RankingS www.dqindia.com
•
VeRticalS
Vol XXX No 16 & 17 I August 31-September 15, 2012
•
SegmentS `100
The Business of Infotech
The $112 bn IndusTry Exports @ $76 bn • Domestic @ $36 bn
UPPERS Laptops Smartphones Tablets Laser MFDs DC Equipment Wireless Software IT Services Exports DOWNERS
SegmentS 176 pages including cover
Servers Desktops Inkjets Routers Modems Training Storage
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Contents August 31 - September 15, 2012
22 Overview
$112 bn, and Counting
Vol- III
Challenges in the global and local markets may have slowed it a bit, but could not keep Indian IT from achieving the $112 bn landmark
REGULARS REGULARS Edit...................................................10 Inbox.................................................12 Ganesha............................................14 Last Matter.....................................174 | August 31 - September 15, 2012
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cONTENTS
16 | Top view All The Numbers
109 | Managed Services Opening New Vistas
With enterprises looking for greater flexibility and cost advantage in their outsourcing engagements, the managed services model is gradually picking up. Though the overall slump in the market did have its impact on the growth momentum
Overview 32 | Computers and Smart Devices Polarized on Mobility
FY12 can be aptly called the year of mobility in India and in sync with the trend, the mobility segment grew while desktops plateaued out
34||Monitors: Automotive 42 Led: The King is Here With the market focus clearly shifting to LED, most vendors are revamping their strategies around that
46 | PRINTERS AND MFDs: Against all Odds
Hit by adverse circumstances, the printer market seems to have learnt to manage in uncertain times
58 | UPS: In the Limelight
With the power industry still plagued by the age-old problem of demand far exceeding supply, the UPS industry retained center-stage
64 | NETWORKING PRODUCTS: Not a Rosy Picture As the market saw consolidation over the last couple of years, the networking industry saw a marginal dip
72 | SERVERS: Win Some Lose Some
The x86 servers market demonstrates growth while the non-x86 UNIX market continues to shrink. It is a twohorse race with IBM and HP locking horns
114 | Semiconductor Design The Buoyancy Continues
Driven by the demand across industry segments, India stands to benefit both ways—as a consumer of semiconductors, and as design hub
119 | IT SERVICES EXPORTS: Blooming in Adversity India’s IT exports shine amidst clouds of crisis, currency fluctuations, and shrinking GDP
126 | DC Equipment: Working Well in Tandem Virtualization and server consolidation drove increased demand for structured cabling, racks, and enclosures
132 | Structured Cabling: Gain, with Pain! The market for structured cabling is tricky, with a lot of potential but enough roadblocks too
139 | Unified Communication Celebrating Collaboration
After large enterprises, even the mid-market segments and small enterprises are now embracing UC
143 | IT Distribution: Changing Dimensions
77 | Security: Defend and Protect
Still the hot seat for ambitious plans, IT distribution saw more successes than failures
86 | Storage: Taming the Flood
The Indian IT training industry saw some growth, thanks to demand for software certification programs. But pure-play training vendors didn’t have much luck
With security breaches becoming more sophisticated and the emergence of cloud, BYOD, and virtualization, the security market stands to gain from increased budgets
150 | IT Education & Training: Trapped, for Now
With growing data, enterprises need better ways to store, access, analyze and profit from it. All vendor moves over FY12 hence were polarized on these elements
154 | Projectors: Boardrooms to Classrooms
92 | Infrastructure and Systems Software Eventful Times
157 | Vertical Applications: An Uncertain Ride
While the dipping growth trajectory was a cause for concern in sub-segments like infrastructure management, systems software and middleware among others, there was a lot on the delivery side
96 | Enterprise Applications: Marching Ahead CRM and BI maintained the momentum they picked up last year, becoming the saviors. Having gained popularity with small players, cloud helped in faster adoption of enterprise apps
103 | Domestic Services Looking for that Sunshine
The domestic services market that had been growing consistently at over 20% was caught under the impact of the turbulent economic scenario. A slowdown in IT investments, project delays, and long decision-making cycles curtailed growth at 9% | August 31 - September 15, 2012
Technological advancements and demand from the education sector are driving the projectors market in India
The vertical apps market continued to grow in FY12 despite the tough conditions, as it moved towards gaining a competitive edge through innovative paltforms
162 | IP Surveillance: War Against Terror The worsening terror environment calls for continuous monitoring and complex video analytics—opening up the market for IP video surveillance
166 | Smart Metering: Energizing India India’s power distribution sector should subscribe to a ‘consumer friendly’ route including some smart grid initiatives for an appreciable growth
169 | BPO: Slow Growth, But Maturing
The market dynamics for global BPOs is undergoing tremendous change. Service providers are aligning themselves to integrate more technology to be able to deliver better business value beyond mere cost savings
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Edit
Vol XXX No 16 & 17 Aug 31 - Sept 15, 2012
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www.dqindia.com 10 | August 31 - September 15, 2012
Ibrahim Ahmad
Bomb
ibrahima@cybermedia.co.in
“W
hat is the most essential ingredient for the Indian tech success story to go on and on,” I had asked the CEO of one of India’s largest software services companies about a year back. I had expected him to mention things like tax incentives, tackling policy paralysis, foreign investments, and so on. But I was pleasantly surprised. “Education, education, and education. This is the single most important thing we should all focus on. Many countries are building their education system”. He then explained that you produce great minds and the rest of the stuff will just fall in place. You will have the best of policies and you will be flooded with investments. I am sure he must be a sad man today. The QS World University Rankings for 2012 reveals that none of our universities and institutes of excellence are amongst the top 200 in the world. IIT Bombay which was ranked 187 in 2010, dropped to 225 last year, and this has slid further to the 227th position. The saddest part is that in the global survey, India is the only BRIC country without any university in the top 200 list. The top 10 institutes are Massachusetts Institute of Technology, University of Cambridge, Harvard University, University College London (UCL), University of Oxford, Imperial College London, Yale University, University of Chicago, Princeton University, and California Institute of Technology. These institutions have more or less managed to be amongst the top for years now. From Asia, those in ‘the top 50 include University of Hong Kong, National University of Singapore, University of Tokyo, Kyoto University, Seoul National University, Chinese University of Hong Kong, China’s Peking University, Singapore’s Nanyang Technological University, China’s Tsinghua University and Japan’s Osaka University. China has 7 institutes in the top 200 list. Our IIT Delhi is at 212, and IIT Kanpur at 278. The need for world class educational institutes is not for creating software engineers who will bring us Dollars and Euros. We need educated and skilled people to also create opportunities in India and grow demand here. We need education so that more technology products and services are created and sold in India. Education is very critical for the growth of not just the IT industry, but for the national GDP as well. It is therefore the duty of all of us to do something about it. There is a lot desired from the IT industry, which only wants to get good engineers and sales managers, but has hardly contributed in strengthening education systems in India. The government, and specially our minister Kapil Sibal, should spend time on improving the deteriorating condition of colleges and schools, rather than on defending the 2G and coal scams. If we believe that we can get 8-9% growth rate without great educational systems, we are fooling ourselves. It’s easy to get upset when QS and PISA rankings (survey for schools done sometime back) throw open the real state of educational institutes in India. But that is a fact, and the sooner we accept it the earlier we might be able to work on it. I agree with those who believe that our poor education system could be the biggest threat to our economy in the long run.
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dataquest (not affiliated with Dataquest Inc., a division of Gartner Group, USA), is printed and published by Pradeep Gupta, on behalf of Cyber Media (India) Ltd, printed at M/s Karan Printers, F 29/2, Phase II, Okhla Industrial Area, New Delhi, published at D-74, Panchsheel Enclave, New Delhi 110017, India. Editor Ibrahim Ahmad. Distributors in India by IBH Books & Magazines Dist. Pvt. Ltd, Mumbai. Subscription (Inland): `1200 (24 issues), `2400 (48 issues), `3600 (72 issues). Subscription (Foreign): US $145 (SAARC Countries), US $75 (Rest of the world) By Airmail. (For subscription queries contact our Reader Service Executive: rsedqindia@cybermedia.co.in) Dataquest does not claim any responsibility to return unsolicited articles or photographs unless accompanied by adequate returnpostage. All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publishers.
12 | August 31-September15, 2012
August 15, 2012
Vol XXX No 16&17August31-September15, 2012
significant role in the evolution of the automotive industry from here than it has traditionally played. I want to add that the automotive industry contributes almost 30% of the total revenue of the Indian engineering services industry. In FY12, it added an estimated $1.5 bn. Thanks for the interesting article. It is a very detailed, well presented, and well researched article.
Priyanka Vohra, Gurgaon
A Lot of Potential
Best Foot Forward
I found the article ‘Best Foot Forward’ (Dataquest, August 15, 2012) extremely interesting. I also agree with the author that the adoption of well-structured IT governance models will assist banks in enabling better alignment between IT and business. All this will enable better control, security, and enhance conformity to internationally accepted best practices. Good job!
Namita Das, Chennai
In Search of Frugal-IT?
I came across the issue dedicated to growth verticals (Dataquest, August 15, 2012). Congratulations to the whole DQ team for the edition. The article ‘In Search of Frugal-IT?’ is well-written and informative. Undoubtedly, IT will play a far more
Corrigendum This is with reference to the Sapient profile in the DQ Top20 Vol I (Dataquest, July 31, 2012). Rajdeep Endow was the company’s MD of Sapient India at the time of writing and not Karandeep Singh. n This is with reference to the Mindteck profile in the DQ Top20 Vol I (Dataquest, July 31, 2012). The CEO and managing director of the company at the time of writing was Wayne Berkowitz and not Pankaj Agarwal. n
Error is regretted—Ed
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This is with reference to your article ‘A Lot of Potential’ (Dataquest, August 15, 2012). Despite all the bad news surrounding the telecom industry in India, the telecom services industry managed to grow 7% in FY12. The facts put together in the story are very interesting and informative. Another interesting factor highlighted in the article is the increasing consumerization of IT in enterprises as well as greater penetration of newer consumer devices, the industry needs to quickly innovate, looking beyond building fatter and fatter pipes, and becoming a gatekeeper to a collection or share of anyone who innovates.
Swati Gupta, New Delhi
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ganesha
FY13 An Olympic Challenge! DR GANESH NATARAJAN
Drawing a parallel to the brave performance of Mary Kom in the Olympics, there are enough firms in the Indian IT industry who believe that a high double-digit growth can and will be achieved through active pursuit of new opportunities, and a strong focus on innovation
The author is CEO of Zensar Technologies and chairs the National Knowledge Committee of the CII. He can be reached at maildqindia@cybermedia.co.in
T
he distraction provided by the Olympics in July and August proved to be a welcome opportunity to take our minds off the darkening clouds in the global economy. More importantly, they gave us a number of important lessons in succeeding despite all the odds. It is interesting to note the differences in motivation amongst various participants and the resulting outcomes that each sport enjoyed! To draw a parallel to some of the companies in our sector cannot be difficult if we do a little analysis. The most glaring failure was the tennis squad. The old firm of Leander Mahesh and Sania after creating all the TV headlines with their public spats flattered to deceive, leading to the oftrepeated pleas that they should now make way for younger legs in the Davis Cup and retire to tennis commentary a lá Vijay Amritraj. To a lesser extent the much vaunted archery and shooting squads possibly fell prey to the unnecessary hype and hoopla that surrounded Deepika Kumari and Abhinav Bindra—the first a nervous rookie, and the other a wealthy veteran and gold medal holder who had to suffer the ignominy of finishing so far behind that he was denied a chance to watch the finals of his own event! And of the ever-warring hockey squad, the less said the better! On the contrary, the wrestling squad showed the grit and determination needed to capitalize on chances and make it to the top (well almost!). Add the valiant Geeta Phogat to the mix of Suresh and Yogeshwar and one can have great hopes for this low-cost sport with the ongoing support of worthy foundations and of course, the Haryana 14 | August 31 - September 15, 2012
Like some firms in our industry one hopes that settling for smaller wins will not compromise the gold pursuit that Saina Nehwal is surely capable of! government. The great achievement in badminton of Kashyap and Saina Nehwal was a little soured by the excessive celebration of a bronze won by default. Like some firms in our industry one hopes that settling for smaller wins will not compromise the gold pursuit that the lady is surely capable of! Mary Kom is a star and role model for every aspiring youngster from a tier-2 or -3 (in her case, probably tier-4) part of the country. Having met her and seen her at a presentation made by the Olympic Gold Quest team led by Geet Sethi to the CII National Council, there was no doubting the lady’s courage. Her stellar performances and public apology at not going to the next level has won the collective hearts of all Indians. And there lies the moral of the story for all of us. The times are tough and the weak economic outlook for Europe and a possible slackening in the US, aggravated by slowdown in spending in India, could well support the Cassandra view of single-digit growth for the industry this year. But there are enough firms—TCS, Cognizant, Zensar, Mindtree, and Infotech among them, who believe that a high double-digit growth can and will be achieved through active pursuit of new opportunities and a strong focus on innovation. We will prevail and India will retain the ‘gold’ status through this decade!
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TOP VIEW
Top View 2012 Domestic Products/Services
FY 2010-11
Categories
In `crore
Servers
FY 2011-12
In $mn
In `crore
Growth(%)
In $mn
In `
In $
2,709
602
2,817
587
3.99
-2.51
Desktops
13,341
2,965
13,423
2,796
0.61
-5.67
Laptops
13,101
2,911
15,137
3,154
15.54
8.32
Total PCs
26,442
5,876
28,560
5,950
8.01
1.26
29,151
6,478
31,377
6,537
7.64
0.91
8,796
1,955
14,513
3,024
65.00
54.68
-
-
1,962
409
-
-
-
-
16,475
3432
-
-
Inkjet Single function
100
22
80
17
-20.00
-25.00
Laser Printers Single-function
550
122
620
129
12.73
5.68
Dot Matrix Printers
251
56
177
37
-29.48
-33.89
Inkjet MFDs
242
54
200
42
-17.36
-22.52
Laser MFDs
509
113
571
119
12.18
5.17
PoS Printers
250
56
305
64
22.00
14.38
Large Format Printers
131
29
160
33
22.14
14.50
Total Printers/MFDs
2,033
452
2,113
440
3.94
-2.56
Monitors (standalone sales only)
2,624
583
2,710
565
3.28
-3.18
Storage Peripherals (including digicam)
4,265
948
5,757
1,199
34.98
26.55
Consumables
4,339
964
4,989
1,039
14.98
7.79
524
116
629
131
20.04
12.54
3,278
728
3,671
765
11.99
4.99
17,063
3,792
19,869
4,139
16.44
9.17
Routers
2,966
659
2,788
581
-6.00
-11.88
Switches
4,421
982
4,686
976
5.99
-0.63
Modems
378
84
314
65
-16.93
-22.12
WLANs
1,079
240
1,316
274
21.96
14.34
Structured Cabling
1,345
299
1,614
336
20.00
12.50
10,189
2,264
10,718
2,233
5.19
-1.38
PCs
Total Systems Devices
Smartphones Tablets
Total Devices Printers/MFDs
Enclosures & Racks UPS Total Peripherals Networking Products
Total Networking Products 16 | August 31 - September 15, 2012
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TOP VIEW
FY 2010-11
FY 2011-12
Products/Services
Categories
Storage
Total Storage
1,978
440
1,584
ATMs, Unified Communications, Biometrics, Projectors, and others
ATMs
1,720
382
Unified Communications
1,829
Biometrics Projectors
In `crore
Others Total Hardware
In $mn
In `crore
Growth(%)
In $mn
In `
In $
330
-19.92
-24.92
1,892
394
10.00
3.13
406
3,647
760
99.40
86.94
151
34
210
44
39.07
30.38
-
0
576
120
-
-
15,867
3,526
3,637
758
-77.08
-78.51
70,877
15,750
89,985
18,747
26.96
19.02
Systems Software
System Software
2,320
516
2,695
561
16.16
8.90
Enterprise Applications
ERP
1,625
361
1,780
371
9.54
2.69
SCM
717
159
863
180
20.36
12.84
CRM
956
212
1,250
260
30.75
22.58
1,147
255
1,550
323
35.14
26.69
333
74
250
52
-24.92
-29.62
Total
4,778
1,062
5,693
1,186
19.15
11.70
RDBMS
1,629
362
1,970
410
20.93
13.37
Middleware
1,421
316
1,507
314
6.05
-0.58
Infrastructure Management
1,365
303
1,462
305
7.11
0.41
Development Tools
1,494
332
1,644
343
10.04
3.16
800
178
840
175
5.00
-1.56
Total
6,709
1,491
7,423
1,546
10.64
3.73
Core Banking
1,084
241
1,302
271
20.11
12.60
PLM
684
152
740
154
8.19
1.43
Graphics Software
655
146
702
146
7.18
0.48
Telecom Software
1,322
294
1,490
310
12.71
5.66
134
30
200
42
49.25
39.93
3,879
862
4,434
924
14.31
7.16
Network security
942
209
1,046
218
11.04
4.10
Content Security
630
140
720
150
14.29
7.14
1,572
349
1,766
368
12.34
5.32
19,258
4,280
22,011
4,586
14.30
7.15
BI Others
Infrastructure Software
Productivity Suite
Vertical Applications
Others Total Security Products
Total security Total Software 18 | August 31 - September 15, 2012
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TOP VIEW
Products/Services
Categories
FY 2010-11 In `crore
FY 2011-12
In $mn
In `crore
Growth(%)
In $mn
In `
In $
IT Services (domestic)
39,325
8,739
42,864
8,930
9.00
2.19
BPO services (domestic)
12,876
2,861
13,597
2,833
5.60
-1.00
Gaming & Entertainment Services
3,176
706
3,303
688
4.00
-2.50
Training
1,640
364
1,476
308
-10.00
-15.63
0
879
183
Other Training (certification, IT e-learning, etc) Total Services
57,017
12,670
62,119
12,941
8.95
2.14
Total Domestic
147,152
32,700
174,115
36,274
18.32
10.93
EXPORTS FY 2010-11
FY 2011-12
Growth(%)
Products/ Services
Categories
IT Services
Application Development & Maintenance
87,642
19,476
108,676
22,641
24.00
16.25
Infrastructure Services
27,602
6,134
43,436
9,049
57.37
47.53
IT Consulting & Package Implementation
16,783
3,730
22,397
4,666
33.45
25.11
8,432
1,874
12,596
2,624
49.38
40.05
Engineering Services
18,528
4,117
26,686
5,560
44.03
35.03
Others
54,773
12,172
63,200
13,167
15.39
8.17
Total
213760
47,502
276,991
57,706
29.58
21.48
Semiconductor Design
16,201
3,600
19,117
3,983
18.00
10.62
BPO Services
58,735
13,052
62,935
13,111
7.15
0.45
736
164
828
173
12.50
5.47
289,432
64,318
359,871
74,973
24.34
16.57
1,712
380
2,216
462
29.44
21.35
Total Export
291,144
64,699
362,087
75,435
24.37
16.59
Total IT Industry
438,296
97,399
536,202
111,709
22.33
14.69
Testing
Training Total Services Hardware Exports
20 | August 31 - September 15, 2012
In `crore
In $mn
visit www.dqindia.com
In `crore
In $mn
In `crore
In $
DATAQUEST | A CyberMedia Publication
Overview
$112 bn, and Counting Challenges in the global and local markets may have slowed it a bit, but could not keep Indian IT from achieving the $112 bn landmark Onkar Sharma (with inputs from Team DQ) maildqindia@cybermedia.co.in
22 | August 31 - September 15, 2012
visit www.dqindia.com
DATAQUEST | A CyberMedia Publication
Overview
Size does Matter
All said and done, the fact is that Indian IT industry leapt past the $100 bn mark in FY12. Though the landmark has come at a time when the business sentiment is bleak, it means a lot for the economic progress of the country. It reflects how Indian IT industry has emerged as a mainstream contributor to India’s GDP. Also it must be noted and acknowledged that the size of the industry has moved up significantly. And it surely 24 | August 31 - September 15, 2012
Growth Overview Industry
FY12
FY11
GROWTH %
In `crore
In $bn
In `crore
In $bn
In `
In $
Exports
362,087
36.3
291,144
32.7
24.37
16.59
Domestic
174,115
75.4
147,152
64.7
18.32
10.93
Total
536,202
111.7
438,296
97.4
22.34
14.69
Indian IT Crosses the $100 bn Mark 120
$ bn 112
100 $ bn 97 80
60
Source: DQ Estimates
Industry size estimate
H
ardly had India’s IT industry shown signs of resurrection in FY11, that the Eurozone disrupted investor sentiments and affected customer-behavior adversely in FY12. A sense of disbelief which seemed to have been instilled in the psyche of India’s IT fraternity, though, painted FY12 as a year of growth, but with a hazy road ahead. This time around the industry seems to have realized that the road ahead will not be as rosy as it was during 2003 to 2008 when exports grew at a phenomenal 26% CAGR. What built further pressure is of course the intense competition within the sector, which impacted growth in billing rates and revenues. This was apparent in the latter part of FY12, when quarterly results of leading players fell short of expectations. For the first time in 47 quarters, Infosys, considered the bellwether of the sector, did not meet its revenue growth guidance. Cognizant revised its growth guidance downward to 20% from 23% while Wipro cringed away from giving a full-year guidance. However, TCS was the only company that seemed upbeat in its outlook banking on a bouquet of clients.
