Microsoft India finds retail & SMEs hot

For almost 15 years, ever since Microsoft started operation in India in 1990, much of its business focus has been on the area of enterprise and institutional segments or larger businesses and the retail as well as the small business segment always played a second fiddle. But now, as India's economic boom has given rise to a burgeoning consumer market, Microsoft India is changing its focus.

It is now carving out a different India strategy that, for the first time, puts an increasing focus on the retail and the small and medium enterprises (SME) segments, which Microsoft believes currently offers the company a greater growth opportunities for the future.

In its most ambitious retail initiative yet Microsoft India announced this week a retail strategy that involves opening of 500 retail outlets across eight Indian cities in the next six months and introduction of a range of products and devices in the areas of entertainment, education and learning, gaming, productivity and communications that Indian consumers hardly expected out of Microsoft. It includes the introduction of Windows Media Center 2005 for the first time in the country, and launch of a slew of digital music devices, smart phones, and educational software for the home user.

The outlets would be opened in partnership with the store owners. Microsoft India said it will invest in the infrastructure required for showcasing, and provide its retail partners with marketing support as well. And although company officials were mum on investment numbers, analyst said that the partnership plan with storeowners is a smart move since "that way, its mega retail plans would come at least financial investments."

The retail strategy, says officials, aims at helping Indian consumers embrace a "Digital Lifestyle" with the help of "a rich constellation of Microsoft products, services and partnerships."

"Microsoft's consumer offerings provide a fantastic experience to the end user," said Neelam Dhawan, the recently appointed managing director of Microsoft India. "Technology has changed the way consumers work and play the world over. We have products to meet their needs in all areas of entertainment and education ... whether it's related to music, TV and movies, games, communication or sharing their cherished memories."

She added that, "These offerings have been appreciated by consumers worldwide, and we are happy to present them to Indian customers today. The recently set up consumer division will spearhead our foray into this segment, bringing together all of Microsoft's business units and offerings in a comprehensive manner."

Microsoft says that its retail strategy is based on two broad planks. One is that India's burgeoning computer user group which is basically thriving on using pirated software to a huge extent -- Microsoft reckons that almost 74 percent of the IT industry does not use genuine software -- gives it an enormous "revenue opportunity" in the retail segment.

And, the other is the fact that increasingly Indian consumers are getting tech conscious, but that demand remains largely untapped.

"Urban consumers today are extremely tech conscious, they want the latest and the best in software whether it's for entertainment, communications or education," said Ranjivjit Singh, Group Director of MS India's consumer business division."

"But the actual buying experience leaves a lot to be desired," he said adding which is one important deficiency Microsoft's retail centers will address.

"It will bridge the gap between the consumer and the need for information on and access to new products. A consumer will be able to come in, look at and play around with our products, with experts helping them through the process -- and walk away knowing how Microsoft software can help her have more fun, get more done and stay in touch," he said.

Indeed the retail push is going to be big. Because besides partnering with store owners, Singh informed that Microsoft also plans to partner with original equipment (OEM) vendors, and retail financiers to create "financing schemes, and alternate delivery models to make these offerings more affordable for consumers."

To check piracy MS India says that it will release low-cost versions of its Windows software. The low-cost Windows starter version for India will be available in Hindi and English at around $22, which would also help reduce entry-level personal computer prices to around $250.

"We are spending a lot of time in educating individuals and businesses on why they need to buy genuine software and the benefits accruing from the same," says Dhawan, which she feels has a more profound impact in the long term than "just policing."

The retail strategy comes close to the company's focus on small and medium businesses space that was announced about a month back. This strategy too has the same basics of it retails strategy which is a new licensing program that reduces initial purchase cost by allowing companies to pay for software over a three-year period.

When evaluating a technology solution, SMEs look for three things; "A solution that will help address their business need can be easily implemented, and finally a solution that is cost effective in the short and the long term," said a company official.

The company added its plans for the SME segment, "which would be another key growth driver", includes extension of reach from 16 cities to 32 cities across India by the end of this year. According to IT industry lobby NASSCOM, the SME segment currently contributes about 15 percent of all domestic software revenues and is expected to surge substantially by 2008.

The year 2005 has been busy for MS India. According to the industry sources its growth has been "gentle" with its core area of PC operating systems and suites being impacted by piracy and Linux nibbling continuously at MS India's markets.

Still, the company remained committed to its enterprise and institutional segment and launched newer products. For instance, it launched "Score-Office as Smart Client" that caters to users of other ERP or legacy systems and BizTalk Server 2004, its integration server offering for enterprises.

In peripherals arena, it launched a range of "biometric-enabled" hardware like mouse and keyboards, wireless optical desktop comfort edition mouse, optical desktop unit with fingerprint reader, wireless intelliMouse explorer with fingerprint reader, and the likes.

The company also continued with e-governance initiatives like the Bhoomi project in the Indian state of Karnataka, the Postal Department, Project Bhasha (language) and Project Shiksha (education), which have now been rolled out in seven states.

During the year MS India also concluded multi-million dollar software partnerships with two of India's leading outsourcing firms Infosys and Wipro, which Microsoft CEO Steve Ballmer signed during his visit to the country last November.

Copyright 2005 by United Press International