Be What?s Next? has been Microsoft Corp?s slogan for about a year now and one that its chief executive Steve Ballmer spelt out again in New Delhi last month. For the software giant, the ?next? in India is clearly how fast it can tap the potential for cloud computing?a phenomenon that everything it is doing is oriented towards?while growing its core businesses such as operating systems, participating in India?s e-governance push and driving research.
As proof of that, Microsoft points to over 5,000-odd applications built by Indian clients on its Windows Azure platform and a customer base of around 1,400 for its Business Productivity Online Suite (BPOS) that also has 4,000 trial users currently and about 700 vendors selling the service. In a country where the penetration of IT is still relatively low among small businesses, Microsoft sees itself positioned uniquely, because of the breadth of its products and services, to tap a cloud computing opportunity that is projected to grow to anywhere between $1 billion and $3 billion by 2015.
?The way we look at it is, number one, we?ve built the most, the widest array of cloud computing offering that are out there, apart from the competition,? says Sanket Akerkar, managing director, Microsoft Corporation (India). ?The second piece is that we really feel that the user interface and the familiarity with many Microsoft products is a very strong advantage.? India revenues for Microsoft grew in double digits last year, says Akerkar, adding that the company is ?aspirationally? looking for very aggressive growth from cloud offerings such as Windows Azure and Office 365 which rolls out this month to replace BPOS.
Microsoft does not split revenue by region but the India revenue for the Redmond-based company was pegged at around R3,755 crore in 2009-10 by DataQuest, around 2% of its global revenues of $62 billion. According to Gartner India, nearly 39% of the firm?s India revenues come from the Operating Systems segment (both server and client) and about 22% from Office Suite software. While Database Management Systems account for 10% and application development 7.6%, segments such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) currently constitute 0.5% and 1.3% of revenue. Through its collaboration with Nokia, Microsoft is also eyeing India?s telecom market.
Analysts see Microsoft?s push towards cloud computing as a bid to gain back a leadership role, having missed out on opportunity in the internet boom that saw companies such as Google emerge as rivals.
?Definitely competition is increasing day by day. There are always new entrants in the market, dropping prices and new open source offerings becoming more mature,? says Asheesh Raina, principal research analyst, software industry, at Gartner India. ?Earlier, as the competition was not very high, they could easily read the market.
Going forward, there are so many dynamics which are changing.?
While Raina reckons that there is a vast potential for Microsoft?s conventional businesses such as operating systems considering the relatively low ratio of computers per person in the country, he reckons the focus on cloud computing is necessary to safeguard its existing portfolio by ensuring interoperability and portability. ?If you are not there in the emerging technologies and somebody else is, the reverse then happens. The emerging technologies are going to bulldoze the older ones.?
Operating Software accounts for the biggest chunk (14%) of the total market in India for packaged software estimated to be $3 billion in 2010 by IDC India and projected to grow at a CAGR of 20% from 2010 to 2015. The Enterprise Application segment that includes ERP, CRM, and Supply Chain Management is estimated at $600 million and is a market in which Microsoft sees potential for itself amid rivals like German software maker SAP AG and Oracle Corp.
Traction in cloud computing would hinge on awareness levels as most organisations don?t know how it can help them, according to Nishchal Khorana, head, consulting and ICT practice, Frost & Sullivan. ?Keeping that in mind, what Microsoft is doing is spending immensely on marketing and creating an awareness in the ecosystem about cloud, and about Microsoft offerings,? says Khorana.
?The enterprise customers across the verticals are trying to get their hands around and get a feel for the cloud services and the potential and what we are seeing is only the early adopters. Once they gain confidence, the floodgates are going to open,?says Moorthy Upalluri, general manager, Developer and Platform Evangelism at Microsoft.
Microsoft, which set up shop in India in 1990, has six business units with offices in 13 cities and employs about 5,500 people. India is one of the few single country areas that report directly to Redmond as against a region-wise managing structure, the key benefits of which are the significant amount of resources and the attention of top executives to the market in India with the CEO and COO visiting every three months, says Akerkar. ?When we have that much executive coverage, we have a lot of discussions on the kind of things that we need to do differently,? he says. ?Obviously, that?s feedback that we put into our product teams as well as our broad go-to market teams in terms of how we want to change things as we go forward.?
Microsoft also banks on its research arm with six centres across the global to read the future?a recent example being the Xbox gaming console?s new Kinect sensor which reads gestures, a technology derived from the research that its global computer vision groups have been working on for at least a dozen years.
At Microsoft Research India (MSR India) in Bangalore, one of six research centres globally, researchers put out some 100 papers a year and their research agenda is not determined by market or product priorities, says managing director P Anandan.
Among its seven research groups is one that focuses on technologies for the emerging markets looking at areas such as healthcare, ICT in education and financial service delivery for the poor.
?They are looking at basically how to leverage existing and future devices that would address the needs of a specific community,? says Anandan, singling out its recent project to adapt a digital slate?which recognises handwritten pen-and-paper input on ordinary paper forms and gives immediate electronic feedback?for use in the microfinance records of self-help groups in rural West Bengal and Orissa. That project is among several others from the lab?such as ?wiki-basha?, a multilingual content creation tool that enables Wikipedia contributors to search and source content from other Wikipedia articles in over 30 languages, ?LiteGreen?, a project to save desktop energy by virtualising the user?s desktop computing environment and ?DebugAdvisor?, a bug search tool.
?Today it?s in a research lab stage. This is an example of a particular user interface for a particular community,? says Anandan, of the microfinance records project. ?It?s not clear how big that market is, but from research we understand that there is a scenario that this type of user interaction is what?s going to be necessary. Will that translate into a product? Perhaps, perhaps not.?
But Anandan is clear about the role his six-year-old research centre will play over the next few years, saying it has proved itself so far. ?We need to take leadership and we need to have things that have come out of this lab and have left some strong imprint behind in the technology world. So, for me the aspiration for this lab is to go to the next level where we have some very strong legacies.?