$ bn 79
FY10
FY11
FY12
puts the country’s IT in a lead spot compared to its global counterparts. The outlook might be gloomy right now but it does not disappoint the long-term interests of the industry and its peers. It is apparent from IT exports, which continued its steadfast movement in the positive direction. Though it is a fact that the domestic market has not grown to a size where it could weigh on exports, it is nearing a phase where it needs to decide its further course. It has to look beyond the culture and tradition to set trends and compete with the global majors. Thus, the domestic market might be a cause for concern but it has reached a transitional phase that calls for innovation. The domestic market growth registered a sharp decline from 23% in FY11 to a mere 15% this fiscal. Certainly an indicator of the country’s vulnerable economic situation visit www.dqindia.com
seeing that the spend on IT is by all kinds of companies spread across diverse verticals. However looking at the overall global scenario, these figures also show the endurance of the Indian IT industry and its ability to hold on in rough times despite a troubled global scene. Furthermore, the market does not appear to be stuck in a loop and signs of improvement are already visible. Most market research firms have indicated this, though with reduced growth figures. For example, Crisil Research sees Indian IT services exports growing at 12-14% in 2012-13 in dollar terms. Obviously it is still lower than the previous year, but the good part is that it will grow in double-digits. Another important point to observe is that after having reached a mammoth size of $100 bn the industry cannot continue to multiply at the same rate as before. It has to go through a period of rationalization and maturing, and growth rates will gradually stabilize at a reasonable level. This is a juncture where the industry needs to reflect upon its current standing and decide upon a future course of action. The IT companies will also have to develop strategies to deal with some of the global challenges that have recently emerged. Some of the challenges that stare in the face are of course related to the global markets of
DATAQUEST | A CyberMedia Publication
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breadnbutter /panasonic/115/sep.12
Overview
the US and Europe which are fraught with internal challenges right now. In the US it is election time, so the anti-outsourcing rhetoric has again taken steam, keeping India IT extra-cautious. On top of that visa norms have been tightened and local hiring by Indian IT companies in the US has gone up. All this has naturally slowed the offshore services. Indian IT companies generate close to 20% of their revenues from the European market, primarily the UK, hence any improvement in business sentiments in these markets will surely usher a new era of growth for the Indian IT services companies.
26 | August 31 - September 15, 2012
Industry Segments: An Overview
Indian IT industry comprises several segments and sub-segments wherein the performance of key vendors shapes up the market mood. Of course the enterprise customers also play a huge role in defining the industry’s growth with their preference for certain products and services. Shaping the industry were a number of trends like cloud, big data, enterprise mobility, et al. Let’s take a look at how some of the key industry segments fared in FY12, a sneak preview of the pages that follow with more in-depth and detailed analyses of each of these areas. Computers and Smart Devices: The PC market (desktops and notebooks) as per Dataquest estimates saw an overall growth of 8% to `28,560 crore. The demand for desktops remained sluggish with growth hovering at single digit. With the market for conventional desktops going through a challenging phase, the vendors focused their energies on desktop form factors like the All-in-ones (AIO) which connected well with consumers. Meanwhile vendors like HP and Lenovo launched AIOs specifically for the SMB markets as well, indicating that enterprises too adopted AIOs. Storage: The storage market rode on key trends like big data and cloud to analytics, and demonstrated a growth of 14%. One of the key highlights of the year was the industry transitioning to a unified storage market rather than selling NAS or SAN separately. Unified storage devices married both NAS and SAN and offered the best of both worlds and a visit www.dqindia.com
high degree of storage management agility and scalability. EMC and IBM fought for greater market share in a market that is fast seeing a bigger play from other vendors like Dell and HDS. HP on the other hand had chalked out aggressive go-to market strategy on storage. FY13 will see the overall storage segment growing at a brisk pace with all vendors deepening their mandates here in India. Semiconductor Design: Driven by the consumer boom, India as a market for semiconductor design and a captive base for design jobs is getting better by the day. Industry reports suggest that the India semiconductor market is anticipated to grow at a CAGR of around 22% during 2012-2015. According to Dataquest estimates semiconductor as a segment saw overall growth of 25%. As per the ISA-E&Y Report of 2011, the VLSI Design industry is poised to grow at a CAGR of 17.3% from a base of around $827 mn in 2009 to around $1.3 bn in 2012. Around 35% of the chips being designed in India are for consumer electronics products, around 31% for telecom related products, and slightly more than 15% for wireless products. Servers: It is clearly a mixed bag. Overall for both x86 and non-x86 the market managed to garner just about 4% or `2,817 crore. The UNIX market saw a steep fall challenged by slow uptake from large enterprises and commodity x86 servers eating into the traditional UNIX terrorities. Due to their form factor and ability to offer more computing density, blade servers grew well over FY12 and will make up for bulk of the x86 shipments moving forward, eating into the conventional server forms like
DATAQUEST | A CyberMedia Publication
Overview
tower and rack-mounted. As we look ahead at FY13, servers are expected to maintain the same flat growth. IT Distribution: Natural calamities (Thailand floods) and rupee devaluation weighed heavy on the IT distribution segment, which received a lease of life from the SMBs and SMEs. Mobility and non-IT businesses seem to attract a lot of attention from tier-1 and -2 distributors and even sub-distributors were trying to cash in on it. The segment was witness to the trend of offering a complete package of solutions to partners. FY12 also saw regional expansion and national proliferation. Domestic Services: A slowdown in IT investments, project delays and long decision-making cycles pulled down the domestic services revenues. After growing steadily at more than 20% for several months, the industry came sliding down to a dismal 9% in FY12. Overall market sentiment remained gloomy as most large enterprises cut down their expenditure on new tech initiatives. Service providers expanded their focus beyond traditional networking and co-location services, and growth came from infrastructure and cloud-based services. The market is expected to witness consolidation in the near future as some tier-2 services providers will merge with or be acquired by large vendors. The government and SMB sectors are also expected to drive growth in the coming months. Managed Services: As enterprises look for greater flexibility and cost advantage in their outsourcing engagements, the managed services model is gradually picking up. According to Dataquest estimates, the overall managed services market in India currently stands at `10,755 crore DATAQUEST | A CyberMedia Publication
According to Dataquest estimates, the overall managed services market in India currently stands at `10,755 crore and is growing at about 11%. and is growing at about 11%. With enterprises showing greater preference for the on-demand model, managed services has now become an integral part of every IT service provider’s portfolio. However, there are many concerns related to security and delivery processes that will need to be addressed. While the market is set to take off, service providers will need to enhance their capabilities and invest in trained resources that can efficiently manage the complex requirements of multiple clients. IT Services Exports: Despite the continuing sluggishness of the global economy, IT exports from India have been growing with vendors tapping more geographical areas, driving innovations in their products and services, and balancing their service offerings. IT Services exports have grown steadily from 14% in FY10 to 22% in FY11, to almost 27% this fiscal. This certainly demonstrates the resilience of the Indian IT industry and its ability to hold its own despite a turbulent world market. The industry had to deal with several challenges ranging from the ongoing global slump, Euro zone crisis, a rapidly fluctuating currency and the country’s shrinking GDP. The coming months may see growth coming from the emerging markets and new tech frontiers visit www.dqindia.com
including cloud computing and virtualization, and the convergence of mobility and web. Printers: India remained an exception to the general rule, again, as its PC adoption stood at 15%, which opened doors for the printer market also. This offered a ray of hope along with the boost offered by the government, BFSI, SOHO, and education segments. Advancements in technology ensured that vendors put their best foot forward. With players taking note of the importance of MPS, companies are moving towards offering end-to-end solutions. Monitors: The PC monitor market underwent a difficult time post the Thai floods. The combined bundled and standalone PC market in FY12 accounted for `5,130 crore with a nominal 3.6% growth against the 12% growth in FY11. Certainly the overall business spend on IT took a sharp plunge given the market conditions in the US and Europe. Out of the `5,130 crore, the bundled monitor market accounts for `2,420 crore with a growth of 4%. The standalone market was the worst performer with a 3.3% growth at `2,710. The dearth of hard disks pushed the assembled PC prices up, directly impacting the sale of standalone monitors. Vendors like LG, Samsung, and others were seen struggling to find takers all through the year. UPS: FY12 was witness to some major acquisitions (Numeric Power Systems by Legrand; Hi-Rel Electronics by Hitachi; Luminous by APC by Schneider Electric) which brought about a lot of consolidation in the marketplace (Emerson acquired DB Chloride; Eaton’s making aggressive moves). With the presence of local, regional and MNCs, the marketplace is expected to get highly competitive. August 31 - September 15, 2012 | 27
Overview
Enterprise Applications: This segment was directly impacted by the slow growth of the industry. But the performance of major vendors like SAP and Oracle was way above industry expectations. However the trend was more with cloud which opened up avenues like mid-market for vendors. While ERP continues to be the biggest solution, it was CRM and BI that ultimately saved the year, especially when global factors hit the market adversely, forcing several conglomerates to delay their IT adoption/upgradation plans. All in all, the enterprise apps market grew by 14%. Infrastructure and Systems Software: The segment witnessed healthy demand for rotational database management systems (RDBMS) as companies were seen spending on managing and utilizing their data. Middleware was perhaps the worst performer as the big customers showed minimal interest. The development tools market though saw an uptrend. Microsoft completed the development of over 10,000 applications on its Azure platform. Equally, IBM and HP had their share in the market. The infrastructure market accounted for `10,118 crore in FY12 up from `9,029 crore in FY11. IT Education & Training: Revenues for FY12 stood at `2,355 crore, with the market remaining almost flat. Pure-play companies witnessed marginal growth while the software certification market was quite impressive as companies are constantly leveraging advanced technologies like smartphones, games, labs, etc, to impart better knowledge. The demand for specialized courses is likely to increase in future. And the focus should 28 | August 31 - September 15, 2012
Highlights
n Indian IT industry leapt past the $112 bn mark in FY12 n At a time when the business sentiment is bleak, Indian IT industry has emerged as a mainstream contributor to India’s GDP n India remained an exception to the general rule, again, as its PC adoption stood at 15%, which opens doors for the printer market also
now move from students as its immediate customer to the IT professionals who are looking for specialized certification programs and short-term technology-enabled courses. Vertical Applications: The overall market grew 13%, which was below expectations. The total market was at `4,239 crore, up from `3,745 crore the previous year. While the core banking solutions market was upbeat, PLM market fell into the global slowdown trap. Manufacturing proved to be a biggest dampener. However 3D was a trend that took rounds in the PLM industry. The banking sector continued to be part of the financial inclusion drive and opened its arms to core banking apps. A number of RRBs and cooperative banks were seen lined up to ride the core banking bandwagon. Solution providers like TCS, Infosys, Oracle, etc continued to win contracts from Indian as well as overseas banks venturing into India. Unified Communications: Tremendous growth is seen in the mid-market and smaller enterprise segments, which have increasingly invested in UC services over the last year. Affordability and the huge benefits attacted Indian SMBs to adopt. There was big adoption of mobility and video, a trend that will continue to grow in future visit www.dqindia.com
also. The other area is IM which has grown tremendously from 2010-11 and is expected to grow in the coming fiscal also. Since the network and IP infrastructure of the country has already begun to improve, IP telephony has also shown tremendous growth over the last year. Apart from this, conferencing and collaboration—audio, web, and video—has always been a lucrative area. Networking Products: In FY12 enterprises began to consolidate their IT requirements into a single pool with the flexibility to scale up. Many state governments, PSUs, and banks rolled out IP networks while many of them have already laid down the roadmap for stronger network rollouts in the coming years. New deployments coupled with productivity enhancement initiatives in the business enterprise segment, strong consumer demand for clients, drove enterprises towards setting up a strong and reliable network infrastructure. Wireless picked up tremendously in the last couple of years and thus networking products saw huge influence of this technology. So be it switch, router, modem or other networking products, the demand was to grab a wireless product rather than something that can only be connected through physical mediums. DC Equipment: This market showed promising growth last year with structured cabling and racks and enclosures contributing equally. Consolidation, virtualization, information explosion, energy demand, and cloud computing drove racks and enclosure, while the key drivers for DC equipment were the finance sector and government projects. n
DATAQUEST | A CyberMedia Publication
Computers and Smart Devices
Polarized on Mobility FY12 can be aptly called the year of mobility in India and in sync with the trend, the mobility segment grew while desktops plateaued out Shrikanth G shrikanthg@cybermedia.co.in
F
Y12 brought in some cheer and heartburn as well. The vendors cheered with the growing adoption of notebooks, smartphones, and tablets and heartburn as desktop market growth remained in low single digits and many found the going getting tough. Clearly the term—consumer is king—manifested well and defined the market in FY12. The consumer business remained buoyant while the enterprise had its share of ups and downs and some quarters challenged the vendors to the core. 32 | August 31 - September 15, 2012
visit www.dqindia.com
DATAQUEST | A CyberMedia Publication
Computers and Smart Devices
34 | August 31 - September 15, 2012
Indian PC Market (In `crore, Growth%)
8%
22%
21,601
26,442
28,560
FY10
FY11
FY12
Total Units: 11mn ( Desktops and Notebooks) Desktop growth slowed down as vendors focused on upping their share on AIO market. Notebook market innovated on form factor and oriented towards thin and light and to an extent, Ultrabooks
one saw from these verticals over the year. If you look at vendor strategies, clearly they invested in transitioning to an AIO based
desktop strategy in addition to conventional ones. Take the case of Lenovo, which during OND 2011 launched two powerful AIOs—The ThinkCentre Edge 71z and the ThinkCentre Edge 91z. Company sources say that the new range has been designed specifically keeping in mind the entrepreneurs and small businesses, who can take advantage of PC hardware and software innovations like faster processors, stability and security, that are most likely to make them more competitive. With a good line-up of products for the SMB segment, Lenovo is evolving as a preferred partner in this category with both consumers as well as small businesses. Lenovo also says that
PC Market Composition
Analyzing PC Vendor Market Share (Units %)
(Revenues %)
Dell 16%
Notebooks 53%
Others 41%
Desktops 47%
HP 13.2% HCL 5%
Total Revenues: `28,560 crore (Desktops and Notebooks)
visit www.dqindia.com
Lenovo 13.3%
Acer 12%
Source: DQ Estimates
The growth was not at all impressive at low-single digits, even if vendors ventilated their angst by saying “we could have done better” but the more worrying trend for them was the buying sentiment. Many enterprises went slow on new PC purchase decisions. That said, many vendors harped on how best to innovate the desktops. In line with that a fundamental form factor shift happened in this space and as a reflection of this the bulk of consumer desktop buying is clearly polarized on All-in-Ones (AIOs) and one saw enterprise adoption as well. These integrated machines are cross overs and offered a unique computing experience. In terms of conventional desktops, the traditional buying segments like IT/ITeS and BFSI, education were the ones that are still powering the volumes. Even though the demand was not like the mid-2005 times, but there is a certain amount of stable buying
Over FY12, in unit terms the overall desktop shipments stood at 5 mn units and notebooks managed to muster about 6 mn units The biggest shift in the smartphone as a segment one saw over FY12 was the 4.2-inch large display becoming the norm with the exception of the iPhone With just about half a million units for FY12, the Tablet market is taking nimble steps in India
Source: DQ Estimates
Desktops Down—Blame it on Mobility
Highlights
Source: DQ Estimates
Many started on a good note and faced turbulent weather as the year progressed. Even big vendors with huge marketing muscle like HP faced rough weather and were caught in the recessionary headwinds at the later part of the year. So FY12 was all about go-tomarket and grabbing whatever the opportunity and market share possible. In a way that sums up the overall mood of the PC industry which also saw pathbreaking form factor innovations. According to Dataquest estimates, over FY12, in unit terms the overall desktop shipments stood at 5 mn units and notebooks managed to muster about 6 mn units.
Total Units : 11 mn ( Desktops and Notebooks)
DATAQUEST | A CyberMedia Publication
Computers and Smart Devices
Notebooks: The Happening Space
It has been one of the most innovative years for the notebooks and it was during FY12, Intel pioneered a new brand of notebooks called Ultrabook and laid out some fundamental design philosophies to guide the Ultrabook form factors. The Ultrabook as per Intel’s vision is an ultra-sleek notebook weighing at sub 1.5 kg and yet able to provide mainstream computing experience with extended battery life of 5 plus hours. Acer was the first of the vendors to jump into the Ultrabook bandwagon and followed by Asus and all other vendors. But in an Indian context, Ultrabooks are yet very nascent as vendors are still struggling to arrive at a price parity. Yet again, Ultrabook is benchmarked against DATAQUEST | A CyberMedia Publication
Indian Smartphone Market (In `crore, Growth%)
65%
97% 14,513 -23% 8,796 4,465 FY10
FY11
Source: DQ Estimates
it enjoys a leadership position in the AIO segment with market share close to 45%. Meanwhile players like HP also upped their ante on the AIO space with leading products. It brought to market products like the HP Compaq Pro 4300 AIO for businesses with some innovative technologies on board. As we look at other vendors like Acer which saw good traction for verticals like education, BFSI and government. Companies like Dell also followed the innovation route on desktops and if we look at players like HCL, it had a tough year and it lost overall market share. HCL is a major desktop player in the country and clearly companies which had a good product mix of desktop and notebooks were able to successful cushion and take the impact of the slowdown in the desktop space.
FY12
With customer options expanding, the smartphone market saw good growth with Samsung, RIM, Nokia, and HTC took the top slots. Market also saw the emergence of low-cost smartphones from a whole lot of smaller vendors
Apple’s Mac Book Air and hence its performance pales out as Apple Air many believe is a one-of-its-kind device and has no head-on competition for that product right now. So this comparison has led to Ultrabook as a low-cost Apple Mac Book Air, which it is not, as some of the Ultrabooks are more expensive and less functional. Meanwhile as we look at mainstream notebooks the addressable market also expanded over FY12 with Tamil Nadu government announcing the free laptop scheme for students had clearly benefited players like Lenovo visit www.dqindia.com
which considerable expanded its market share by clinching a 3.65 lakh deal with the Tamilnadu government for its free laptop. Interestingly, Lenovo is said to have emerged as the lowest bidder and had offered at the Notebooks at sub `14K, much below the average selling price. However all vendors are gunning for the overall free laptop scheme of Tamilnadu government which envisages to give a total of 9.6 lakh laptops. So by end of FY13, this will considerably expand the India notebook market by about close to million additional units. One of the bigger success stories last year was Dell, it also saw its significant spikes in its market share with AMJ and JAS 11 seeing great traction for its mobile offerings. In May last year Dell added the Vostro 3000 series, to its Vostro range of laptops followed by Vostro V131 in August. Dell also aggressively focused on tier-2 cities to capture mid-market clients for hardware, software and IT services. In all the Notebook space over FY12 was a tightly fought game between HP, Dell, Acer, and Lenovo. The second-in-line vendors beyond the Top 5 also August 31 - September 15, 2012 | 35
Computers and Smart Devices
made their say and the vendors to look out here is Toshiba, Sony, and Samsung. These vendors demonstrated big gains over the last year but recently Fujitsu is also making aggressive forays in the Indian market with its offerings. Samsung, of late, had launched some very innovative thin and light notebooks that are fast catching up. Interestingly HCL is the only Indian company in the fray with comparable market share and it really needs to counter this big MNC aggression during FY13.
The market has a plethora of low cost sub `10K tablets but it still has potential to grow. One is waiting for the big push...
Smartphones: What Goes up Stays up for Now
38 | August 31 - September 15, 2012
Smartphones: Top Vendors FY12 Market Share (Units %)
Others 20% Samsung 38% RIM 14%
Nokia 28%
Source: DQ Estimates
The smartphones market is growing at high double digits both in terms of value and units. But it saw vendor realignment over last 6 quarters and clearly polarized towards Android in India. As per estimates a total of 11.5 mn smartphones were shipped in India during FY12 with Samsung emerging as a leader in the last two quarters. According to CyberMedia Research Mobile Handsets Tracker 2011, smartphones contributed to 6.2%, multi-SIM handsets over 57% of total shipments in CY11. The report further states that the overall India mobile handsets market recorded sales (unit shipments) of 183 mn units in CY11. In the overall India mobile handsets market, Nokia retained leadership position with 31% share, followed by Samsung at #2 with 15% and Micromax at #3 with 5%, in terms of sales (unit shipments) during CY11. The biggest shift in the smartphone as a segment one saw over FY12 was the 4.2-inch large display becoming the norm with the exception of the
Total Units: 11.5 mn Clearly Samsung had a spectacular year backed by a huge smartphone product folio. Nokia in the last 2 quarters had lost signficant share and until it populates the market with newer models, it will further lose out to competition
iPhone. Players like Samsung and HTC clearly thrived on the large-screen HD display. The smartphone market is divided into 4 worlds. The enterprise world in India still remained loyal to RIM’s BlackBerry while the mass market adopted Android in a big way. The Apple world is just about growing in India and Windows mass market adoption visit www.dqindia.com
is yet to be seen. The iPhone still remains as an object of exclusivity in India and the higher price is a big deterrent for iPhones here in India. Vendors like RIM adopted a two-pronged strategy—enterprise and consumer. BlackBerry predominantly an enterprise centric vendor up till now made aggressive forays on the consumer side over FY12 and made all attempts to create a balance through a well-spread out product portfolio. On the enterprise side BlackBerry went aggressive on trends like BYOD and the entire wave of consumerization of IT according to RIM sources, this trend augurs well for its growth here in India as its phones are most secured and more apt for BYOD. With Android adoption on the rise, it had fostered quite a bit of regional vendors started attacking the lower end of the spectrum with low-cost smartphones. However if one looks at the OS dynamics from an Android perspective, the bulk of the devices out in India were still stuck with Android 2.3. And, while players like Samsung and HTC had announced and rolled out upgrade roadmaps for older Android phones to Android 4.0, but it has not been
DATAQUEST | A CyberMedia Publication
Computers and Smart Devices
Tablet Market: Taking Nimble Steps
Samsung 56% Apple 22%
Source : DQ and V&D Estimates
Others 22%
Total Revenues: `1,962 crore Despite the market being flooded with low-cost sub `10K tablets, it’s still positively oriented towards Samsung and Apple. However the low-cost tablet market share is expected go up significantly during FY13
a smooth rollout. For instance, HTC garnered much of customer ire for not giving Android 4.0 update to its flagship Smartphone Desire HD, citing compatibility issues with its Sense UI. Right now Android 4.0 smartphones are in the higher end of the price point, and vendors rolling out newer generation Android OS phones quickly at affordable prices is the need of the hour. Overall smartphone outlook for FY13 is expected to grow at a healthy pace with players like Nokia firmly putting Windows Phone and its latest versions in the market in addition to vendors like Samsung and HTC going aggressive on Android.
