference is that key people will hold dual responsibility for markets as well as regions. The attempt, which began soon after Limaye took charge in early January last year, is supposed to have yielded good results for IBM India–the company is more than confident of turning in better profits in calendar year 1999 than what it ended the year 1998 with. And this, without taking into account the services revenue brought by IBM Global Services, which continues to be a separate legal entity though operationally there is little distinction.

So sometime starting end January, the headquarters at Golden Towers in Bangalore will see

the migration of Alok Ohrie to Mumbai. As Channel Manager, he will manage not just PC channel movement but also that of AS/400, which have been consolidated for the first time. He will be joined by Murli Raman as Vice President, Marketing and Channels. Nipun Mehrotra, Vice President, Public Sector & Distribution, will move to Delhi. Vikas Gurugunti from the Personal Systems Division will take over the server line of business, earlier with Nipun Mehrotra, as Marketing Manager, Systems. Shashi Mal will move into the place vacated by Alok Ohrie as head of PSD.

In keeping with the regional focus in addition to the vertical market focus, each region will have a Regional Manager too. This role will be fulfilled by Nipun in North, Ashish Kumar in South and Amit Sircar in East. Both Ashish Kumar and Amit Sircar will continue to hold their respective portfolio as head of Small and medium Business segment, and head of Industrial Sector. In short, they will play dual roles.

Just how well this change will hold good for IBM this year is debatable, since there are no company figures to validate its claims to good performance in calendar 1999. In the PC business, going by IDC figures for the first six months ended June 1999, IBM holds good in the notebooks segment. Though in unit terms, it is at number two behind Compaq (2,762 versus 2,910) with a market share of 25.3 per cent, in terms of total value of shipments, it is ahead of Compaq ($11.3 million versus $10.8 million) with a market share of 28.2 per cent.

In the desktop business, for the first six months, IBM (with 16, 513 units) is at number five behind Compaq, Zenith, HCL and HP in terms of number of systems sold. This, however, is said to be strategic as, in terms of value, it is at number two (with $24.9 million), continuing to sell desktops in the Rs 1 lakh plus category. This is expected to change this calendar year, given that it has started manufacturing in Pondicherry. More than offering competitive prices, IBM will now be in a position to offer PCs with varied configurations, which it could not offer when it was shipping systems directly into India. Saving on inventory cost by reducing bill to order and product turnaround cycle is also expected to benefit IBM in the long run. In the PC server category, it has managed to be at number two both in terms of units sold ( (with 1,858 units) and value ($10.1 million).

In the Unix and RISC server category, there is reason to believe that IBM’s performance has been better than good. Though market analysts put Sun Microsystems a notch above IBM in the Unix server category, in the RISC category, IBM is supposed to clearly ahead. In fact, its RS 6000 range of systems is supposed to have had a good run in the market place. Its AS/400 systems, on the other hand, have only managed to hold on to the numbers and keep the revenue stable. This, coupled with the sale of four System 390 to the Reserve Bank of India, has kept the IBM banner high.

Clearly, there are indications that the year 1999 will be a good year for IBM, even without taking into account its revenue from systems integration and networking services, which are its stronghold. That IBM has decided to consolidate AS/400 with the PC business and drive its channel activity from Mumbai perhaps is with the intention of extending its reach beyond the first level cities and thus increase its market share. How much of this will hold true will be known only by June this year.