The Tablet Market: Growing up
With just about estimated half a million units for FY12, the Tablet market is taking nimble steps in India. Yet again industry estimates point out that Apple holds a significant slice of the tablet space followed by Samsung. The market has a plethora of low-cost sub `10K tablets and 40 | August 31 - September 15, 2012
The smartphones market is growing at high double digits. It is clearly polarized towards android in India
this market though has a good potential to grow, one is yet to see the big push. Even a player like RIM took on the value-for-money strategy and significantly slashed the prices of its tablet, Playbook. Globally, as we look at the recent data released by iSuppli’s (IHS iSuppli Display Materials & Systems Service report) shows that Apple iPad saw a phenomenal growth of 44.1% during Q2, 2012 and shipped 17 mn iPads and garnered a whopping 70% market share over Q2 globally. During the quarter the total visit www.dqindia.com
number of tablets shipped (all vendors) stood at 24.4 mn. In the last one year, Apple had significantly upped its ante in India thanks to distributors like Redington which is driving Apple’s growth here in India. Apple iPad 2 saw a big spurt post iPad 2 sales and post its new iPad (aka iPad 3) launch, it slashed the prices of the iPad 2 significantly thus leading to larger adoption. However players like HCL say that India is the value-for-money market and the market for sub `10K tablets are on the rise. HCL in the last one year went aggressive on the tablet space and competes head-on with players like Micromax, Karbonn, iBall among others. But again, with Apple’s 7-inch iPad mini—all set for launch in the coming quarter— might change the low-cost tablet market as well, given that Apple gets the India pricing right and puts the mini pricing at sub `15K will totally alter the personality of the India tablet market in 2013. n
DATAQUEST | A CyberMedia Publication
Monitors
With the market focus clearly shifting to LED, most vendors are revamping their strategies around that ONKAR SHARMA onkars@cybermedia.co.in
T
he PC monitor market went through a very difficult time post the Thaifloods. PC prices went soaring because of the dearth of hard-disks— which are primarily manufactured in Thailand. This was visible across the bundled and the standalone PC monitor segments. But irrespective of the growth parameters, the market came alive with interesting technological trends and changed consumer behavior. Combined bundled and standalone PC market in FY12 accounted for `5,130 crore with a nominal 3.6% growth against the 12% growth in FY11. Certainly the overall business spend on IT took a sharp plunge given the market conditions in the US and Europe. Out of `5,130 crore, the bundled monitor market accounts for `2,420 crore with a growth of 4%. But here Dataquest will look into the standalone monitor market and trends that swept the market. The effort here is to measure the size and growth in this segment. As the overall monitor market did not do well, standalone suffered a jolt—registering a mere 3.3% growth at `2,710. The dearth of hard disks pushed the assembled PC prices up which exert a direct impact on the sale of standalone monitors. Vendors like LG, Samsung, and others were seen struggling to find takers all through the year. In the overall market, AOC emerged as the clear leader taking over LG with a marginal lead. It clinched the top spot with 22% market share, whereas LG grabbed 21.5% market share. Samsung stood at the third place with 21% share while Acer stayed at number four with 20%.
Industry Trends
There was a demand for the adoption of LED monitors over LCDs in a big way. While LCD still leads the market, the trend for the coming quarters, among 42 | August 31 - September 15, 2012
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DATAQUEST | A CyberMedia Publication
Monitors
44 | August 31 - September 15, 2012
Indian Monitors Market
Highlights
(In `crore, Growth %)
n Vendors like LG, Samsung, and others were seen struggling to find takers all through the year n The standalone monitors market had a worst year with merely 3% growth n 3D was the buzzword in the monitor space as well n Vendors hope for a revival in sales in FY13
Standalone Bundled 3%
19%
4%
5%
2,624
2,327
2,710
FY11
Source: DQ Estimates
other things, is LED monitors stealing the show, thereby turning out to be the growth driver for vendors like LG, Samsung, AOC, and others. Thus taking into consideration the bundled monitor market, it is important to look at the growth in the desktop market. The desktop market did crawl up in India which impacted monitor sales also. However all in all, it pushed the bundled market by 4%. In a first for the country, the Indian standalone PC monitor market saw LED sell-throughs touch a new level. This can be attributed to leading vendors discontinuing production of LCD based models, at the same time promoting the LED form factor. Major vendors have replaced their entire portfolio with LED monitors, especially that of the 15.6 inch screens. Viewsonic has entirely shifted its focus from LCD to LED. LG joined the fray this year declaring that it would discontinue with the LCD monitor business in same category because of the drop in sales numbers. The drive has brought good results as was quite visible in the last quarter of FY12, with LED monitor sales overtaking LCD. The India market for the 15.6 inch LCD monitor witnessed a drop of 45% in volume terms in Q4 2011, as compared to the previous quarter. AOC witnessed growth in its 21.5 inch LED business significantly. Smaller vendors including Beetel, Viewsonic, and Intex also witnessed growth in a few pockets due to their lower priced offerings as compared to the major MNC vendors. Interestingly for these small vendors, close to 80% of their business was generated by the LED category. In a nutshell, most of the vendors are
2,420
FY12 Total (`Crore)
FY11: 4,951
12%
FY12: 5,130
4%
Though the monitor space was the worst hit in FY12, the overall monitors segment (bundled and standalone) has rapidly shifted towards LEDs. Vendors minimized their LCD offerings to replace with LEDs.
phasing out their LCD monitor lines, shifting their emphasis to LED. The consumer today has a wide array to choose from, also with the add-on technology advancements. Interestingly, consumers have shown big interest in large screen sizes. More than 45% sales was reported in the 18.5 inch category while 15 inch followed with 30% sales. Increased interest in 20 and 22 inch categories depict the choice of consumers for future trends. Furthermore, the market saw an onrush of 3D and HD monitors. Urban consumers laid their interests in the new category. LG had started the trend in FY11 which was further extended by AOC that unveiled its 3D and IPS monitors to tap on the growing segment. BenQ is also in the market with its XL2410T 3D LED gaming monitor.
Regional Split
According to CMR, in terms of regional split, southern India contributed the maximum sales of around 37%, followed by western, northern, and eastern India. visit www.dqindia.com
Northern and western India saw a growth in their shares during Q4 2011 due to the festive season sales extending into the month of October 2011. Amongst the top 5 vendors, LG and Samsung saw more than 60% of their business coming from southern and western India collectively. AOC had almost equal business from all regions, while Acer and Dell received more than half of their business from southern India. Also, the slow demand in metros forced the vendors to focus on the upcountry market and push on its channel schemes in those regions. LG conducted several lucky draw programs for its channel partners in order to revitalize the monitor business.
Price Variation and Rupee Depreciation
As far as prices of monitors are concerned, it was no different than last year in the beginning. But as the rupee eroded, most vendors were forced to increase the prices. LG had to take the hard decision despite the sluggish demand. Similarly, other vendors endeavored to keep themselves in profit. Also adding to the price increase was the LED phenomenon which was touted to be slightly pricier. However most of the monitor prices ranged in the LCD category. Further,
DATAQUEST | A CyberMedia Publication
Monitors
Tracking The Top Vendors
(Market Share %)
(In `crore)
LG
582 576
SAMSUNG
554 567
ACER
534 542
BenQ
95 95
VIEWSONIC
116 108
OTHERS
161 216
Viewsonic 4% BenQ 3.5%
Others 8%
AOC 22%
Acer 20%
FY11 FY12
LG 21.5% Samsung 21%
Source: DQ Estimates
578 596
Source: DQ Estimates
AOC
There was a shift in the leadership. AOC emerged as the leader with as much as 22% market share while LG managed to grab the 2nd spot. But more than market share, the vendors were concerned about their sales which suffered a major setback due to a slump in the assembled PC market. Companies like LG tried to woo customers through reward schemes to boost their partners but to little help.
with LED taking centerstage, prices of most monitors are coming in consonance with LCD counterparts. It is believed that in FY13, LCD would reach an extinct level. LG’s LED monitor range in screen sizes between 18.5-23 inch is priced between
DATAQUEST | A CyberMedia Publication
`7,300 to `13,000. Samsung and ViewSonic have tried to match the competition in terms of price range for their LED monitors. AOC, BenQ, etc, have tried to stay ahead of the competition in the price race for their LEDs.
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The Road Ahead
It is expected that the ongoing fiscal is going to be a year of revival for the vendors when they would see the re-emergence of the assembled PC market. Amid the myriad trends, LED will be the buzz of the market unlike ever before. n
August 31 - September 15, 2012 | 45
PRINTERS AND MFDs
Against All
Odds
Hit by adverse circumstances, the printer market seems to have learnt to manage in uncertain times Shilpa Shanbhag shilpas@cybermedia.co.in
46 | August 31 - September 15, 2012
visit www.dqindia.com
DATAQUEST | A CyberMedia Publication
PRINTERS AND MFDs
Under the Scanner
The Ministry of Environment curbed the imports of second hand devices which helped in increasing sales and proved to be a silver lining. Apart from that, the reconditioned market players came across loopholes owing to which around 30,000 units found their way to the Indian shores. This loophole was later plugged by the ministry and further damage prevented. India was the hub of competition as Japanese companies like Konica minolta and Toshiba increased activities. Other vendors like Panasonic, Brother, etc, also recorded growth in their businesses. Even Dell, though a new 48 | August 31 - September 15, 2012
Highlights
The Overall Printer Market
MPS is showing wide traction among the small and medium businesses in India. Companies across verticals are now insisting on paper and ink cartridge recycling which in turn is forcing vendors to manufacture green printing oriented printing devices MFDs have managed to gauge maximum interest owing to affordable price bands and the attractive features offered by this segment of printers
entrant in the market has been able to give others a stiff competition. MFDs have managed to attract maximum interest owing to affordable price bands and the attractive features offered by this segment of printers. The prime features and characteristics of MFDs like printing speed, price range, features, and value for money quotient have enabled it to strike a charm among the customers. These devices are also gaining popularity owing to the fact that usage of these devices save time, space, cost, and are ideal for small businesses as well as consumer segment.
Technology Angle
Technology grows and creates new propositions. In the laser multi-function segment, new technology was introduced. HP and Canon both launched ink efficient inkjet models. Technology to ensure cloud computing compatibility was also introduced. On the customer-user behavior front, medium size enterprises are adopting managed document services. A lot of importance is being given to printing cost as companies have become more sensitive towards it. Owing to general inflation visit www.dqindia.com
(In `crore, Growth%) -1%
-5%
3%
2,137
2,033
2,113
FY10
FY11
FY12
Source: DQ Estimates
F
Y12 was surely a challenging period for the IT industry. The printer segment was no exception. The turbulence started around 2-3 years ago, after the Lehman crisis 4 years back, and affected the industry badly. The industry’s upward ride came to a standstill. Just as it was on the recovery path, a natural calamity in the form of Japan’s tsunami brought in the realization of how vulnerable the IT industry was. Before it could even limp back, the Thailand floods administered another blow on the manufacturing clusters leading the IT industry to ponder about separating the IT clusters to avoid such a scenario in the future. If all this was not enough, the last blow was still to hit the Indian IT industry (which according to market research reports is 85% import-centric)— read rupee devaluation. This also had an impact on the prices of printers which witnessed a rise of 8-12% across all brands during FY12.
The printer market showed some promise after being badly hit and having witnessed price hike. The technology and services quotient seemed to offer hope
and high interest rates, there was a standstill on investments in expansion which is evident from the fact that the national retail chains like Croma did not expand much. Continuous ink supply based systems like L100 and L200 provided litmus to Epson’s growth. Canon witnessed a shortage of IP 2770 in the inkjet SF printer segment in H2 FY12, whereas their new model, E500 in the inkjet multi-function printer segment helped Canon increase sales due to low cartridge cost. Samsung’s market presence was strengthened by the launch of its chipless toner based printers ML1676 and SCX-3201G. There is an increased level of awareness in relation to document outsourcing as people are now making an effort to print less copies. With the entry of smartphones, tablets, et al ruling the roost document outsourcing is assuming center stage. Even the concept of e-copy is assuming importance, especially in the telecom, automobile, healthcare, banking, and insurance sector as they offer huge opportunities. This is driving many vendors but
DATAQUEST | A CyberMedia Publication
PRINTERS AND MFDs
being riddled with the opportunity is the risk of the confidentiality of the data stored, which necessitates security to be treated with importance. Though the fundamental technology hasn’t changed much, the addition of cloud printing, managed print services, and the nascent introduction of mobile printing allows printers to follow their users onto their tablets, smartphones, and other mobile devices.
Green Quotient
Green printing primarily refers to the usage of cost saving and environment-friendly methods of printing. In the recent past, enterprises and SMBs have started focusing on green printing as it helps in diminishing the cost of
Scanning Ahead Scanning, as a utility, has not witnessed a decline but in fact it is growing. There are large number of sectors where the demand of scanners is increasing and healthcare is one of them. Some of the key players in this segment are HP, Compaq, Canon, Fujitsu, Acer, Umax, and Epson. Apart from healthcare, there is a major demand from the banking sector for flatbed scanners. These are used extensively for digitization of records. In order to leverage on this trend, Canon is working with its system integrators. With over 100,000 units shipped during the last financial year, Canon enjoys 50% market share. The current market size for flatbed scanners is estimated at 200,000 units.
printing and also helps in maintaining a healthy and sustainable environment.
Single-function Inkjet Canon 12%
100
80
FY10
FY11
FY12
Source: DQ Estimates
-20%
HP 60%
Epson 25%
Source: DQ Estimates
-31%
145
Segment Support
Others 3%
(In `crore, Growth% and Share in %)
Just like the margins even HP’s stronghold remained undeterred
Multi-function Inkjet
Others 3%
(In `crore, Growth% and Share in %)
Canon 15%
341
242
200
FY10
FY11
FY12
Source: DQ Estimates
-17%
Epson 14%
HP 68% Source: DQ Estimates
-29%
This market bore a look similar to that of FY11
52 | August 31 - September 15, 2012
Companies across verticals are now insisting on paper and ink cartridge recycling which, in turn, is forcing vendors to manufacture green printing-oriented printing devices. Taking this trend into consideration, numerous benefits have been offered by green computing to customers and the demand for green printing is sure to get a boost in ensuing years. Cloud printing, though at a nascent stage, has shown prominent signs of gaining foothold in the recent times. Despite of being at the initial stages, it has tremendous potential for gaining wide spread acceptance among the SMBs and enterprise segments. Some of the prime factors driving this are enhanced productivity, seamless workflow of mobile and remote sales force, and unprecedented flexibility.
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According to Netscribes, the overall printer shipment figures in India stood at around 2.7 mn units in CY 2011 and is anticipated to leap forward to reach about 2.9 mn units shipment by CY 2012. The printers market in India gets a significant boost from the prevailing SMB space by virtue of its extensive volume and steady increase in IT expenditure. According to Netscribes, IT adoption among SMBs is anticipated to witness a CAGR of 24%. A major chunk of their expenses has been spent on computational expenses followed by internet, IT services, networking, security, software, and storage expenditure. The wide presence of SMBs apart from home, government, education, and SOHO (buyers of single function devices) currently forms a pivotal support for the printers market. In order
DATAQUEST | A CyberMedia Publication
PRINTERS AND MFDs
Single-function Laser
Xerox 5%
(In `crore, Growth% and Share in %)
13%
Samsung 8%
620
FY10
FY11
FY12
HP 52%
Canon 34%
Source: DQ Estimates
550
Source: DQ Estimates
-14%
642
Others 1%
Even the price rise seemed to not affect HP and Canon’s foothold in this market
Multi-function Laser (In `crore, Growth% and Share in %)
Xerox 4%
Epson 1%
Others 7%
12% -18%
FY10
509
FY11
571
Samsung 28%
Canon 23%
FY12
As increasing number of companies got into the buying mode, its benefits galore for the market leaders
to target the growing demand in the education segment, vendors like HP and Canon launched inexpensive printers. Even Ricoh launched printers targeting SOHOs and tier-2 and -3 cities. But for some companies like Canon, BFSI offered big bulk business opportunities in the face of a largest deal (implementation of 800 document scanners for digitization projects). Canon was awarded the largest managed document services contract with a multi-national bank. While the government segment did not grow fast for some companies owing to delay in approval of contracts and rupee devaluation leading to government projects posing as a loss DATAQUEST | A CyberMedia Publication
Source: DQ Estimates
620
Source: DQ Estimates
HP 37%
making debacle. This led to many companies adopting the refrain mode. Though the telecom sector has been going through a bad phase, digitization is taking shape in the telecom industry. Even the e-business segment has pulled the margins for Canon cameras and inkjet printers. Multi-function printers witnessed increasing acceptability in the SMB, home, and retail segments. SMBs prefer a mix of single function and multi-function printers to attain overall printing solution efficiency. Even the decreasing price gap between single function and multi-function printers in the same technology space also prompted a set of customers to move to the latter category. visit www.dqindia.com
August 31 - September 15, 2012 | 53
PRINTERS AND MFDs
Dot Matrix Printers
Multi-function printers witnessed increasing acceptability in the SMB, home, and retail segments. SMBs prefer a mix of single function and multi-function printers to attain overall printing solution efficiency.
Others 2%
(In `crore, Growth% and Share in %)
WeP Periperals 22%
-35%
251
177
FY10
FY11
FY12
Epson 58%
TVSe 18%
Source: DQ Estimates
389
Source: DQ Estimates
-29%
Even though the market continued to reflect the negative trend, Epson went from strength to strength
Large Format Printer (In `crore, Growth% and Share in %)
Canon 14%
22% 28%
131
160
FY10
FY11
FY12
HP 52%
Epson 23%
Source: DQ Estimates
102
Source: DQ Estimates
Others 11%
Increase adoption of printers ensured that the margins maintained a northward trend
Services Angle
Managed print services showed wide traction among the small and medium businesses in India. The adoption of MPS eliminates hardware costs comprising capital required to purchase printers and other multi-function devices. Companies mainly opt for payper-page services in order to leverage on cost reduction benefits. Another important factor driving the adoption of MPS is the lack of knowledge on the requirement of printing infrastructure among users and hence outsourcing these services proves to be a profitable solution. The MPS segment is assuming great significance, which even the vendors are recognizing. On the MPS front, Xerox has a remark54 | August 31 - September 15, 2012
able presence coupled with the efforts of OEMs like HP and Canon. Even WeP Peripherals and HCL have started taking steps in this direction in order to offer end-toend solutions. But the challenge on this front remains localizing these end-to-end services. Companies like HP, Canon, and Xerox have understood that while providing end-to-end solutions to customers, they also need to understand the needs of the organization to whom these services are provided.
Vendor Perspective
In order to grab a better picture of the fiscal that breezed past, let’s put the top players under the scanner: HP: HP intends to partner with visit www.dqindia.com
channel partners to address the SMB and mid-market space to offer MPS. There are approximately 35 mn SMBs in India (the second largest number after China). It is targeting about 350 mid-market accounts for MPS in metros and plans to extend the services in a phased manner to other tier-1 and -2 cities. HP has included its printing solutions as part of its Partner Managed Print Services (PMPS) customer engagements. In the next fiscal, HP expects to record growth on the back of latest generation of printers that bring affordability, energy efficiency, and mobility (through technologies like HP ePrint) to home consumers, SOHOs, SMBs, and large businesses. It intends to continue to focus on cloud-led and web connected innovations. Canon: At an investment of $1.1 bn, Canon acquired approximately 99% share of Océ’s total assets. The acquisition has resulted in the integration of Canon’s and Océ’s business aspects in sales, service operations, and distribution networks.
DATAQUEST | A CyberMedia Publication
PRINTERS AND MFDs
PoS Printers
(In `crore, Growth% and Share in %) WeP Periperals 9%
147
250
305
FY10
FY11
FY12
Source: DQ Estimates
70%
TVSe 20%
Others 11%
Epson 60% Source: DQ Estimates
22%
Retail segment ensured that it pulled the margins of PoS printers for FY12
This acquisition also enabled Canon to strengthen its production line. Small towns continued to build traction with focus shifting to smaller cities and 50 new channel partners were appointed to help the company expand its reach. In relation to managed document services, Canon’s client base increased from 50-70 large clients. Canon is also on an expansion drive on retail network front. From 70 stores it is on track to create 300 stores by 2014. Retail stores contributed approximately `150 crore to Canon’s kitty this year. The supply chain system continued to pose a challenge as it affected margins. Hence it spread its supply chain location
DATAQUEST | A CyberMedia Publication
from Singapore to 25 different locations to tackle this issue. Epson: It saw client wins for dot matrix printers from the state governments and BFSI sectors. In the POS category, expansion of retail chains, hospitality sector, governments, textile showrooms, and entertainment zones added clients to its kitty. Inkjet category was witness to the launch of innovative M-series printer and traction from the SOHO segment and DTP centers. On the technology front, Epson launched genuine ink tank which cuts the cost of printing. Samsung: Samsung India plans to further scale up its business in 2012. In 2011, the company focused on consolidat-
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Companies across verticals are now insisting on paper and ink cartridge recycling which in turn is forcing vendors to manufacture green printing oriented printing devices
ing the printer business with a distinct product strategy and strengthened its distribution channel with an increased focus on its B2B business. With the launch of advanced printer models in the laser printer, multi-function printer, network printer categories, wireless printers including the world’s smallest laser printer–ML 16663201, and Samsung SCX printers, it has strengthened its position in the market. Xerox: Xerox India expanded its channel base in tier-2 and -3 cities with a focus on top 200 cities and over 25 towns. For FY12, Xerox also put its best foot forward on the technology front with Emulsion Aggregation toner—breakthrough
August 31 - September 15, 2012 | 55
PRINTERS AND MFDs
technology for producing black and color toner. Another energy efficient technology, namely solid ink–a proven sustainable color printing technology was incorporated by Xerox. Xerox also intends to strengthen its Phaser, Workcenter, Docucolor, and iGen range of products and digital presses and also launch a new range of office automation devices and digital product equipment in 2012. In the future, Xerox intends to expand its partner base on panIndia basis and particularly in places which are not adequately covered. Xerox is moving towards providing managed print services as it is garnering an increased share from this front. Ricoh: Ricoh forayed into managed document services which is a combination of managed print services and document management solutions. For India it has a 3-pronged strategy, namely strengthening its product line, focus on Ricoh innovations, and expanding sales and service support. In order to strengthen its laser printer business, it intends to increase the number of distributors and resellers. This year, it plans to increase partnership base by 500. Despite making remarkable moves, Ricoh was not able to break the monopoly of HP and Canon. TVS Electronics: Dot matrix printers contributed a major share (90%) to the revenue pie, while the thermal printers generated the remaining. Approximately 70% of its revenues is generated from the channel business. TVSe’s customers are mainly from the banking, government, retail, and dairy segments among others. Bluetooth, Wi-Fi, RoHS, and continuous improvement in speed and throughput, used across print56 | August 31 - September 15, 2012
The massive PC base coupled with declining hardware prices is providing a growth opportunity for the overall printers market in India
ers like direct thermal, impact printers, and thermal transfer printers emphasis its efforts on the technology front. WeP Peripherals: During FY12, WeP Peripherals launched scanners and also entered into a tie-up with a Europe based company to launch card printers. After the acquisition of Elnova (power business), its UPS business has been made a separate entity that offers both brands of Elnova and WeP (UPS). FY12 was also witness to client wins in POS printers (Bridgestone Tyres). Dot matrix printers comprises 30% of the turnover.
Consumables Perspective
The consumables market is less profitable as people prefer to use compatible or third party products. Owing to this, companies like Canon could not increase their prices but it launched small capacity cartridges. It increased efforts in relation to Original Ink Center in around 2,000 areas. According to a market research, customers use non standard consumables to achieve a lower cost of ownership. This was adversely visit www.dqindia.com
impacting the performance of printers. In order to target Indian customers in relation to consistent printer performance and ensure low-cost of ownership, Ricoh launched ‘Genuine Refill Programs’. This initiative is consistent with the Ricoh’s policy of harmonizing with the environment through products that reduce environmental impact. Taking into consideration the disadvantages associated with the usage of compatible or third party products, lot of awareness needs to be spread and also companies need to consider enhancing their product portfolio to offer cost advantage, add more products, etc.
Road Ahead
According to Netscribes, the massive PC base (increased penetration in D or E class markets) coupled with declining hardware prices is providing a growth opportunity for the overall printers market in India. Rapid increase in content creation and ongoing demand for enterprise mobility further fueled the growth in the market by a large extent. Presence of active industry verticals such as manufacturing, media and entertainment, retail, and government also acted as the crucial drivers for the market. SMBs play a pivotal role in revenue generation for the printers market in India. On a final note, it can be concluded that Indian market is equivalent to the Chinese market scenario approximately 10 years ago. And with the products becoming more customer-centric, with much more intelligence built into them, and with the companies’ ability to manage uncertain times, the road ahead appears promising. n
DATAQUEST | A CyberMedia Publication
UPS
In the Limelight
With the power industry still plagued by the age-old problem of demand far exceeding supply, the UPS industry retained center-stage Shilpa Shanbhag shilpas@cybermedia.co.in
T
he power sector in India is synonymous with erratic supply and increasing deficit. These factors have given a lift to the UPS market in India since times immemorial as they are essential for the business continuity of any commercial or industrial organization. According to Netscribes, during 2011 the market was worth approximately `40.7 bn and is estimated to be around `46 bn in 2012. According to market research, the UPS market has been growing at 12-13% on a y-o-y basis.
Grabbing the Pulse
All critical equipment are essentially required to have a clean and uninterrupted power supply if they need to operate competently. Poor quality of grid power puts the organizations in a susceptible situation and results in hours of downtime; in turn amounting to huge losses. These factors have affected the industry and made UPS systems an integral part of any organizational infrastructure. 58 | August 31 - September 15, 2012
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DATAQUEST | A CyberMedia Publication
much more than just maintenance !
UPS from 550 VA to 5400 kVA Who else to trust for faultless maintenance service provision, other than a UPS specialist? Especially when you need guaranteed operational continuity! The dedicated CIM (service) specialists are available 24 / 7 to help you increase the service life and availability of your most critical electrical installations. We offer the most adapted and ideal solutions wherever your power supply needs to be fully secured: > CIM THERMO: complete installation thermography; > CIM RENT: high quality power supply equipment on lease; > CIM AUDIT: power supply diagnostics; > CIM BATTERY CHECK: preventive battery diagnostic. Service provision, with a smile !
COMMISSIONING
INSPECTION
MAINTENANCE
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UPS
Segment Boosters
It is imperative to study and understand customers’ needs, and 60 | August 31 - September 15, 2012
Highlights
Indian UPS Market
Sub-5 KVA segment is the largest because of its popularity among SMEs and SOHOs According to Netscribes, South India is the largest market for UPS, with a market share of around 33% Slump in sales of desktops due to increase in sales of laptops has decreased the demand for UPSs in the SOHO segment
then provide the most suitable solution comprising different products. And this necessitates indepth knowledge of the application. Currently, the focus should be on server closets; server room; and small, medium and large data center applications. With the ever-changing demands from power, it has now become very important to develop customized solutions for channel partners. It becomes essential to enable channel partners to competently handle the technology upgrades and adeptly propose the best solutions to their key customers. The banking and financial sector is one of the prominent end-user segments for the UPS industry. With 63,000 ATMs setting up, it means a huge scope for the UPS segment. The 3-5 kVA UPS are generally used in bank ATMs, and with RBI allowing third party ATM networks to be set up, this segment is expected to see some grave competition. According to Frost & Sullivan, the third party ATM network providers may opt for 1 or 2 kVA UPSs instead of UPSs between 3-5 kVA, which is expected to hit the margins of 3-5 kVA UPS suppliers. 1-2 kVA UPSs falls under ‘less than 3 kVA’ subcategory of UPS which is mostly imported in the country. A supplier offering a very competitive price with flexible payment terms, wide spread distribution and service reach visit www.dqindia.com
(In `crore, Growth%)
12% -1%
10%
2,980
3,278
3,671
FY10
FY11
FY12
Source: DQ Estimates
The UPS market is slowly getting replaced with transformerless UPS and modular UPS based on market requirements of cost effective, energy efficient and innovative products. This shift towards modular UPS is mainly due to hot swapping features along with the flexibility that they offer in terms of redundancy. Modular UPS allows customers to invest based on their actual load, and to upgrade their systems while their business grows, without hampering uptime, availability and reliability. Since there has been considerable increase in energy costs over the years, UPS players are fast adopting the green method to reach out to customers. Currently with the rising energy costs, it is crucial to promote products that are energy efficient and lower the TCO. The entry of tablets and laptops may intimidate the 600 VA market but the increased penetration of desktops in tier-2 and -3 cities is fueling the growth of the sub-1 kVA UPS systems. Even the growth of PC consumption in BFSI and government segments is driving the growth of the segment. Even though globally PC adoption has recorded single digit growth, in India it is approximately 15%, a good figure for the UPS segment to leverage. The Indian market has got a boost from the increased acceptance of cloud servers, as they now pack greater power within lesser space. Due to this increased demand for cloud computing, manufacturers are gearing up to provide data center UPS with greater efficiency, lesser TCO, and are investing in coming up with better technology.
Despite the stable growth figures, the UPS segment was affected largely by natural calamities and forex uncertainity
is most likely to find favor with the third party ATM network providers. This is expected to be a game changer for the 1-2 kVA UPS suppliers, bringing in huge scope and intense competition. Even the SMB and government segments are not to be left out of the race. Demand for the IT/ITeS sector, which is growing by 15-20% y-o-y, is one of the major drivers for this market, especially in the more than 20 kVA power range. The IT/ITeS sector comprises approximately 70% of the total market share. The non-IT segments like manufacturing, electro-medical, banking, healthcare, telecom, transportation and logistics, security, etc, garner the remaining 30% of the market share. The growing needs of e-commerce, the evolution of data centers, and increase in the number of servers have increased the need for deploying UPSs. The importance of these segments is evident from Swelect Energy Systems’ major contracts which included branch automation orders from Syndicate Bank, SBI and its associate banks, Corporation Bank, and UCO Bank. Swelect Energy Systems powers over 80% of the ATM installations in the country. BPCL, NIC Equitas, IIT-Madras, Inspector
DATAQUEST | A CyberMedia Publication
UPS
UPS Market Share (Organized)
Dissecting the Market Share of UPS Players 1%
(<5kVA)
(<30kVA)
Total Market Share: `1,689
Total Market Share: `1,982
11% Others 9%
28%
3% 3%
Others 40%
24% 5% 4%
4%
Source:*DQ Week
5% 5%
APC by Schneider Electric
Uniline
Genus Power Infrastructure
Tritronics
Su-Kam
Techser Power Solutions
Swelect Energy Systems
Aplab
Delta Power Solutions
Intex
Microtek
True Power International
Emerson
Kevin Power Solution
Best Power Equipment
Others
The UPS market is expected to witness high competition with local, regional, and MNCs putting their best foot forward. Note-The shares of Luminous and DB Power have been considered with APC by Schneider Electric and Emerson respectively.
General of Stamps and Registration, ELCOT, and Hospira were few of its major wins.
Quick Snapshot
FY12 witnessed some major acquisitions, namely Numeric Power Systems by Legrand (consequently it was rechristened as Swelect Energy Systems); Hi-Rel Electronics by Hitachi; Luminous (74%) by APC by Schneider Electric. Players like Emerson, post its acquisition of DB Chloride and Eaton, are also aggressively etching ahead in the market. The segment is expected to witness some more acquisitions in the days to come. Currently, the segment which is witness to the presence of local, regional and MNCs is expected to become a highly competitive market with the entry of MNCs like ABB and the likes, and consolidation in the market. 62 | August 31 - September 15, 2012
APC by Schneider Electric 28%
Swelect Energy Systems 16% Emerson 12% WeP Peripherals 4%
APC by Schneider Electric 23%
Emerson 50%
Swelect Energy Systems 18%
Source: DQ Estimates
2% 2%
Source: DQ Estimates
1% 1% 1%
With RBI allowing third party ATM networks to be set up, the 3-5 kVA UPS segment is expected to witness huge competition.
Rising raw material prices, increase in import prices of approximately 8-10%, and depreciation of the Indian currency in relation to the US dollar were key factors affecting players in the segment. The rupee depreciation (around 20%) affected the importers of UPS systems the most. Suppliers owning manufacturing units and also importing were insulated from this impact to a certain degree. This led to most players passing on the discomfort to the end users through price hikes. This segment also did not remain unaffected by the Thailand floods, which impacted the availability of hard disks for 5-6 months, affecting the low-end UPS segment. Even on the technology front, there has been a need for higher and effective offerings that cater to India-specific needs. Hence, keeping in mind customer demand, many companies have earmarked investments. APC by Schneider Electric has dedicated an R&D center in Bengaluru that caters to this demand. The visit www.dqindia.com
segment witnessed substantial growth but companies cannot continue to sell UPS alone. Owing to commoditization, players now need to sell other services along with the traditional UPS— leading to them offering end-toend solutions. Players are now starting to starting to offer managed services, software, etc, that could prove to be a big growth push for the segmant.
Road Ahead
The healthy demand for power is driving innovation in the power back-up industry to improve performance while reducing overall costs. With the ever rising demand from numerous sectors, the power back-up market is looking at a huge opportunity ahead. While thin clients, virtualization and cloud computing may threaten UPSs’ territory, there will be lots of other opportunities to reap benefits from. n (Note- Emerson has refrained from participating in the survey and the data carried in the tables and article are based on inputs received from secondary sources.)
DATAQUEST | A CyberMedia Publication
Not a Rosy Picture
As the market saw consolidation over the last couple of years, the networking industry saw a marginal dip Akanksha Singh akankshas@cybermedia.co.in
NETWORKING PRODUCTS
DATAQUEST | A CyberMedia Publication
Highlights
Indian Networking Market
The pressure to reduce costs amongst budget constraints, organizations are searching for innovative ways of designing, building and managing networks Networking products saw huge influence of wireless Collaboration, data centers, and network security saw great demand for networking products
(In `crore, Growth%)
a part of the complete end-to-end networking solution. Deploying enterprise applications like ERP and SCM is becoming a norm, thus leading to increased adoption by all enterprises, including SMEs in remote areas. Multi-national companies establishing their presence in India are setting up connectivity between their domestic offices as well. In addition, newer networking technologies and applications are driving organizations to deploy networks of the scale and complexity never seen before. The pressure to reduce cost amongst budget constraints and competitive pressure is making organi-
8,844
9,104
FY11
FY12
Source: DQ Estimates
3%
As the market saw consolidation over the last couple of years, networking industry saw marginal dip
zations search for innovative ways of designing, building, and managing networks. Wireless picked up tremendously in the last couple of years and thus networking products saw huge influence of this technology. So, be it switch, router, modem, or other networking products, the demand was to grab a wireless product than a product that can only be connected through physical mediums. Virtues like connectivity, portability, and being future-proof drove the wireless equipment
Networking Segments (In `crore, Growth%)
6%
Total FY11 8,844
Total FY12 9,104 -6%
21%
-17% 378
2,966
4,421
1,079
314
FY11 Modems
Routers
2,788
4,686
1,316
Source: DQ Estimates
F
Y12 was a year when enterprises started consolidating their IT requirements into a single pool as they had the flexibility to scale up. Many state governments, PSUs, and banks rolled out IP networks and laid down the roadmap for stronger network rollouts in the coming years. The networking market grew marginally by only 3% in FY12. The networking market revenue stood at `9,104 crore in FY12 as compared to FY11. The contributors to the growth of the overall market was majorly seen from Switches and WLANs. The switches market showed close to 6% growth in FY12 whereas WLANs showed whooping 22%. Modems and router market declined considerable from last fiscal. As the market saw consolidation over the last couple of years, the modems industry dipped to -17%. The routers market also showed dip of -6% due to integration and optimization of both cost and capability. Although driven by new deployments plus productivity enhancement initiatives in the business enterprise segment and continued strong consumer demand for clients, most enterprises are working towards setting-up a strong and reliable network infrastructure. This, in turn, has raised the networking products demand in various sectors. Organizations these days are investing heavily in infrastructure support that can deliver end-to-end, effective, and reliable solutions that will eventually transform their business operations. Hence there will be a strong demand for wireless, storage, broadband, switching, security, cabling, etc, that forms
FY12 Switches
WLAN
Collaboration, data centers, and network security saw great demand for networking and will continue seeing the same this year as well
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August 31 - September 15, 2012 | 65
NETWORKING PRODUCTS
nologies saves organizations up to 49% compared to the cost of purchasing and operating separate products for each function.
Indian Modems Market (Share in%)
Others 14% D-Link 13%
Modems Atrie technology 52%
Beetel Teletech 21%
Source: DQ Estimates
business way ahead of its wired counterparts. Few areas where we saw great demand for networking and will continue seeing the same this year as well are collaboration, data centers, and network security. Collaboration is clearly the number one solution from networking standpoint. This was the trend last year and will continue this year as well especially within larger companies. Data centers are the second big area for networking products. IT is becoming a strategic part of the business strategy for organizations. In order to access the right information at the right time, the data center and technology around the data center are increasingly becoming important. A third area that continues to gain momentum is overall network security. Security whether its from the compliance standpoint or to mitigate overall risk is gaining importance as companies build up their IT departments. As the number of laptop users increase so does the number of people accessing the network, hence it is important to have the right security policy and components in place to ensure a secured network.
For years together Atrie Technology maintained leadership its market share for modems wheras Beetal Teletech and D-Link were second runner -ups
Collaboration is clearly the number one solution from a networking standpoint. This was the trend last year and will continue this year as well, especially within larger companies
Grappling with Issues
As the industry evolves, new and newer challenges are being met by vendors. Networking comes as business transforming solutions for enterprises as they look at scaling up their performances. CIOs often face the challenge of working on dissimilar systems while trying to integrate the back-end requirements of the IT infrastructure. Manageability across systems has become critical in integrating network resources for the delivery of optimized results. 66 | August 31 - September 15, 2012
While working on an integrated network it becomes crucial that the security concerns of applications and systems are taken into consideration. IT infrastructure requires multi-level security in order to manage smooth operation within the organization. Compiling multiple networks to form a unified system reduces the complexity of IT infrastructure and service management. Today, integrating routing, switching, security, QoS, and wireless tech-
The industry saw dip in the overall revenues as many vendors performed way below their own expectations. The incoming of next-generation networking devices that can completely replace modems, routers, switching, etc, are already leading the wired traditional modem industry. The emergence of technologies like 3G and WiMax are already out in the market with their much improved devices. Last mile connectivity based on wireless technologies such as 3G will boost broadband in India. The demand for 3G modems and routers will increase significantly. This will probably decide the future of this market. The modems market has undergone several innovations and this era has given a push to 3G modems. Since, India is already trying to work out its ambitious broadband plans, the broadband access devices will find market presence in the coming years. Atrie Technologies also saw dip in its revenues by almost 27% during the last fiscal. FY12 marked the dawning of D-Link’s ‘Cloud Era’. The company showed impressive growth with many product launches. D-Link launched its cloud product portfolio to emphasize its commitment to the cloud space integrating with its ‘mydlink’ platform. With speed becoming the deciding factor in choosing broadband service, the dial-up modem market seems to be going southwards. Besides, the ADSL2+ technology modem continues to gain more and more popularity in the SOHO market due to its
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DATAQUEST | A CyberMedia Publication
NETWORKING PRODUCTS
Allied Telesyn 4%
Others 16%
Juniper 4%
D-Link 2%
HP 12%
Source: DQ Estimates
Cisco 62%
With new technologies foraying in switches market, Cisco has gained momentum and bagged majority in market share
effectiveness to offer high-speed broadband connectivity to small and medium businesses along with the home consumers. The newer ADSL models with further enhanced chipsets like the latest ADSL2/2+ standards provide internet transmission of up to 24 Mbps downstream and 1 Mbps upstream. And these modems also continue to be the hot favorite of service providers.
Switches
The switches market saw upwing in its overall revenues thanks to the verticals like government, telecom, and financial services which deployed switching components onto their IT infrastructure. Last year it saw rising trend of storing data on network drives and SANs and with the continuous increase of high-bandwidth applications in organizations. This availability of new technologies by enterprises held promise for vendors which were being squeezed for margins in their volumes business of unmanaged layer-2 and -3 switches. Pricing competition among big vendors like Cisco, HP, and Juniper maintained intense pressure in the market. 68 | August 31 - September 15, 2012
Ethernet remained driven by its lower cost and ease of administration. Both metro ethernet and ADSL were largely driving the business last fiscal Juniper in FY12 focused on innovative customer solutions in India. Juniper is helping the Essar group to manage its mobile network security. They are also managing Bajaj Capital’s (financial planning and investment) integrated wired and wireless campus network. Juniper helped Spectranet to extend its geographical reach with the deployments of an IP/MPLS network core running their ‘Junos’ operating system. The company has also worked with the Government of Chhattisgarh to link its public agencies and deliver e-government citizen services. Netgear will be launching L2&L3 switches in India. DLink launched a new range of HD camera’s, DGS-6600 series chassis switches, and IPV6 ready managed switches in the enterprise space whereas in the consumer space, the company launched 3G routers and ‘mydlink’ cloud services. D-Link also rolled out its broadband network solution with a state government undertaking in FY12. Ethernet remained driven by its lower cost and ease of administration. Both metro ethernet and ADSL were largely visit www.dqindia.com
Routers Market Share
HP 3%
DAX 3%
Others 10%
Huawei 6% Cisco 62% Juniper 16%
Source: DQ Estimates
Switches Market Share
With enterprises deploying futuristic routers, Cisco led the market followed by Juniper
driving the business last fiscal. Telecom service providers rolling out ADSL networks continued buying the large 10G and IG over ethernet switches for their broadband deployments. The real push in terms of volumes in the enterprise switching business will come with greater rollout of metro ethernet networks.
Routers
FY12 saw enterprises deploying futuristic routers. The market today demands for routers which can support both 3G and 4G technologies. Enterprises are looking at routers that support features like 3G and in-built switching at affordable prices. Capacity augmentation and upgrades continued to take place at various network points as ethernet and IP remained traditionally preferred choices of packetized communication requirements. The market saw routers that had the capability to integrate some latest features like content processing, VPNs, firewalls, and load balancing. Wireless capabilities are quite popular and are replacing the need for separate wireless access points for small office networks.
DATAQUEST | A CyberMedia Publication
NETWORKING PRODUCTS
WLAN
Increase in devices/hand-helds (laptop, iPads, smartphones, etc) with Wi-Fi demands, high bandwidth, and triple play capabilities at low costs are only few to mention for wireless LAN’s good performance in the last fiscal. Cisco showed consistent performance in wireless LAN for the past couple of years. Ruckus wireless is second in the lead which has grown outrightly in the last fiscal. For Ruckus, hospitality, education, and healthcare have been the largest contributors for its revenues. Ruckus wireless was involved in 70 | August 31 - September 15, 2012
WLAN Market Share
Others 25%
Cisco 37%
Netgear 5% D-Link 8% Aruba 9%
Ruckus 16%
Source: DQ Estimates
Cisco launched a router which is used in mobile towers and is also tailored to meet the constraints—poor power supply, high real estate costs, and huge growth in fresh subscriber numbers—with which operators functioned. Dax Networks witnessed flat growth irrespective of many products and projects executed in FY12. The company executed IP surveillance project in Manappuram and also supplied active and passive products to ELCOT, Punjab e-governance projects as well as to Sarva Siksha Abhayan. The deployment of routers in both the categories ensured that the above parameters met without fail, and those were the driving factors in the routing business in the last fiscal. Edge router solutions with lesser last mile bandwidth costs are the major boosters and these routers also help in the uptake of cloud based solutions. Due to this, there is a demand for devices that handle 3G connectivity, switching, and routing in a single device. The explosion of voice, video, and data devices has led to an increased demand for data bandwidth.
Cisco remained the market leader wheras Ruckus Wireless, Netgear, Aruba and others showed impressive growth in FY12
many major projects last year for deploying its wireless LAN which included Mumbai Airport, Delhi University, You Broadband, Oberoi Hotels, and Delhi Airport metro. For wireless LAN products, Dax completed many projects with IIT Guwahati and National Institute of Technology. Netgear witnessed prominent growth with new and innovative product launches. Some of these include the R6300 dual band gigabit Wi-Fi router based on Broadcom’s 802.11ac router platform, launched its small business video surveillance suite, universal Wi-Fi range extender (WN3000RP) for laptops, tablets, smartphones, and home theater devices for the Indian market. The influx of smart mobile devices and the continued proliferation of higher performance 802.11n networks are driving enterprises to upgrade, extensions, and replacements of their wireless infrastructures. Mobility has played a very important role in driving the growth of WLAN. Now BYOD will further emphasize on the necessity of Wi-Fi as the most cost-effective, secure, and reliable technology. This boom is bevisit www.dqindia.com
ing fueled by the sales of smartphones and tablets. The wireless LAN technology has evolved rapidly in the recent years with 802.11n standards. The industry adopted the 802.1x secure authentication framework. This system enables users to authenticate and encrypt data traffic on the wireless medium. Another emerging technology in this segment is IEEE 802.11n. This solution will operate in the 2.4 and 5 GHz radio band, offering backward compatibility with the pre-existing 802.11a/b/g deployments. Wireless solutions based on the 802.11n standard employ several techniques to improve the throughput, reliability, and predictability of wireless LANs. The 3 primary innovations which has further improved the growth are MIMO (Multiple Input Multiple Output) technology, packet aggregations, and channel bonding. Together, these techniques allow 802.11n solutions to achieve an approximate 5-fold performance increase over the current 802.11a/b/g. Today, IEEE 802.11n, 3G, HSxPA, EVDO, and TD-WCDMA are some of the technologies that the vendors are adopting in India for a complete solution. The cloud, on the other hand, is another major growth driver. Devices and services and software are becoming more integrated with each other, and accessibility on the go is gaining popularity. There is going to be more public WLAN access providers (hop spot) with data roaming agreements with different service providers. Users get flexibility to roam with any WLAN access provider, but still being customer of one service provider of his or her choice. n
DATAQUEST | A CyberMedia Publication
Win Some
Lose Some
The x86 servers market demonstrates growth while the non-x86 UNIX market continues to shrink. It is a two-horse race with IBM and HP locking horns
Shrikanth G shrikanthg@cybermedia.co.in
T
he Indian server market has been going through tough times over the last few years. As we look at the numbers of FY12, the growth of x86 servers remained flat while the UNIX (non-x86) market saw significant de-growth. Much can be attributed to the lull in server buying in H2 FY12 and hence large mission critical buying slowed and also traditional buyers of UNIX exploring x86 architectures. This has put the brakes on the UNIX market and hence leading to the decline. With UNIX market getting highly niche in the last couple of years, the vendors, in this backdrop, focused their attention on x86 servers and tried to offer the best of functionality and configurations. 72 | August 31 - September 15, 2012
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DATAQUEST | A CyberMedia Publication
SERVERS
Highlights
The growth of x86 servers remained flat while the UNIX (non-x86) market saw significant de-growth The Blade server market emerged as the clear winner and it is growing at about 30% y-o-y IN FY13 too, the x86 market is expected to retain its market growth while the UNIX market will further decline
DATAQUEST | A CyberMedia Publication
Indian Server Market (In `crore, Growth%)
-17%
.3%
4% Non x86 30%
2,699
2,709
2,817
FY10
FY11
FY12
x86 70% Source: DQ Estimates
Clearly the year that went by belongs to the x86 servers and most of the action revolved around this. The x86 servers challenged the traditional UNIX deployments with new buying decisions favorably tilting towards them. This is more so due to the vendors launching products that are more agile, feature rich, and took care of the diverse computing needs of the enterprises. As we look vendor wise, HP unveiled a roadmap dubbed ‘Project Odyssey’, aimed at
Source: DQ Estimates
The x86 Story
mission critical business computing requirements. The initiative behind ‘Project Odyssey’ was to unify UNIX and x86 server architectures onto a single platform. This allows organizations to leverage on the availability and resilience of UNIX based platforms along with the familiarity and cost-efficiency of industry standard platforms. Further plans under ‘Project Odyssey’ include enhancing the HP-UX operating environment on HP Integrity servers, delivering blades with Intel Xeon processors for HP Superdome 2 enclosure (code named ‘DragonHawk’), and the scalable c-Class blade enclosures (code named “HydraLynx), while fortifying Windows and Linux environments with innovations from HP-UX within the next 2 years. Once ‘DragonHawk’ is available, clients will be able to run
mission-critical workloads on HP-UX on Intel Itanium based blades while simultaneously running workloads on Microsoft Windows or Red Hat Linux on Intel Xeon based blades in the same Superdome 2 enclosure. IBM also focused on innovation and created feature rich products. As part of its Systems and Technology Group (STG), IBM invests significant amount of money on R&D on storage and servers and that clearly manifested in really robust products. So what made IBM tick in the end was its aggression in areas like innovation, pre-sales, post-sales, and its capabilities to seamlessly offer end-to-end solutions. All this had been amply reflected in the Dataquest Customer Satisfaction Audit 2012, in which IBM topped in servers and storage. Sources in IBM say that it is the only company delivering endto-end solutions to customers. If we look at the server categories, IBM does offer one of the broadest ranges in the industry from entry, mid-to-high end across x86 to RISC/UNIX. For IBM what helped was wins like K Raheja Corp, one of the leading corporations in diverse fields of reality, hospitality, and retail has moved to IBM’s x86 based eX5 servers and Storwize V7000 storage
The market remained flat. The only silver lining being the positive traction on the x86 market, while non-x86 UNIX market saw significant de-growth
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August 31 - September 15, 2012 | 73
SERVERS
Decoding the x86 Story
Total Units: FY11: 130,00 FY12: 132,000
(Units Market Share%)
IBM and HP have in excess of 30% market share in the Blade space. This was driven by the big demand from data center
Others 16%
Others 26%
HP 32%
HP 34%
Dell 20%
IBM 22%
IBM 26%
FY11
Source: DQ Estimates
Dell 24%
FY12
Thanks to Blade servers that powered the x86 space. Vendors like Dell upped its market share, while players like Fujitsu took on to energy efficiency form factors in a big way
system to run its mission-critical applications, including SAP and Microsoft Exchange. Another player who upped its ante in x86 during FY12 was Dell. Q4 CY11 was particularly good for Dell in which it claimed market leadership and it also saw the highest growth in this quarter. Dell announced a full portfolio of new blade, rack, and tower PowerEdge servers to support its customers ranging from small businesses to hyperscale data centers. Dell designed the 12th generation of servers based on input from more than 7,700 customer interactions in 17 countries across 4 continents.
Going South: Non-x86 Servers
4,600
3,680
FY11
FY12
The numbers are reflective of the shrinking market. Big Blue IBM claimed leadership in this tough market
74 | August 31 - September 15, 2012
Source: DQ Estimates
(In `crore)
Dell says PowerEdge servers will deliver dramatic performance and management gains to more effectively power the business applications our customers run most, including ERP, OLTP, and mobile applications. As we look beyond the major vendors like Acer, HCL, and Fujitsu had a mixed year. For instance, companies like Fujitsu recently pitched on USPs like energy efficiency and brought to market products like PRIMERGY and set a new target to beat for single-node server efficiency by achieving new energy efficiency benchmarks. From the CIO’s standpoint, in the last couple of years their thinking is more attuned to aspects like manageability, virtualization, and the road to the cloud. In this backdrop, servers clearly became the vital computing infrastructure and they enable the much needed computing required for mission critical computing. But since majority of the market is polarized on Intel, it becomes a tough proposition for each vendor to differentiate their offerings and clearly it is a challenging market as lot of elements visit www.dqindia.com
make a perfect server and CIOs need to have an elaborate plan to ascertain the best server and the operating environment best suited for running their apps. With so many technology challenges, delivering customer satisfaction is not an easy task in this segment. Meanwhile, the Blade server market emerged as the clear winner and it is growing at about 30% y-o-y and FY12 was no exception. Both IBM and HP have in excess of 30% market share in the Blade space and driven by the big demand from data centers which went in for the high-density Blade servers.
The Non-x86 Story
This is clearly a dampener and much can be attributed to the market realignment ever since Sun went into Oracle’s fold few years back. In the non x86 space, IBM holds leadership and emerged as a leader in the non-x86 space with a strong uptake for its Power 7 series. The non-x86 UNIX market saw significant decline over the year both in terms of units as well as value. Two things are happening here. One, the predominantly 3
DATAQUEST | A CyberMedia Publication
SERVERS
horse race has become bi-polar and despite Sun–Oracle’s bestof-breed non-x86 products, the immediate fallout post the SunOracle merger has led some of the Sun’s clients new purchasing decisions going for IBM and HP in the past. The second major factor that has shrunk the total addressable market is the power x86 servers bring to table and hence most of the mission-critical jobs can be done out of x86 servers. So, it is the verticals like BFSI that are traditional buyers of UNIX to an extent, remained loyal to UNIX, and this loyalty sustenance might get challenged in the days ahead. HP did have a tough time over the last year in its business critical systems portfolio and what aggravated HP’s challenges were the changes in the top management and ink-
76 | August 31 - September 15, 2012
ing out new strategies also took time. However FY13 would be the year where analysts would be watching HP’s performance on business critical side more closely as the success of the new strategies put in place by the new CEO Meg Whitman and her team would be seen. Also, HP is locked into Itanium and despite Intel announcing in the next few years Itanium roadmap, in the long run, the CIOs might get the feel of getting locked inti Itanium. But HP is bullish that such a thing is not real and Itanium is alive and kicking. However CIOs are also at the moment not too worried as HP even in the case of products being discontinued has a policy of offering service and hence at the moment it’s not a major concern for HP’s Itanium users. But having said that, it does not mean that all the CIOs will be loyal when it comes
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to new purchases on Itanium that might go to competitors like IBM for its Power 7.
Outlook
Server volume/value will remain flat during FY13. This can be attributed to long decision making cycles and extended product refresh cycles. The new age servers will clearly remain dated beyond the typical 2-3 years product refresh. The x86 market is expected to retain its market growth while the UNIX market will further decline. Vendors to retain their UNIX customers will increasingly cross sell x86 to customers at the same time adding value to their UNIX environment. Instances like HP’s ‘Project Odyssey’ can be seen as nimble steps in that direction. Clearly FY13 will be a year of technological innovations for servers and whoever innovates will garner more market share. n
DATAQUEST | A CyberMedia Publication
Security juniper_reverse_white.eps
Defend and Protect With security breaches becoming more sophisticated and the emergence of cloud, BYOD, and virtualization, the security market stands to gain from increased budgets Meghna LAL meghnal@cybermedia.co.in DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 77
Security
About 35% Indian companies experienced data breaches due to negligent insiders 20% experienced the most expensive cause of a data breach—
The security market is expected to have a CAGR of 16.4% from 2011-2016 with UTM leading the way. Cisco continued to be the market leader in network security with a market share of 35% 78 | August 31 - September 15, 2012
(In `crore, Growth%)
14%
1,750
1,994
2,325
FY10
FY11
FY12
Source: DQ Estimates
17%
With 2011 being regarded as the most ‘impressive’ year for security breaches, security market will continue to grow with UTM leading the way.
hacking or malicious insider breaches 60% Indian businesses are struggling to effectively manage and protect digital information 89% Indian organizations have lost information in the past year Over 90% of Indian SMBs are not sufficiently prepared for disasters These incidents have a significant impact on the functioning or the enterprise: 31% of Indian organizations revealed that losing information could lead to decreased revenues, apart from loss of customers (34%), increased expenses (33%), and brand damage (35%). Furthermore, 31% of respondents were unable to comply with government regulations
and 40% faced similar challenges with external legal requirements around information management in the past year. The cost of just a single data security breach can be catastrophic for an enterprise. A benchmark study, conducted by the Ponemon Institute and Symantec estimates an economic impact anywhere in the range of $1 mn to $58 mn in the US and `53.5 mn in India— damage to enterprise reputation and loss of customers and market share notwithstanding.
Key Players Analysis
The security market in India grew by 17% to touch `2325 crore in FY12. According to a report by Gartner in 2011, the market is expected to have a CAGR of 16.4% from 2011-2016 with UTM leading the way. Cisco continued to be the market leader in network security with a market share of 35%. The company is planning to roll out a fresh suit of security products and solutions in India with the launch of its ASA series of security products that combine firewall, VPN, intrusion prevention, remote access, and other features. The security software market in India was pegged at $209 mn in 2011 and is set to grow to $320
Network Security Market in India (In ` crore Growth%)
Juniper Networks 15%
11% 7%
Dell SonicWall 12%
Fortinet 6%
880
942
1,046
FY10
FY11
FY12
Others 11%
Cisco 35% Check Point 21%
Source: DQ Estimates
Consider this:
Indian Security Market
Source: DQ Estimates
O
nce upon a time in Utopia, there lived a happy IT manager, with his users, data, and applications all safe behind the hardened LAN that he managed and enhanced from time-to-time. Security concerns focused on physical break-ins and actual theft or destruction of data devices and media. But things changed. And soon enough the IT manager was dealing with malware, worms, viruses, bots, DDoS attacks, and other breaches unleashed by the evil King of Hackland, and data security took on unprecedented importance. Alas, Utopia was doomed! What perhaps the IT manager had failed to realize is that a secure network is no longer just about firewalls and perimeter based defenses, but more about protecting the information, ensuring trusted interactions. 2011 is being regarded by many as one of the most ‘impressive’ year for network security breaches.
Cisco continued to lead the market; big data center build out and emergence of BYOD will continue to drive the market
visit www.dqindia.com
DATAQUEST | A CyberMedia Publication
Complexity is the number one issue facing your network today. It is a money and resource drain and a barrier to growth. The solution is not going to be found in more of the same. It’s going to take a new approach. Junos is a new approach, designed to simplify the network architecture. These are new neTwork issues, and They won’T go away wiTh old neTwork Thinking.
ComplexITy Is a gIven, RIghT?
juniper.net/simplyconnected
© 2012 Juniper Networks
À Inbound Response Management Priya Sharma v:1800 209 3062 f:022 66765553
Security
Highlights
Content Security Market (In ` crore Growth%)
37%
720
FY10
FY11
FY12
Source: DQ Estimates
630
Symantec 50%
Trend Micro 14%
Source: DQ Estimates
McAfee 27%
14%
460
BFSI, telecom, manufacturing, and government drove the growth for Symantec; major revenue streams were virtualization, mobility, and cloud.
mn by 2014, a 50% growth as per Gartner estimates. Companies in Asia-Pacific are expected to spend $4.7 bn on security, according to Gartner. With big data center build out in India and the emergence of BYOD, Cisco is betting big on the Indian security market. “Further, a combination of rapidly changing customer expectations and radically different technological advancements is driving a new generation of on-demand security services, which are transforming the way organizations operate and innovate,” says Mahesh Gupta, VP, borderless networks, Cisco India and Saarc. According to him, the way forward for the enterprise is lesser client based endpoint security services and more cloud security based linkages from a thin endpoint connection manager. Fortinet maintained #1 position in the UTM vendor space for last 4 years (18.9% share of the UTM security appliance market through Q1 2012) and the #4 position in the overall security appliance market for 2011, according to IDC. The company registered the highest growth rate (56%) in India. It built up 2 strong vertical practices—telco and government. One standout deal in India last year was with a government division that 80 | August 31 - September 15, 2012
Increased consumerization and BYOD is fast blurring the concept of a perimeter in an enterprise, intensifying the need for security across multiple access points The security market is expected to grow at a CAGR of 16.4% from 2011/16 with UTM leading the way
Others 9%
The security software market in India was pegged at $209 mn in 2011 and is set to grow to $320 mn by 2014, a 50% growth as per the estimates provides IT solutions and communication infrastructure to all local government organizations. Fortinet is also expanding its footprints to tier-2 and -3 cities by expanding their channel base. The number of its resellers in India and Saarc region crossed 200 in December 2011 and is expected to scale up to 300 by the end of 2012. The company launched a series of channel initiatives focusing on education, profit, and proximity in April this year to support its objective of creating value for, and getting commitment from, its resellers and distributors internationally. Juniper continued its focus on the telecom market for its security software solution for smartphones after its acquisition of S Mobile. visit www.dqindia.com
Companies are still not spending enough on creating and implementing mobile security policies that address the rapid growth in mobility and BYOD trend as far as mobile security is concerned. It was a tough year for India’s telecommunications industry with high competition and regulatory complications and uncertainty, but it is poised to recover from these challenges and companies such as Juniper Networks will benefit from the upswing. For quite some time, Check Point had been in the fray for changing the box UTM landscape by introducing software blade architecture. FY12 saw that dream finally taking shape. The company saw good growth across key financial metrics, driven by the newly introduced array of network security appliances. It also bagged major deals from the government and introduced ThreatCloud, the first collaborative network to fight cyber crime. Check Point was named the ‘Network Security Vendor of the Year’ under the ‘Enterprise Vendor Category for 2012’ by Frost & Sullivan for the APAC region. “We have been growing ahead of the market and are focusing on channels to expand our footprint both vertically as well as geographically,” says Bhaskar Bhakthavatsalu of Check Point. It had been widely speculated that Dell would acquire Fortinet with its strong position in the UTM market and significant appeal for
DATAQUEST | A CyberMedia Publication
Security
Major Security Breaches of 2011-12 Electronics giant Sony faced a breach in the company’s PlayStation network that compromised the personal data of some 77 mn accounts on the online service. The attack cost it $170 mn. In June, Citigroup acknowledged that hackers managed to steal credit-card numbers from about 360,000 affected clients. The fraud loss was estimated at $2.7 mn. Hackers used SecurIDs—the tokens used by office workers to access corporate systems—to launch cyber attacks against Lockheed Martin in May. In the same month, Fidelity National Information Services took a $13 mn hit due to ‘unauthorized activities’. Closer home, in July 2012, India’s naval computer systems at the Eastern Naval Command headquarters in and around Visakhapatnam, has been reportedly broken into by alleged Chinese hackers. The naval computers were found to be infected with a virus that secretly collected and transmitted confidential files and documents to an unauthorized IP addresses. In July, 2012, The Indian Institute of Management-Ahmedabad (IIM-A) filed a complaint with the police ‘apprehending’ theft of data from its computer network and servers by unauthorized persons.
the enterprise. But Dell’s acquisition of SonicWALL strengthened their overall market position and opened up new opportunities for their global channel partners. With the deal, Dell gained immediate access to network security and secure remote access solutions that align well with Dell’s strategic objectives in both the SMB and enterprise markets. It has been estimated that Dell SonicWall has garnered about 12% of the security market in India. The content security market continues to be dominated by Symantec, followed by McAfee, Trend Micro, Websense, and Check Point. The major revenue streams for Symantec in India over the last year were: Virtualization, mobility, and cloud. In line with last year, BFSI, telecom, manufacturing, and government drove the revenues for Symantec. The company saw excessive movement of top management, including its MD, Ajai Goel and channel sales head, Vineet Sood which worried channel partners. But the company continues to be the market leader based on its large portfolio to enterprise customers, strong post sale support, end-toDATAQUEST | A CyberMedia Publication
end solutions, and overall better TCO for enterprises. Having established itself in the enterprise segment (35-40% market share), Trend Micro is focusing on the consumer market, estimated at $100 mn, in a big way of which it currently controls 5% market share. The company aims to capture 20% consumer market share by 2014 in India. According to Amit Nath, country manager, India and Saarc, Trend Micro’s strategy for the consumer market in India is to focus on tier-2 and -3 which is expected to witness a 10-15% growth. It has started aligning & strengthening existing channel partners and increase to 3,000 channel partners by end of this fiscal with go-to-market strategy to establish Titanium as the leading anti-virus solution. Constant movement of top McAfee executives in the past 2 years was a concern area with channel partners and enterprise customers with Indian operations being managed from Singapore. To give it a greater local control, McAfee appointed Jagdish Mahapatra as the managing director for India and Saarc operations in visit www.dqindia.com
The truth is, without radical innovation and new thinking, the network itself is likely to break— either through the impossible operating costs of maintaining the infrastructure or by the inability of complex, proprietary solutions to meet the demand.
It’s time for a new approach. And it starts with a new philosophy.
À Inbound Response Management Priya Sharma v:1800 209 3062 f:022 66765553
August 31 - September 15, 2012 | 81 JN_DQTop20_STRIP_V1.0.indd 5
9/15/2012 3:45:07 PM
Security
February this year and recently announced the appointment of Anand Prahlad as managing director (operations) for its India business. With equal presence in all 4 threat vectors: The end point, the network, email, and web-traffic, Mcafee is betting big on network and database security, which amounts to the largest part of our revenue worldwide including India. Post the acquisition of NitroSecurity, the company has developed compelling offerings around security information and event management (SIEM) that is taking off really well in India. The company is also focused on its cloud offerings, especially in the SMB market.
Growth Drivers
The increasingly sophisticated threats and management overheads facing each organization has significantly boosted the need for a robust security system in place. “Cyber threats have been around forever but had been more opportunistic than targeted. Whereas organizations today are victims of Advanced Persistent Threat (APT), characterized by its sophisticated approach and the need to remain hidden for as long as possible to obtain large amount of sensitive information to cause maximum damage,” says Bhaskar Bhakthavatsalu, regional director, India and Saarc, Check Point Software Technologies. According to Mahesh Gupta, VP, borderless networks, Cisco India and Saarc, 3 key trends emerged during the past year and are bringing about a fundamental shift in how security is developed and deployed. These are: a) the rapid rise of the consumerized endpoint, b) the onset of virtualization, mobile, and cloud computing, and c) the growing use of high-definition videoconferencing. 82 | August 31 - September 15, 2012
Key Trends of FY12 Unified Threat Management (UTM) Continues to Gain Ground—Service providers and enterprise are cashing in on the benefit that consolidation brings over point solution. Cloud based public and private applications offerings are also driving the demand for UTM products. Adoption of Virtualization by Large Enterprises—Virtualization is fast gaining recognition by leading enterprise networks in the world as a perfect convergence solution with consolidation to achieve hyper-cost benefits while improving efficiency in the data center. Government Regulations—DoT has mandated Indian telcos to be responsible for security of their own networks and have an organizational policy on security and network management. The RBI mandate too has enforced IT guidelines for banks and financial institutions. Such government regulations have prompted the industry to invest and implement network security solutions contributing to the growth of the network security market. Growth of Consumerization and BYOD—With employees demanding remote access to business applications, data and resources and their desire to connect to resources from both corporate and personally-owned devices, thought targeted at increasing enterprise efficiency, also represents an increasing risk on information security.
Both consumers and enterprises have increased the purchase of multiple security tools such as anti-virus, anti-spyware, firewall, intrusion detection, etc. For the endpoint security software market, the consumer market is also as big as the corporate market with the latter expanding its features to include browser security, encryption, and centralized management. In addition, regulatory compliance requirement is also a significant driver for security solutions with companies required to align with international regulations, standards, and best practices when collaborating with global business partners. In a survey of the Indian financial services sector, Symantec found that compliance and governance were key drivers for IT security investments with 31% of respondentbanks invested in identity management and stated that investment in technologies to address such regulations were likely to continue in the past 12 months. “Almost every CIO we talk to ranks mobility and cloud at the top of the list. Both have the potential of significant improvevisit www.dqindia.com
ments in IT economics and efficiency,” says Chanda Ramakrishna, national distribution manager, Dell SonicWALL India. One report, for example, cites that android users in mid-2011 were 2.5 times more likely to encounter malware than at the beginning of the year. Because smartphones and tablets are a more intimate communications channel than a computer, users are 30% more likely to click an unsafe link. According to a study by IDC, people downloaded 10.9 bn mobile apps in 2010 (a figure IDC expects will increase to nearly 76.9 bn by 2014), each a potential threat to corporate security and a potential drag on network performance which has direct impact on productivity and profitability. The combination of these factors presents IT departments with a serious dilemma. “On one hand, while smartphones and tablets are simply too powerful and useful for businesses to ignore, empowering and enabling users to work far more flexibly and productively, they are also difficult to deploy securely, adding substantial pres
DATAQUEST | A CyberMedia Publication
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sure to technology budgets and resources,” adds Ramakrishna of Dell SonicWALL.
Industry Adoption
In May 2012, Symantec Intelligence observed a whopping 187% rise over the previous month in phishing attacks on the Indian brands, all of which were in the banking sector. The report also observed that globally the Defense industry has been the targeted industry of choice in the first half of the year, with an average of 7.3 attacks per day. The Symantec State of Security Survey 2011 revealed that nearly 75% of Indian businesses have been attacked in the past 12 months, but on-going security efforts have reduced the revenue loss of cyber attacks by 40% on an average. The survey found that 53% of Indian businesses are planning changes to enterprise security
84 | August 31 - September 15, 2012
in the next 12 months, the areas of change being risk management, endpoint, and web security. The survey also found an increase in budget and manpower for private and public cloud initiatives. The BFSI sector accounts a share of 36% of the total IT security market in India according to a Frost & Sullivan report. It is estimated that a majority of Indian enterprises spend a mere 8-10% of their IT budget on IT security while the financial enterprises allocates around 25% for the same. The BFSI sector was closely followed the ITeS/BPO vertical as far as security spending is concerned. The traditional enterprises, retail, health, and education verticals are also fast catching up. Enterprise customers are a high priority target market since a substantial volume of sensitive information and e-commerce transac-
visit www.dqindia.com
tions are exchanged over corporate networks and the internet daily. Largely corporations with 10,000 employees are expected to be the top network security spenders, with security budgets increasing proportionately to the company sizes. According to Frost & Sullivan, the traditional network perimeter was seen shifting as new business practices emerged. Due to this, growth in the Indian network security market was propelled by virtualization, cloud computing, mobility, and enterprise social media adoption. The overall market sentiment picked up momentum in the light of an improving economic climate and an increasing awareness of the need for network security solutions. Technology convergence, regulatory compliance, and the continuous growth of network infrastructure will continue to propel the Indian network security market from 2011 to 2018. n
DATAQUEST | A CyberMedia Publication
THEME : “Alan Turing - Creator of Intellectual Currents”
6 - 7 October 2012
The Faculty Hall, Indian Institute of Science, Bangalore, India. ALAN TURING 1912 -1954
9 - 10 October 2012
Dept. of Computer Science & Engineering Organized by : Indian Institute of Technology Kanpur, India. Dept. of Computer Science & Automation, IISc
Supercomputer Education & Research Centre, IISc Dept. of Computer Science & Engineering, IIT Kanpur Computer Society of India
In Association with : TC 1 & TC 2
Media Partner : ACM India Council
The objective of these events is to offer a befitting tribute to the extraordinary scientific achievements of the creative genius Alan Turing, whose Birth Centenary year is being celebrated the world over in 2012. Highlights of the IISc, Bangalore Event include: • Plenary Lectures by Turing laureate Prof. Raj Reddy (CMU, USA) and by Prof. Kurt Mehlhorn (Max Planck Institute, Germany) Prof Raj Reddy Prof Kurt Mehlhorn • Talks by leading researchers and professionals on Turing's pioneering contributions • Special audio-visual session on Turing Award Winners by Doctoral students • An exhibition on History of Computing • Screening of ‘Code-Breaker’ - A Biographical Movie on Alan Turing ‘Code-Breaker’-Movie • An online programming contest and a Turing Quiz for students • Panel session on Computer Science / IT Education in India The venue of the event is the historic Faculty Hall in the Indian Institute of Science, which completed its centenary in 2009.
Highlights of the IIT, Kanpur Event include: • H V Sahasrabuddhe Endowment Lecture on "Inflections in Computing” by Prof. Kurt Mehlhorn (Max Planck Institute, Germany) • Talks by leading researchers & professionals on Turing's pioneering contributions Prof Kurt Mehlhorn • Screening of ‘Code-Breaker’ - A Biographical Movie on Alan Turing The events will be a unique opportunity for Computer Science/Information Technology Faculty; Doctoral, Master's, & Senior Undergraduate Students in Computer Science; Researchers & Professionals in Information Technology R & D, to get exposed to path-breaking technical contributions of the Founding Father of Theoretical Computer Science.
Event details are available on the website http://lcm.csa.iisc.ernet.in/turing-event For more information on the event, send email to CSI Bangalore Chapter at csi_bc@yahoo.com Please visit: http://www.csi-india.org/web/csi/alan-turing-special
Storage
Taming the Flood With growing data, enterprises need better ways to store, access, analyze and profit from it. All vendor moves over FY12 hence were polarized on these elements
Shrikanth G shrikanthg@cybermedia.co.in
A
s we look at FY12, the storage story revolved around ‘Unified Storage’. As a concept, unified storage has been talked about for years, but it hit the terra firma over last year and indeed it has created a taxonomical change in the industry. The network storage industry is composed of NAS and SAN and this getting blurred by unified storage that brings in a whole lot of unique deliverables to the table. The industry is moving towards one unified storage platform and no longer predominantly divided on NAS or SAN lines and it is up to the enterprises to leverage NAS/SAN in one single platform. What is powering the era of unified storage is simplicity, manageability and scalability. “IT organizations in mid-sized and 86 | August 31 - September 15, 2012
visit www.dqindia.com
DATAQUEST | A CyberMedia Publication
Storage
Global Landscape
According to IDC Worldwide Quarterly Disk Storage Systems Tracker Q1 CY12, the worldwide external disk storage systems factory revenues posted an y-o-y growth of 7.1% and stood at $6 bn, in Q1 CY12. Meanwhile the total disk storage systems market posted just under $8 bn in revenues, representing 6.8% growth from the prior year’s first quarter. Total disk storage systems capacity shipped reached 6,037 petabytes, growing 20.8% y-o-y. In Q1 CY12 External Disk Storage Systems vendor performance globally shows EMC maintaining its lead in the external disk storage systems market with 29% revenue share in the first quarter, followed by NetApp in second place with 88 | August 31 - September 15, 2012
Highlights
Indian Storage Market
Market moving towards a one unified storage platform Total external storage market grew by 14% to `1,584 crore in FY12 Storage peripherals market grew at a healthy pace
(In `crore, Growth%) 14%
14.1% market share. IBM is in the third place with 11.4%. HP and Hitachi ended the quarter in a statistical tie for fourth place with 10.2% and 9.4% market shares, respectively.
The Local Dynamics
Given this backdrop if we analyze the Indian market dynamics—like worldwide, there is a clear orientation towards unified storage and the thought was more inclined to a sentiment that instead of a separate NAS or SAN appliance, a converged unified storage box was seen as a better value proposition. As we analyze key vendors, they went aggressive over the last one year on unified storage. In simple terms unified storage offers seamless delivery of block and file storage from one platform. What it means is that enterprises can leverage a single platform for file and block data services. Centralized management makes administration simple. Data efficiency services reduce the capacity requirements up to 50%. So clearly the USP of unified storage lies in its ability to bring a whole deal of storage management functionality on one single device. It’s an integrated storage that concurrently supports Fiber Channel (FC), FiberChannel-over-Ethernet (FCoE), IP Storage Area Networks (iSCSI), and NAS data protocols. So clearly that’s NAS and SAN in one single box. EMC and NetApp visit www.dqindia.com
1,388
1,584
FY11
FY12
Source: DQ Estimates
large enterprises are struggling with a deluge of data and increasingly diverse data management needs. They require storage solutions that meet their growth requirements while simplifying operations, reducing the total cost structure, and quickly adapting to changing business needs,” said Richard Villars, vice president, Information and Cloud research, IDC, reflecting on the unified storage phenomenon. According to Dataquest estimates the total external networked storage market in India (including storage software) grew by 14% to `1,584 crore. (This does not include secondary storage). So with the blurring of lines, vendors took to the market with predominantly unified storage devices and solutions that makes for both NAS and SAN. And that is big way forward for the industry as well and it gives more freedom and choice for the CIOs to create a more robust, efficient storage backbone.
Powered by newer technologies like ‘Unified Storage’ FY12 saw CIOs exploring solutions that can transform their storage architectures more agile, flexible, and scalable Note: Revenues do not include secondary storage devices
were early movers in this space and they made concrete gains riding on unified storage. EMC, the market leader, adopted a multi-pronged approach and as we look at its strategy over FY12 its unified business grew by more than 27% y-o-y with great traction on the VNXe/VNX; and saw the install base going to more than 460 units. It may be recalled that in 2011 EMC made aggressive forays into the unified storage space by announcing the VNX family designed for virtual data centers and offered a converged solution consisting of its Clarion SAN and Celerra NAS systems into a single, unified family of solutions. The VNX family includes the VNXe entry series with added simplicity for small and medium businesses, and the VNX series, delivering higher performance, efficiency, and simplicity for demanding virtual application environments. And this acted as replacement for EMC’s previous Clariion and Celerra product lines. This converged product family combines block and file protocols in a single platform, managed by the new Unisphere management software.
DATAQUEST | A CyberMedia Publication
Storage
Storage Peripherals: Making the Most of it
Analyzing Vendor Market Shares (In %) Dell 6% Symantec 7%
Driven by the boom in the consumer space and the need for data storage on the go, the storage peripherals market grew at a healthy pace. According to a Gartner observation: “Globally in 2011, the SSD market growth intensified as adoption and competition increased in both the PC and data center segments to reach a combined total of $5.8 bn. The flash card and USB flash drive markets remained challenging, with growth relegated to mobile phones and emerging regions.” Clearly the emerging markets push is why most of the leading vendors in the fray attempted to grow the market and share in this part of the world. If one looks at players like Kingston, it saw the India sales growing at a healthy pace and a tremendous traction for its SSD business which grew by a whopping 110%. Meanwhile the sales volumes for USB flash drives and Micro SD cards almost doubled. It launched innovative products like the Wi-Drive for the Apple products. It is indeed a tough market as players like Transcend had a tough time and saw their overall revenues and share going south. The latter half of the year was difficult for the external hard drive market due to the Thailand floods that created some demand and supply problem and inflated the market.
As we look at NetApp another aggressive vendor and one of the pioneer in the unified storage space, it has a range of innovative solutions. For instance, its SANscreen software provides a unified view across and an end-to-end storage environment. It’s agentless and heterogeneous, SANscreen delivers real-time visibility across all major storage vendors’ platforms. SANscreen automatically correlates the storage infrastructure into a set of “storage services,” detects and analyzes the impact of change, gathers real-time and historical performance data from virtual machine to storage device, allows customized reporting that drives all storage operation decisions, and much more. The value pitch NetApp drove home was the message, “With your current legacy environment under control, and with a unified view of both real-time and future data, you can more easily migrate existing applications from legacy archi90 | August 31 - September 15, 2012
According to experts, by 2020, data will grow to 35 zetabytes; 44 times the amount of digital information stored today
tectures to a truly unified storage architecture.” According to Anil Valluri, president, NetApp India, “Storage is becoming an enduring infrastructure layer in IT and commands for a major share in solutions like shared virtual infrastructure, private cloud, and desktop virtualization. NetApp visit www.dqindia.com
Others 3%
EMC 24%
NetApp 10%
IBM 23% HP 12%
Source: DQ Estimates
HDS 9%
Sun-Oracle 6%
Clearly it is a tightly fought battle between EMC and IBM. Each vendor has a sweet spot and tried to offer differentiated offerings
has been delivering technology and product firsts for 20 years and is poised to be the preferred storage technology partner of choice to customers across verticals.” Enterprise storage is the market in which each vendor fights it out literally in terms of revenues and market share. As we look at IBM which gave tough competition to EMC, it topped the Dataquest-CMR Customer Satisfaction Audit (CSA) 2012. Also IBM was one of the fastest growing top 5 external disk storage vendors in India driven by past acquisitions (like XIV) and R&D (Storwize V7000 SONAS). With those assets it made big inroads on the SMB segments as well over the last year. Clearly the sales performance reflects higher customer satisfaction. IBM also pitched hard its unified storage offering (Storwize V700) and played the storage efficiency game. It harped on such
DATAQUEST | A CyberMedia Publication
Storage
DATAQUEST | A CyberMedia Publication
Storage Peripherals Market (In `crore, Growth%)
35%
59%
36% 2,676
4,265
5,757
FY10
FY11
FY12
Source: DQ Estimates
class leading features like the ability of Storwize to compress data by as much as 80% through supported real-time compression for block storage, enabling up to 5 times as much data to be stored in the same physical disk space. Unlike other approaches to compression, IBM real-time compression is designed to be used with active primary data such as production databases and email systems, dramatically expanding the range of candidate data that can benefit from compression. As its name implies, IBM Real-time Compression operates as data is written to disk avoiding the need to store uncompressed data while awaiting compression. As we look at HDS, it worked on a strategy aimed at abstracting the complexities of the underlying storage environment to create a service-oriented model in which organizations manage storage as a service to their consumers, regardless of the nuances of the underlying physical devices that serve up the storage. Clearly this strategy rode on a fully unified approach. Meanwhile players like Dell took to market its ‘Fluid Data’ architecture that is supported by strong design tenets to create shared values across the portfolio and enable an end-to-end offering with a consistent set of storage characteristics. Dell sources say that it provides value through automated, highly virtualized, and non-proprietary end-to-end solutions, which enable customers to spend less on maintaining infrastructure and more on innovation From an HP’s perspective, it had taken a differentiated approach through its Converged Infrastructure (CI)—this is an ecosystem based approach that gives
The storage peripherals market comprises flash drives, flash cards, MP3/MP4 players, external HDD, and digital cameras. All sectors saw good buoyancy over FY12
enterprises an end-to-end depth in managing their IT assets. Over the last year HP’s ESSN’s division had taken a cross-selling inter-collaborative approach for making the CI piece work. It has also embarked on a converged storage play with strategies like ‘Store 360’ announced at its 2011 Discover event clearly manifests its intent to go forward with a unified storage paly as we move forward. HP’s storage business is witnessing a strong momentum and armed with a slew of products like 3PAR, IBRIX, StoreOnce and LeftHand. HP is determined to give a very tough competition to EMC, IBM and Dell in FY13. Industry observers say that since HP is pitching storage along with CI, makes its aggression manifesting into real deals across segments during FY13
Road Ahead
According to industry experts, organizations today are creating, leveraging and storing more information than ever before. According to experts, by 2020, data will grow to 35 zetabytes; visit www.dqindia.com
In simple terms unified storage offers seamless delivery of block and file storage from one platform. What it means is that enterprises can leverage a single platform for file and block data services
44 times the amount of digital information stored today. Business will be responsible for 80% of this information and as IT organizations upgrade their technology infrastructures, 2x the amount of data will be created during the process. Clearly data is growing and many of it is unstructured and we have reached a stage of intelligence management and hence increasingly the market is moving form a multiple storage silos (in certain cases) to one unified platform. What is interesting is that we are standing at the threshold of many disruptive trends like big data, cloud adoption in the real sense, and analytics. All these are closely tied with storage and hence all vendors keep innovating in this space. In all, one can see a tough battle for market share with players like HP upping its share significantly. Dell is also expected to make significant inroads with its storage offerings. n August 31 - September 15, 2012 | 91
Eventful
Times
While the dipping growth trajectory was a cause for concern in sub-segments like infrastructure management, systems software and middleware among others, there was a lot on the delivery side ONKAR SHARMA onkars@cybermedia.co.in
Infrastructure and Systems Software
The RDBMS market in India buzzed with activity in sync with global trend, especially in the wake of the big data debate that has put pressure on companies to manage and utilize their data to achieve future goals. It outpaced the last year growth of 14% with 20% in FY12. The overall market size, thus, stands at `1,970 crore in FY12 from `1,629 crore the previous year. Oracle continues to be an undisputed player in the RDBMS market in India with resounding 62% market share. It grabbed the market with a number of solutions and the engineered systems have further added to the strength. Following closely are Microsoft and D-Link in the Indian market. But the turnaround has started taking place in the market, though not so visibly. After its acquisition of Sybase, SAP tried emerging as an option for enterprises in India. Also adding to its portfolio, SAP has wooed a number of customers for its in-memory HANA database management solution. But DATAQUEST | A CyberMedia Publication
The RDBMS market outpaced last year’s growth of 14% with 20% in FY12 When it comes to enterprise management and information management software, HP leads the market The development tools market stood at `1,644 crore
to share Oracle’s empire seems a little difficult in the near future.
No Takers for Middleware?
The facts suggests that middleware vendors had hard time selling in the Indian market, though many of them claimed to have bagged a number of clients. Oracle was the clearcut loser in this process which faced problems to get customers, though IBM was slightly a better choice for some of the buyers that chose to go for middleware. Experts cite cloud computing as a biggest challenger to middlware. They say the clients are no longer interested in investing on the middleware as the cloud computing solutions are doing the needful. But if vendors are to be believed, it is a short-term phenomenon that will vanish as the awareness increases in the
market. The middleware market only grew 6%. The biggest loser this time, thus, was none other than Oracle which slipped to #2. IBM emerged as a market leader with 34% market share. Given the overall market scene, it does not seem to be a duopoly area. Players like Microsoft and SAP are fast gearing up to share the arena.
Infrastructure Management
When it comes to enterprise management and information management software, HP leads the market, although players like IBM and CA vie for the bigger chunk. The overall infrastructure management software market in India accounted for `1,462 crore with merely 7% growth. Certainly it fared below expectations. The upper hand which HP has over the competition after it acquired Mercury, Opsware, and TRIM continues to help it. However IBM and CA were extremely competitive. Increased need for service assurance, maintaining the quality of a network or IT infrastructure due to improved quality control norms, and IT security are areas which CA is banking on to increase its market share.
RDBMS Market
(In `crore, Growth% and Share %)
SAP 1%
Others 2%
20% 14%
D-Link 15%
1,629
1,970
FY11
FY12
Microsoft 20%
Oracle 62% Source: DQ Estimates
Database Fancy Carries On
Highlights
Source: DQ Estimates
A
number of things kept the growth wheel moving for the infrastructure and systems software segment. FY12 witnessed a healthy demand for Rotational Database Management Systems (RDBMS) as companies were seen spending on managing and utilizing their data. But middleware was perhaps the worst performer since the enterprise segment showed no interest in buying the solutions. However the uptrend was obvious in the development tools market as the leading players like Microsoft and IBM ruled the roost. This year, we have clubbed the systems software segment with infrastructure software segment.
RDBMS Market was again on the growth trajectory, thanks to a number of government projects, BFSI, FMCG, and telecom verticals
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August 31 - September 15, 2012 | 93
Infrastructure and Systems Software
But Google is leading the space. Microsoft’s effort to bundle the service for free with its desktop version has gained acceptance but to little help.
Indian Middleware Market (In `crore, Growth% and Share %)
1,507
FY12
IBM 34%
Systems Software Blues Source: DQ Estimates
FY11
Others 28%
Source: DQ Estimates
1,421
SAP 2%
22%
22%
Oracle 31% Microsoft 5%
Indian Middleware Market bore the burnt for Eurozone crises and the popularity of cloud. Even market dynamics changed significantly
Infrastructure Management Software Market in India (In `crore, Growth% and Share %)
7%
1,365
FY11
1,462
Source: DQ Estimates
IBM 16%
HP 42%
CA 37%
FY12
Source: DQ Estimates
18%
Others 5%
Infrastructure management software market in India was dominated by HP. But IBM, CA, BMC software remained extremely competitive with a range of mid-tier and point solution vendors offering alternate solutions to enterprises
Development and Productivity Tools
Microsoft’s run in the cloud space has bolstered the company’s prospects in the development tools market where it has achieved the mark of 10,000 applications on Azure platform. The development tools market stood at `1,644 crore. It was the second year when it grew at 10% rate. While Microsoft dominated, HP and IBM followed. When it comes to productivity suites, Microsoft is the dominant player that continues to grab close to 98% market. While in FY12, the market was bearing the brunt for Eurozone crises, it grew its business with merely 5%. Postponement of IT spend 94 | August 31 - September 15, 2012
was the main reason behind the slow adoption for MS Office 2010. Despite this, Microsoft had a number of takers for its online version in the SMB sector. It monetized the business through its cloud push through Office 365. Competitors like Google, OpenOffice, and CorelDraw Office had their presence in the market. But Microsoft seemed undeterred as far as wide recognition and acceptance in the mass market was concerned. But one area where Microsoft is still struggling to rule is online office suite, for which it has changed its strategy. To gain market in the online office suite, it revamped its Hotmail service.
The growth trend was disturbed as growth came down to 16% from 37% the previous year. Main reason, of course, was the wait for Microsoft’s Windows 8. But the development in the server and the mobile space had boosted the market. However the onslaught of ultrabooks have caused a some sort of sensation in the market for new buyers. Equally open source counterpart Linux along with OSes like Ubuntu, Fedora, etc, have registered increased entries in the business environments especially where cost is the concern. Also at the server level, even large enterprises are using Linux versions from Ubuntu and Fedora. Red Hat leads the open source market with close to 80% market in its claws. Another competitor is, of course, Apple with iMac and Mac OS. But Apple has a niche audience in certain environments like advertising and creative industry which accounts for a very less market. The server landscape was dominated by Microsoft as it held the largest market. Microsoft Windows Server 2008 R2 dominated the market in the virtualized environments. And the growing trend of dynamic data centers have pushed the adoption for Windows Server 2008 R2. But Microsoft is vying big on the next version of the operating system codenamed Windows Server 2012. But on the server space, competition is a bit higher than the PC space. Red Hat, if not dominating, is surely a promi-
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DATAQUEST | A CyberMedia Publication
Infrastructure and Systems Software
DATAQUEST | A CyberMedia Publication
Development Tools Market in India (In `crore, Growth% and Share %)
10% IBM 8%
1,644
FY11
FY12
Microsoft 63%
HP 17%
Source: DQ Estimates
1,494
Others 12%
Source: DQ Estimates
10%
Microsoft completed the development of 10,000 apps on its Azure platform, dominating the market with 63% market share
Productivity Suites Market in India
Others 2%
(In `crore, Growth% and Share %)
840
FY11
FY12
Microsoft 98%
Source: DQ Estimates
800
Source: DQ Estimates
5%
7%
Microsoft governs the productivity suites market in the absence of serious competition, though Google has really upped the ante in the cloud productivity suite space
Systems Software Market in India HP 3%
16%
Others 14%
IBM 3%
37%
2,320
2,695
FY11
FY12
Linux 15% Microsoft 65%
Source: DQ Estimates
(In `crore, Growth% and Share %)
Source: DQ Estimates
nent player in the server space. It had gained an array of customers with Enterprise Linux 6.O and its further versions like 6.3. Open Source: The positioning of Red Hat clearly has an impact on the open source market. As they say, in tough times the open source market grows more than ever. But it was not the case last year. Despite tough times, there were no clear signs that open source created an extraordinary buzz. But yes, there was certainly growth. Apart from Red Hat, a number of communities working in silos continued to promote open source. Another disappointment was Google’s Chrome book which did not hit the Indian shores, mainly due to a low acceptance in the global market. The overall Linux distribution market soared `404 crore from `340 crore in FY12. UNIX: The rise in x86 platform has no doubt hurt the non-x86 server sales. But FY12 was a year when the companies revived their interest for UNIX. But there was barely any difference. As it is clear that after Solaris went into Oracle’s fold, UNIX market has undergone major changes. Certainly Oracle is more busy in other things than pitching Solaris. It has led IBM and HP poach a number of Oracle’s customers. This is the reason IBM claims to be the new leader of UNIX market, followed by HP and Oracle. Mobile OS: Even though Microsoft rules the desktop and laptop OS market with resounding market share, it finds its business hugely affected with the advent of smartphones. In the smartphone world, Android OS from Google and iOS from Apple dominate the market. What further worsened Microsoft’s condi-
Microsoft dominated the systems software pie, owning half of the market. Red Hat reigned in the enterprise Linux space. FY 12 also saw market shifting towards mobile platform
tion is the tablet market where it stands last in the race. Given this, India Android is the leading OS to be used on smartphones and tablets. Samsung, HTC, Sony, LG, and Apple devices are equipped with Android and iOS. visit www.dqindia.com
In the mobile race, Nokia has been pushed into the peripheries. Analysts believe that mobile is going to be the future, especially it will be a dominating computing device and will help in internet penetration. n August 31 - September 15, 2012 | 95
Marching Ahead
CRM and BI maintained the momentum they picked up last year, becoming the saviors. Having gained popularity with small players, cloud helped in faster adoption of enterprise apps Onkar Sharma onkars@cybermedia.co.in
Enterprise Applications
DATAQUEST | A CyberMedia Publication
Highlights
Since the rupee had the worst year ever, it was obvious that the market would bear the brunt. It had a direct impact on growth numbers since the dollar-rupee comparison did not at all look heart-warming Organizations continue to turn to BI as an important tool for smarter, agile and efficient business, and are increasing their current usage scenario from just an information delivery mechanism
were caught in a legal wrangle after the cancellation of 122 licenses by the Supreme Court of India and hence held further investments on IT. FY12 will also be remembered as an year of further penetration into the tier-2 and -3 markets. Vendors like SAP, Oracle, and Microsoft were able to set their foot right there in the growing markets. According to an Oracle India executive, “Oracle India doubled its revenues from nonmetros and is placing a lot of emphasis on the emerging markets where long-term growth prospects lie.” SAP India also had a good time gaining a plethora of customers from the emerging markets. The overall enterprise applications market went past the `5,000 crore mark clocking double-digit growth of about 14% to reach `5,443 crore. While the under-penetration of the market calls for further growth, it obviously shows a glimpse of future growth. In this segment we take into account the application-wise update of the segment. For all our calculations, the section considered the new license revenue, AMC, upgradation, and maintenance costs. In a nutshell, this is the overall apps market estimation. visit www.dqindia.com
Enterprise Applications Market in India (In `crore, Growth%)
14% 22%
4,778
5,443
FY11
FY12
Source: DQ Estimates
T
he recovery which Indian enterprise applications market had shown in 2010 slackened in FY12, due to a number of factors—global and domestic. But overall, it was the global factor that hit the market adversely and forced several conglomerates to defer their IT adoption or up-gradation plans. The Indian enterprise apps market was abuzz with activity though and went through some interesting trends in a far more intimate way than ever before. Cloud computing, among other things, saw an uptake; if not in a big way, at least in a significant one. Different models to harness the power of tools saw the light of day even in mid and small companies. It was because of this that the market, despite a slump in the global markets like the US and Europe, grew 14%. Since the rupee had the worst year ever, it was obvious that the market would bear the brunt. It had a direct impact on growth numbers since the dollar-rupee comparison did not at all look heart-warming. Experts have raised concerns on the rupee volatility which portends a notso-good time for the enterprise apps market too. It might also have an impact on the vendor and buyer sentiments. A bigger chunk of the market was still engaged in investing in IT, because Indian companies had little choice but to continue investing in IT to drive innovation, especially if they wanted to retain their footprint in the global marketplace. Eurozone crises and slowdown in developing economies had less impact. Sectors such as banking, healthcare, and government were the biggest spenders on IT, while sectors like telecommunications
The enterprise applications market, propelled by mid-tier push and cloud-model, recorded doubledigit growth
ERP: The Tardy Tortoise
The ERP solutions market steered forward, mainly because the mid-market firms manifested interest in automating their processes in a bid to compete with their enterprise counterparts in the globalized market. The overall ERP market in India accounts for `1,780 crore having registered a growth of 9.5%. Despite everything, ERP solutions remains the largest used enterprise application in India. What has led to a growing need for ERP in India is the increasing globalization of the Indian economy. While India has proved to be a hot market for all major vendors like SAP, Oracle, Microsoft, etc, the primary drivers of growth have been domestic demand, the growing maturity of users and incremental enhancements in technology. Thus the ERP market is expected to see a major turnaround in the coming years with the revival of the economy, especially the Eurozone. In FY12, the vendors tried to tap the customers through a number of vertical specific applications. This seemed to work as a number of mid-tier players from different verticals such as retail, healthcare, insurance and banking, etc, preferred to go with August 31 - September 15, 2012 | 97
Enterprise Applications
Indian ERP Market
JDA Software 1%
1,625
FY11
10%
1,780
Source: DQ Estimates
9%
IBM 1% Infor 1% Sage 3%
Others 19%
SAP 47%
Microsoft 11%
Source: DQ Estimates
(in `crore, Growth% and Share in %)
Oracle 17%
FY12
The ERP market witnessed a slow growth as companies were seen holding their ERP spend for specialized and vertical specific applications. However SAP was seen strengthening its leadership with as much as 47% market share in the segment
Indian SCM Market JDA Software 1%
20%
FY11
Others 25%
SAP 36%
IBM 1%
863
Source: DQ Estimates
26%
717
SCM: Hot Potential
Infor 3% Sage 1% Microsoft 1%
Oracle 32%
FY12
Source: DQ Estimates
(In `crore, Growth% and Share in %)
SCM recorded double-digit growth for yet another year, even when the market is down. The segment holds a significant promise as the new areas like e-commerce are emerging, putting pressure on service providers to manage their supply chain efficiently
solutions customized or developed as their vertical. ERP solutions also witnessed healthy demand in SMBs through SaaS based models. Innovation on this front by vendors like SAP, Oracle, Microsoft and Sage, etc, yielded good results. Catching the nuances of the market, the vendors have successfully packaged their solutions for different verticals. Adding to the ERP arena is the presence of several small players. The marketspace has taken a competitive stance with the presence of several small players like Ramco Systems, Eastern Software Solutions, Epicore and other open source providers. Nevertheless, the traditional player—SAP—strengthened 98 | August 31 - September 15, 2012
markeshare in the ERP space whereas Microsoft owns 11% of the market. Oracle consolidated its stand, through its end-to-end solutions strategy. Equally the emerging markets propelled the growth. Following closely was Microsoft which focused on verticals such as retail and finance to further its reach. The other side of the story was public spending on ERP. Many state governments continued to drive their automation process even when the government decision-making was a bit laggard.
its leadership in the ERP space over the competition. Its marketshare jumped to 47% from 42% last year thereby leaving others way back in the race. It manifests SAP’s focus around ERP solutions and the goodwill it has earned among Indian enterprises. To further strengthen its reach, the company has also come down to developing apps which are India-specific and help the Indian customers manage their businesses in a localized fashion. Its ERP Hindi was also in line with its India strategy. Its dedication to the India market has helped the company register a healthy growth amongst all geographies. Second in race is Oracle which holds no more than 17%
The SCM (supply chain management) software market continued to witness healthy growth, through the growth declined compared to last year. It found takers in different verticals like retail, FMCG, etc. The SCM software market registered a growth of 20% with overall size of the market at `863 crore at the end of March 2012. The market for supply chain solutions was driven by pureplay and specialized vendors. A number of verticals where supply is of utmost importance valued the solutions more than ever and focused on automating their supplies to match the world standards. A number of courier companies, e-retailers, logistics oriented businesses proved to be inspiration for the SCM solutions. Even small-time players keenly looked at SCM solutions to keep a track of their supplies to meet the customer expectations. Still the market holds a lot of promise if the experts are to be believed. It might trigger further growth and expansion. However the need for the same is greater than ever due to the challenges unleashed by deregulation and globalization. Although a number of players have jumped in, the market
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Enterprise Applications
CRM: Customer is King
Well, the dictum stands true as far as the customer relationship management (CRM) software market in India is concerned. FY12 proved to be a year when companies of all sizes and from all geographies focused on automating their processes with the implementation of CRM apps. Driven by the adoption by SMBs and also large organizations, the CRM solutions’ space donned a number of demi-avatars in order to suite specific business environments. SaaS based and cloud-based delivery models were a big hit among mid-size companies even in tier-2 and -3 markets. 100 | August 31 - September 15, 2012
Indian CRM Market (In `crore, Growth% and Share in %)
Oracle 22%
Others 29%
956
FY11
1,250
Source: DQ Estimates
30%
FY12
SAP 12%
Avaya 19% Salesforce 13%
Infor 1%
Source: DQ Estimates
31%
Microsoft 3%
IBM 1%
CRM market was upbeat despite the slowdown. It was because of the increased focus on customer management and satisfaction from different segments. Also a number of cloud options helped boost prospects for the CRM market
(In `crore, Growth% and Share in %) 35%
Open Text 1%
IBM 23%
Micro Strategy Microsoft 5% 7%
1,147
FY11
1,550
Others 5%
Oracle 10%
SAP 27% SAS 16%
FY12
Source: DQ Estimates
TIBCO 1% Maia Intelligence 2% Oilk Tech 3%
Indian BI Market
Source: DQ Estimates
stands largely owned by SAP and Oracle. SAP continues to rule with 36% marketshare while Oracle closely follows with 32%. A number of other players like IBM, Microsoft, Infor, Sage, and JDS continue to make their way up. Amongst them, Infor holds 3% of the market. In addition, vendors paid attention to innovation and improved packaging with multiple delivery options. In order to avoid leakages in the supply chains, a lot of organizations automated these functions because of which the demand for SCM picked up. While counting on the challenges in this space, the size of the market is far smaller than other countries. The big reason is that Indian organizations try to stay away from customization process the solution goes through to meet a company set up. It results in extra-cautiousness and keeps users at bay from spending on the SCM apps. Further innovation in this front and verticalization might trigger adoption to turbo-charge the industry.
The BI segment recorded the highest growth in the enterprise applications area. The trend has found takers in all segments as the companies are planning further moves through a valid assessment of their departments with the help of analytics
In the wake of the Eurozone crises, Indian companies thought it better to invest in understanding and catering to customer needs in a best possible way, for which they needed intelligent CRM applications. This was the trend in metros and non-metros in India. The tier-1 market was dominated by Oracle Siebel CRM, SAP CRM, Avaya and Amdocs, etc. Oracle Siebel drew customers from customer-intensive organizations in sectors like BFSI, retail, telecom, and insurance, etc, while SAP CRM had been more broadly adopted in largest part in organizations where SAP’s ERP software suite runs. visit www.dqindia.com
In tough times, demand for customer centric applications naturally goes up. This seemed true in FY12 also. The demand was unabated from even smaller markets and mid-sized as well as SMBs. The SMB market has earned a lot of big names like Microsoft Dynamics CRM, Sage, SalesLogix, Salesforce and SugarCRM, etc. Cloud based offerings developed a penchant amongst SMB customers across industries. To illustrate—an eretailer from Chennai used the CRM solution in order to track customer orders and their delivery without hiring an IT-guy. The retailer relied on the cloud-CRM
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provider for support on pay-peruse basis. Locally designed customer management systems like Impel CRM, Zohor CRM, Smiles and TriVision were also in vogue. But since the advent of the cloud model, most of them were seen losing steam. Yet they hold a significant share. All said and done, the CRM market in India continued to perform way ahead in FY12 accounting for `1,250 with 31% growth. Oracle ruled the market with as much as 22% marketshare whereas Avaya and Salesforce grabbed 19% and 13% marketshare respectively. SAP was fourth in the list with 12% share which it increased from last year’s 10%. Possibly a change in the focus and verticalization helped it regain its share. A number of small players shared a large chunk of the market. Microsoft was seen gaining ground in the SMB space in order to compete with the likes of Salesforce through its cloud offering and thus grabbed 3% of the market.
BI: High Growth
The popularity of analytics continues to grow amongst Indian businesses, raising demand for BI applications all the more. In FY12, business intelligence grew faster than any other enterprise application with as much as 35%. Leading the growth are a number of factors like curiosity amongst entrepreneurs and managers to get the right information about their business to take valid and timely decisions. High growth in data has led companies to put their money into BI applications. Organizations continue to turn to BI as an important tool for smarter, agile and efficient 102 | August 31 - September 15, 2012
The CRM market in India continued to perform way ahead in FY12 accounting for `1,250 with 31% growth. A number of small players shared a large chunk of the market business, and are increasing their current usage scenario from just an information delivery mechanism. Among the sub segments, BI platforms is still expected to be the largest in pure growth terms. In FY12, the BI market accounted for `1,550 crore with 35% growth. The demand for BI solutions was mainly fueled by sectors such as BFSI, government, manufacturing, telecom, life sciences and healthcare. Telecom, despite facing challenges from the regulator and the Supreme Court of India, continued to put money into BI projects to gain insights into customer behavior after the number portability is in effect. Similarly, through cloud-models, vendors are able to reach out to even single-PC users and enabled SMB owners to take right and informed decisions about their business. Even government bodies like the municipalities in some states required data analysis services for fund allocation and consumption. Also healthcare bet big on data analytics. Mergers and acquisitions were round the corner in visit www.dqindia.com
almost every sector, sparking demand for BI applications. It has happened unabated especially in the first part of FY1112. Though the latter part was strained by the news from the West, many companies thought it best to focus on the roadmap ahead rather than influence decisions based on the worsening condition in the Eurozone. The weakening rupee undoubtedly dampened the sentiment in the last part though, which will have repercussions on FY12-13. Interestingly mobile devices became the favorite access points for BI tools by executives. It helped them get every piece of information on the go right on their handsets or tablets. Ruling the market was SAP which captures as much as 27% of the market while IBM is the second biggest player with 23%. SAS continues to hold 16% of the market with strong presence in certain verticals like government, healthcare and telcom. Oracle is the fourth in the list while Microsoft holds 7% of the market. Enterprise applications showed a healthy double-digit growth. However, the outlook for FY1213 is not that bright, keeping the rupee factor and slow recovery in mind. However realty, healthcare, and the public sector are expected to save the momentum. What went right was the tough competition between a number of players in the market which led to innovation and strengthened the partner ecosystem. Key players Oracle, Microsoft and SAP are on a spree of offering their solutions through vertical-specific modes and have toughened the space for small time players. However innovation is fast taking place on this front that can spur a new wave of growth. It is likely that new players will emerge on the scene. n
DATAQUEST | A CyberMedia Publication
Domestic Services
Looking for that Sunshine The domestic services market that had been growing consistently at over 20% was caught under the impact of the turbulent economic scenario. A slowdown in IT investments, project delays, and long decision-making cycles curtailed growth at 9%
SHWETA VERMA shwetav@cybermedia.co.in
DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 103
Domestic Services
104 | August 31 - September 15, 2012
tive impact on the revenues of IT service companies.
Domestic Services: Facing the Heat (In `crore, Grwoth%)
Market Dynamics
9% 23%
30,050
32,070
39,325
42,864
FY10
FY10
FY11
FY12
Source: DQ Estimates
7%
12%
The domestic services market was severely affected by the economic turmoil in the country
Market Share of Tier-1 Companies (Organized Market) HCL Infosystems 3%
IBM India 14%
HP India 9%
10%
Others 56%
TCS 8%
Source: DQ Estimates
Wipro Infotech
The tier-1 companies continued to dominate contributing over 40% to the total market
IT Services: Key Elements IT Outsourcing 16%
Others* 11%
IT Consulting 12% Application Devt & Maintenance 8%
Managed Services 25%
Systems Integration 28%
Source: DQ Estimates
T
he Indian Economic Survey 2011-12 states: “Indian economy is estimated to grow by 6.9% in 2011-12 mainly due to weakening industrial growth. This indicates a slowdown compared not just to the previous 2 years, when the economy grew by 8.4%, but also from 2003 to 2011, except 2008-09 economic downturn, when the growth rate was 6.7%.” With the entire industry reeling under the impact of the slowdown, IT services couldn’t have remained insulated. A continuing global economic recession, uncertain market conditions, and a weakened investment climate in the country—everything had its impact on the domestic IT services market. After registering a consistent growth of more than 20% for several months, the industry came sliding down to a dismal 9 % in FY12. According to Dataquest estimates, the total market grew from `39,325 crore in FY11 to `42,864 crore. The Economic Survey points out: “The growth rate of investment in the economy is estimated to have registered a significant decline during the current year. While a large part of the reason for the slowing of the Indian economy can be attributed to global factors, domestic factors also played role. Among these are the tightening of monetary policy owing to high and persistent headline inflation and slowing investment and industrial activity.” Clearly indicating that the economy has been facing trouble and the market sentiment has been low. The growing uncertainties in the market created an overall mood of caution and concern all round the year. Most large enterprises cut down their expenditure on new tech initiatives, which in turn had a nega-
Managed services and systems integration contributed the largest share (*IncludesITtraining,engineeringservices,hardware maintenance, etc)
More than half of the total IT services revenue in India comes from key verticals like telecom, IT/ITeS, manufacturing, and BFSI. As these sectors were hit by the ongoing recession, service providers tried to explore opportunities in other sectors such as retail, education, and healthcare. “CIOs are under pressure to cut down costs and that has certainly affected the market. Some of the high growth sectors are now becoming saturated so we are looking at tapping sectors like energy & utilities, healthcare, etc,” says Kiran Desai, VP & BU head, managed services, Wipro Infotech. Another segment that is emerging as a big buyer of IT services is the government. With a large number of e-governance projects in the pipeline, vendors can expect more business in the coming months. The IT service companies also expanded their focus beyond the traditional networking and co-location services. IT infrastructure management, IT outsourcing, and cloud based services were among the high growth areas. In fact, managed services (discussed in detail in the next section) emerged as a key component of every service providers portfolio of offerings. “Pure co-location services are not growing as fast anymore. The market for network services is also getting saturated. We are now seeing maximum growth in cloud based services. Therefore service providers are also trying to develop their expertise in this area,” explains Prasad Nambiar, senior vice president & national head, managed services, Tulip Telecom. Nirupam Chaudhuri, research manager, software & IT services, IDC India says, “Services related
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DATAQUEST | A CyberMedia Publication
Domestic Services
Ups and Downs: Revenue Growth Rates of Some Leading IT Services Companies in India (Grwoth%)
-36 -40
-30
-20
to overall development of infrastructure are gaining prominence, with two or more service providers coming together to provide a single solution for the end user.” Another significant trend that emerged in the services sector was the demand from small and medium businesses. Unlike the past where the market was dominated by the large customers with multi-million multi-year contracts, the industry saw a number of smaller deals coming from the SMB segment. This new breed of mid-sized enterprises is looking for an IT infrastructure that can lend agility, scalability, and productivity to their businesses at more affordable costs. “Customers are focusing their IT spend on services for better alignment of current systems to businesses and its processes, by making them more agile and integrated. The IT management is focused more on operational efficiencies and improvements for greater savings,” says Sudhir Rao, CTO, enterprise services, HP India. SMB customers are generally not keen on investing in capex and they find it more convenient to let 106 | August 31 - September 15, 2012
-10
0
10
26
32 34
33
45 39
20
the service provider manage the IT infrastructure. But at the same time they want to extract more value from it. This shift in buying patterns of IT services also points to a change in delivery models. The service delivery models are becoming more modular and flexible in their structure. Service providers are also trying to align their strategies with the changing market realities.
Vendors Strategies
The tier-1 players such as IBM, Wipro, TCS, and HP continued to dominate the market contributing about 40% to the total market share. Wipro Infotech pursued its strategy of focusing on the government sector. As a result, revenues were affected due to slow decision-making and delay in projects. However the company bagged some large orders including deployment of tax management system for Punjab government and state portal enablement for Rajasthan government and automation of state power distribution for the government of Jammu & Kashmir. IBM’s growth was also stalled by the market slowdown but the visit www.dqindia.com
Source: DQ Estimates
18 TCS Wipro Infotech 3 21 Hewlett-Packard India 9 IBM India HCL Infosystems -14 15 Tulip Telecom Spanco 12 Sai Infosystems 18 Dimension Data CMS Infosystems Sonata Software 13 3i Infotech 7 Sify Technologies Tata Technologies 6 Frontier Business Systems Value Point Systems -10 Omnitech Infosolutions -2 Accel Frontline Precision Informatic NIIT Technologies
30
40
50
company continued to push its SmartCloud offerings and won some key customers in the BFSI segment including Sree Charan Souharda Cooperative Bank, Nawanager Co-operative Bank. Other major deals included WinHire Technologies, Shriram Transport company, and Infrastructure deals including Jeppiaar Institute of Technology. Strategic long-term outsourcing contracts such as Apollo Munich Health Insurance for `196 crore and India Infoline for `298 crore also added to the kitty. iON, the cloud based platform launched by TCS in 2011 for small and medium businesses, also gained momentum this year. In spite of the current market situation, the company performed well and registered a healthy growth across almost all domains including BFSI, retail & CPG, and manufacturing. HCL Infosystems was prominent among the large companies hit by the slowdown. Despite some large orders in government and banking sectors, the company’s revenues continued to decline. The systems integration
DATAQUEST | A CyberMedia Publication
Domestic Services
Highlights
n IT infrastructure management and cloud based services were among the high growth areas n The market looked beyond multimillion, multi-year large contracts, and a number of smaller deals came from the SMB segment n Most of the large vendors focused on the government sector were impacted by the slow decision-making and delay in projects
business was particularly hit as government spending of $1 bn was almost stalled. However the company bagged some good deals such as the `2,200 crore UIDAI project and another large project from Narayana Hrudayalaya to deploy cloud solutions. The tier-2 & -3 service providers also felt the heat of the global turmoil as they fell short of their annual targets. The slowing market affected companies like Aricent that saw growth rates falling from a 15-20% range to 9% this year. However the company continued to get business from some of its existing clients and also bagged some deals from OEMs and tier-1 and -2 operators. Tulip Telecom was ranked by Frost & Sullivan as the largest Indian data connectivity provider with a market share of over 30%. The company bagged multiyear orders from the government valued at `150 crore and was appointed as facility management provider for the science and technology body of the Government of India. Spanco also did well with the government sector as it bagged some large infrastructure projects from the governments of Punjab, Mizoram, Maharashtra, and MP. Dimension Data invested `140 crore to set up 6 data centers in tie-up with BSNL. Among the companies that were severely hit was 3i Infotech 108 | August 31 - September 15, 2012
—Kiran Desai, VP and BU head, managed services, Wipro Infotech
“CIOs are under pressure to cut down costs and that has certainly affected the market. Some of the high growth sectors are now becoming saturated so we are looking at tapping more sectors”
“The market did grow a bit slower than we had projected. Some large projects got delayed and deals were stuck due to slow decision-making” —Nirupam Chaudhuri, research manager, software and IT services, IDC India
that saw its revenues plunging down by 35% from `2,570 crore in FY11 to `1,681 crore this year.
Outlook
The current upheavals in the market are expected to continue for some more time though analysts expect recovery by next year. Growth will be largely driven by the public sector with some large infrastructure and development projects in the offing. “Some of the large deals that got delayed last year are expected to close in the coming months. This should help bring back the growth momentum,” says Chaudhuri. The market is expected to witness a lot of consolidation in the immediate future, some tier-2 services providers will merge with or will be acquired by the large vendors. According to Chaudhuri, market leaders like IBM, Wipro Infotech, HCL, and HP have identified some key emerging themes visit www.dqindia.com
and are making investments to enhance their capabilities in these areas. These areas include infrastructure services, cloud, mobility, and business analytics. “Some of these new technologies may take time to absorb,” says Neeraj Jaitley, president, enterprise solutions, HCL Infosystems. “But we will need to invest in moving apps to the pay-per-use model.” For targeting the opportunities in tier-2, -3 cities and SMB space, larger vendors will continue to work closely with their alliances in those markets and take a very segmented (by industry verticals) approach for their go to market strategy. As the market situation gradually improves in the coming months, these emerging technologies can play an important role in driving IT services to the next level of maturity. Enterprises will also need to take a re-look at their IT strategies and realign themselves with the changing market dynamics. n
DATAQUEST | A CyberMedia Publication
Managed Services
Opening
New Vistas
With enterprises looking for greater flexibility and cost advantage in their outsourcing engagements, the managed services model is gradually picking up. Though the overall slump in the market did have its impact on the growth momentum
Shweta Verma shwetav@cybermedia.co.in
DATAQUEST | A CyberMedia Publication
visit www.dqindia.com
August 31 - September 15, 2012 | 109
Managed Services
E
ven as the economy emerges out of the influence of recession, enterprises are looking for innovative ways to prune their IT budgets and manage their infrastructure more effectively. The traditional outsourcing arrangements are gradually giving way to more flexible and cost-effective pay-as-you-go models or managed services. The term ‘Managed Service’ typically refers to a service contract in which a vendor takes responsibility for delivery of one or more elements of IT services without necessarily involving transfer of people and assets. Enterprises are able to avoid the huge costs incurred in purchase and maintenance of IT infrastructure as they can choose to buy only the services they need. With the availability of cloud technologies, today almost everything is being offered as a service—Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), Storage-as-a-Service, and so on. “Enterprises are more open to innovative models now. The Indian market is at an inflection point,” says G Dharanibalan, executive, offerings management and development, IBM. With leading global vendors such as IBM, Dell, and HP focusing on the Indian market with their services offerings, the customers are also showing greater interest in managed services. “As more and more global businesses come to India, the acceptance of managed services has also gone up,” explains Prasad Nambiar, senior VP and national head, managed services, Tulip Telecom. “In fact, the Indian market has much greater growth potential because we already have a large 110 | August 31 - September 15, 2012
Highlights
The market moved slower than expected with some large projects getting delayed Government initiatives contributed to growth, but also created challenges due to slow decision making Maturing of service models is encouraging more enterprises to jump on to the managed service bandwagon Vendors with multi-technology capabilities have a greater advantage
outsourcing base in the country,” he asserts. Leading IT service companies are looking at India and China as high-growth markets for managed services. According to Dataquest estimates, the overall managed services market in India currently stands at `10,755 crore and is growing at about 11%. Although market experts had earlier predicted a growth of 15-20%, the overall slump in the market had its impact on the pace of growth. “The market did grow a bit slower than we had projected. Some large projects got delayed and deals were stuck due to slow decision making,” explains Nirupam Chaudhuri, research manager, software and IT services, IDC India. However looking at the economic scenario, even this moderate growth holds promise. The industry is now looking at managed services as a big opportunity. Indian service providers including Wipro Infotech, TCS, HCL Infosystems, Tulip Telecom, and iGate have all increased their focus on the domestic managed services market. Tulip Telecom attributes 30% of its revenues to managed services, while iGate puts the share at 15%. “We have always had a clear focus on the Indian market as we see a lot of potential here,” says Kiran Desai, VP and BU
head, managed services, Wipro Infotech. The company bagged some large projects during the year including ESIC, which involves connecting 1,200 hospitals across the country. “We believe India is ready for such complex projects now. Managed services can play a big role in spreading the benefits of various government led programs across the nation,” he says.
The Government Factor
Interestingly, the managed services market also received a push from the government sector with a number of e-governance projects and other IT driven initiatives taking off during the year. Most of the leading vendors bagged large government projects ranging from the large scale UIDAI (Aadhar) initiative to various state level WAN projects led by governments in Gujarat, Haryana, West Bengal, and Assam. Several other initiatives in infrastructure, healthcare, and education also led to increased deployment of large scale managed networks in the country. “Earlier this market was being driven only by the private sector. But with the government and public sector companies coming in a big way the domestic market is actually growing better than the global market,” says Pramod Deval, India sales head, iGATE. While government initiatives have contributed to the growth, they have also created challenges owing to the slow decision making process, procedural hurdles, and unpredictability of such projects. “In such deals one can never be sure of the final outcome. Despite making the best offer you may not finally bag the project,” explains Deval.
visit www.dqindia.com DATAQUEST | A CyberMedia Publication
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Managed Services
What’s in Store? Managed Infra Services
Market Drivers • • • • • •
Reduced IT Budgets Need for scalability Acceptance of cloud –based technologies Pay-per-use delivery models SMB adoption Large scale govt projects
Challenges Managed Network Services
Managed Apps
Managed Security Services Managed Storage Services
• •
Managed Services Managed Hosting
•
•
•
Security concerns among customers Adherence to regulatory norms Managing multiple clients, shared resources Service providers need to invest in trained resources Constantly innovate and improve service standards
The Managed Services spectrum consists of an interlinked mesh of multiple services that are being increasingly adopted by enterprises
The other industry verticals that fueled growth included BFSI, manufacturing, and retail sectors. The rate of adoption in telecom and IT/BPO sectors, which have been among the early takers of IT services, has now reached a certain saturation level.
Evolving Market & Strategies
With enterprises showing greater preference for the on demand model, managed services have now become an integral part of every IT service provider’s portfolio. From infrastructure management to applications development, storage or security, an entire range of services is available under the managed services spectrum. The managed services model is evolving in tandem with the rapidly changing business and technology dynamics, and vendors are also trying to adapt their strategies with emerging opportunities. “Players with multi-technology capability, ability to provide an end-toend service, and consistently high-service standards coupled with innovation will grow at a pace which will surpass the 112 | August 31 - September 15, 2012
normal growth curve,” believes Nikhil Gulati, director, business development, managed services, Aricent. Among the market leaders, companies like IBM have an edge with their ability to provide end-to-end capabilities and products. This certainly provides greater assurance to the customers. “Most of the service providers offer a mix of solutions from multiple vendors and that creates a bit of uncertainty. We have a clear advantage as we own the technology we provide,” says G Dharanibalan of IBM. Dell, which is known for its customer-oriented approach, tries to woo its customers by offering a highly flexible service model. “We do not lock our customers into owning the tool set, which is often the practice of other big IT providers,” explains Sumed Marwaha, country manager, Infrastructure and Managed Services (IMS), Dell Services India. HP’s strategy, on the other hand, is to focus on selective opportunities. Sudhir Rao, CTO, enterprise services India, HP, elaborates further, “We are looking at increasing our business visit www.dqindia.com
within our current installed base. At the same time, we are also seeking new projects and initiating innovations specific to the Indian markets.” Among the Indian companies with a full service portfolio, Tata Communications offers a diverse range of networking, hosting, and data center services through its large global network of telecom infrastructure. The company owns 42 data centers worldwide and provides infrastructure to numerous other service providers and carrier companies. Most of the other telecom vendors, including Alcatel-Lucent, Huawei, NSN, Ericsson, etc, today offer their infrastructure as a managed service.
The Drivers
In the initial phases, the adoption of managed services was restricted mainly to the large enterprises, but that is not the case anymore. In fact, it is the SMB segment that is emerging as the biggest market driver. Despite an overall sluggish economy, the mid-sized companies have been showing a keen desire to invest in technologies that can drive their efficiency levels. Cloud based technologies have made IT services more affordable and accessible for such companies. Says Chaudhuri of IDC, “We are seeing a trend towards smaller deals and effective SLAs.” The initial concerns about security and lack of control over critical data are gradually fading away as vendors strengthen their security infrastructure. The maturing of service models combined with streamlining of delivery processes and control mechanisms are encouraging more enterprises to jump on to the managed service bandwagon. The huge advantage in terms of
DATAQUEST | A CyberMedia Publication
Managed Services
flexibility, scalability, and costeffectiveness far outnumber the challenges. Though some enterprises are still going for selective adoption in critical areas like storage and networking, many of them are now expanding their usage to management of networks, servers, PCs, communications equipment, and other devices as well. Besides the cost advantage they offer, managed services enable companies to access best-ofbreed infrastructure and services from multiple providers. There is a tremendous scope for business optimization and improvement in efficiency levels without incurring additional costs of creating and managing the infrastructure. According to Springboard Research, the current managed services pricing model in India is still Service Level Agreement (SLA) based but as the market
evolves, more granular pricing models such as pay-per-user and pay-per-seat are expected to emerge.
The Roadblocks
Being a relatively new segment, there are many concerns among the customers that will need to be addressed. The delivery models and SLAs will have to be designed in accordance with the security requirements and regulatory norms. Service providers will also need to invest in trained resources that can efficiently manage such complex technologies and infrastructure for multiple clients. “This is undoubtedly a huge opportunity area. But if India has to establish itself as a service provider to the rest of the world, we will need to have the right people and resources in place,” points out Amit Sinha Roy, VP,
marketing and strategy, global enterprise solutions, Tata Communications. While the market is on a take off stage, service providers will have to gear up to enhance their capabilities, skills, and knowledge so that they can effectively cater to the wide range of demands from different customers. The CIOs are now demanding more in terms of productivity enhancement, process optimization, and integrated management rather than just focusing on the ‘cost factor.’ Consolidation and commoditization of IT services is putting pressure on service providers to constantly innovate and provide high-quality services. The nextgeneration managed services will require vendors to work effectively in a multi-vendor scenario and ensure seamless delivery within the ecosystem. n
Brickbats or Bouquets? Well, both are welcome… just log on to the PCQuest forum (http://forums.pcquest.com) and pen them down. The forum offers PCQuest readers a platform to post their comments, complaints and suggestions on the magazine. There are discussions running on many issues, technology and non technology related. Come and join. And being a member may just get you prizes as well!
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August 31 - September 15, 2012 | 113
Semiconductor Design
The Buoyancy Continues Driven by the demand across industry segments, India stands to benefit both ways—as a consumer of semiconductors, and as design hub Shrikanth G shrikanthg@cybermedia.co.in
S
emiconductor consumption is going up every day, it’s something like the big data or the cloud phenomenon in the software world; and the same is happening for semiconductors. The chips inside your cable STBs or the medical imaging devices to cell phones to data access devices—these are chips that make the devices intelligent and make them work. With the unlimited potential of the connected world and its multiple devices, the semiconductor market in India is in for a bullish ride. Over the year the release of the draft National Policy on Electronics 2011 further set the tone and augurs well for this segment. The government’s proposed National Policy of Electronics, 2011 envisions creating a globally competitive Electronics Systems and Design Manufacturing (ESDM) industry including nano-electronics to meet the country’s needs and serve the international market. The draft policy sets out to achieve a turnover of about $400 bn by 2020 involving investment of about $100 bn. It also aims at ensuring employment to around 28 mn in the sector by 2020. This includes achieving a turnover of $55 bn of chip design and embedded software industry, $80 bn of exports in the sector. The policy also proposes setting up of over 200 electronic manufacturing clusters. Another important ob114 | August 31 - September 15, 2012
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DATAQUEST | A CyberMedia Publication
Application and Web servers Databases
File Servers
Laptop/Mobile Handset
Mainframes
SafeNet DataSecure
Data Center
Private Cloud
Internal Cloud
FEDERATION
External Cloud
2009 SC Magazine “Best Buy” 5-Star Rating
w w w. s a f e n e t - i n c . c o m
Network Product Guide’s Best in Tokens
2009 WindowSecurity.com Reader’s Choice 1st Runner Up
Semiconductor Design
Indian Semiconductor Market (In `crore, Growth%)
25% 12% 11%
35,664
40,112
50,225
FY10
FY11
FY12
Source: DQ Estimates
jective of the policy is to significantly upscale high-end human resource creation to 2,500 PhDs annually by 2020 in the sector. Of the three sectors—IT, telecommunications, and electronics—electronics presents special challenges. The draft policy seeks to address the major barriers which include lack of a strong base, an adverse international environment, and failure to build an enabling ecosystem.
Market Dynamics
As we reflect on some of the leading market reports, it seems to just reaffirm our bullishness. A report by RNCOS titled Global Semiconductor Market Forecast to 2015 says, “The India semiconductor market is anticipated to grow at a CAGR of around 22% during 2012-15.” As we look at other reports, it also demonstrates the same level of bullish optimism. “There is a move to increase in the complexity of designs being undertaken by Indian design houses,” says PVG Menon, president, India Semiconductor Association (ISA). “As per the ISA-E&Y Report of 2011, the VLSI Design industry is poised to grow at a CAGR of 17.3% from a base of around $827 mn in 2009 to around $1.3 bn in 2012. Around 35% of the chips being designed in India are for consumer electronics products, around 31% for telecom related products, slightly more than 15% for wireless products. In terms of complexity, almost half of the projects being handled from India are in the 1-10 mn gate count area, whilst a third are in the 10-20 mn gates area. Digital designs dominate the market.” Going by the ISA-Frost & Sullivan (ISA-F&S) Report of 116 | August 31 - September 15, 2012
Good demand from both consumers plus commercial for a broad range of products led to good growth Note: The numbers factor in the total consumption of semiconductors in India in any form like purchased locally, imported as part of the CKD or SKD or imported as complete products
2010, the hardware board design industry is growing at a 17.3% CAGR. From a base of around $417 mn in 2009, the industry is expected to grow to around $672 mn by 2012. Whilst more than half of the designs being done out of India will be up to 10 layers, around 38% will be for up to 20 layer boards, and around 10% will be for very complex 20+ layer boards. More than half of these designs will be for boards with speeds of 500 Mhx to over 1 GHz—all of this is evidence to the increasing complexity of designs being done out of India. If we look at the ‘Embedded Software’ space, as per the ISA-E&Y Report of 2011, the
Highlights
VLSI design on the growth path Indian companies will graduate to 3D-chip designing in FY13 India semicon market is anticipated to grow at a CAGR of 22% during 2012-15 visit www.dqindia.com
embedded software industry is growing strongly at slightly more than 17% CAGR, and will touch around $8.5 bn in revenues by 2012. Similar to the VLSI design industry, the bulk of the work is focused on the consumer, telecom, and wireless verticals. Work is almost evenly spread across the areas of OS-related programming, development of middleware, chip-level programming and development of protocols, and testing. So clearly according to ISA the overall semiconductor design market in India has to be seen as a summation of the market size of VLSI design, embedded software design, and hardware board design. That is expected to be around $10.5 bn in 2012.
The Captives
Industry experts say that the captives and the ODC’s run for OEMs by Indian services companies account for more than 60% of the total design workforce in India. So the CAGR of 17% plus that is forecasted for the industry will also include them, either directly in terms of workforce employed by the GIDCs or indirectly in terms of the workforce employed by their ODC partners. When we look at captive operations out of India, there are two types. Companies like Texas Instruments (TI) leverages India as a design hub as well as a market for its offerings. For others India is a pure design hub making for design support for the products. Says Rajiv Kapur, managing director, Broadcom India, “India is an important R&D center for Broadcom. Since India contributes significantly to Broadcom’s overall growth, we are reinforcing our commitment to India by expanding our facilities in the
DATAQUEST | A CyberMedia Publication
Volume 1
RANKINGS
Volume 3
Carrying on with the legacy of the original Top 20 rankings, this issue will rank the Top 200 players in the Indian IT Industry on the basis of their revenue.
Volume 2
VERTICALS
NEW
DQ Top 20 is the ultimate source when it comes to supply side dynamics of the Indian IT Industry. This year, we are completing the offering by adding the demand side. Verticals will give a through view of how various industries are leveraging IT for driving growth, efficiency, customer satisfaction- and are creating value for themselves.
INDUSTRY This issue will contain all that one needs to know about different segments and sub segments of the Indian IT Industry, with all the number, quantitative analysis, the trends, and what is likely to come in the years that follow.
Event
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Semiconductor Design
118 | August 31 - September 15, 2012
India VLSI Design Services Market Proportion (%) of Chips Designed by Industry Vertical
Revenue Shares of Top 3 India 3rd Party VLSI Design Services Companies 2011
Automotive 4.9% Telecom 18.1% Consumer Electronics 34.7%
Networking 27.7%
Industrial 3.7% Storage 4%
Others 69.8% Wipro Technologies 22.1%
Sasken Communications 2.9%
Source: CyberMedia Research India VLSI Design Services Study 2012 (March 2012)
Others 2.6% Source: CyberMedia Research India VLSI Design Services Study 2012 (March 2012)
country to accommodate the continuous growth. In India the headcount growth has been high in past several years and currently open positions in India are high in number—we have been hiring and are still hiring. Currently we have over 1,000 employees across 3 cities of Bengaluru, Hyderabad, and Mumbai.” Broadcom’s strength is in its large and diverse R&D centers across the globe. India center is contributing tremendously across the entire chip engineering process—right from specification to design to post-silicon bring-up activities. From technical specifications to early stage of RTL, high-level design, and verification. It is also very active in software development, delivery, and system engineering. Approximately 90% of Broadcom operates in R&D globally. As we look at some of the other companies that had started leveraging India in big way, like AppliedMicro. Says Vinay Ravuri, vice president and general manager, processor business unit, AppliedMicro, “We are working on some disruptive technologies on the server side and our architecture X-Gene is indeed path breaking. We are the the first and only company to have developed and demonstrated a server chip based on the 64-bit ARM architecture.” The company announced its chip ‘X-Gene’ in October 2011. By doing so, it becomes the only company in the world to have a ‘server-on-a-chip’ solution. With X-Gene, AppliedMicro is aiming at the expanding server market occupied by Intel and AMD. According to industry experts, if Applied Micro’s X-Gene goes according to plan, it has the
Smartplay Technologies 5.1%
Healthcare 4%
Consumer Electronics, Networking, and Telecom make up for the bulk of the market
strength to cause more than a ripple in the server market. The company is also leveraging India as the key design hub. There are numerous other older captives that are already doing cutting-edge work—like TI, Cadence, and a host of others, and what will define the market in the days ahead is the kind of design form factors Indian engineers can work on and their ability to come out with more patents that the parent companies can manifest in innovative products. Says ISA’s PVG Menon, “Some of the challenges that the industry faces are the increasing cost pressure due to salary increases in India, the appreciation of the dollar, the availability of cutting-edge R&D work being done at academic institutions, which can lead to development of Indian IP, and the scaled-up availability of skilled manpower. We at ISA are working closely with the major stakeholders in the ecosystem, viz, academic community, industry, and govvisit www.dqindia.com
A huge market with lots of opportunities with Wipro taking the pole position
ernment, to address these issues. As the solutions are long drawn out in nature, ISA is reaching out to all other allied industry bodies to try and build consensus to a common approach to solving an industry-wide problem which affects all our member companies.” Moreover observers point out that India needs to come out of its perception as low-cost geography, it needs to morph into a market for key skills that is not available else. However as we look at recent developments India is indeed adding critical value to the captives. Analysts say that on the technology front, Indian companies have designed chips on a 28 nm scale that have already been successfully taped out. In 2012, it is expected that 22 nm scale chips designed in India will also be taped out to hit markets across the world. Further, it is expected that Indian companies will graduate to 3D-chip designing in the forthcoming quarters. n
DATAQUEST | A CyberMedia Publication
IT SERVICES EXPORTS
Blooming in Adversity India’s IT exports shine amidst clouds of crisis, currency fluctuations, and shrinking GDP
PRERNA SHARMA Prernas@cybermedia.co.in
T
he geographical hub of the 2008 recession was the United States; now the Eurozone crisis has added to the woes. As the Indian IT industry has been battling the global economic challenges, India’s rapid currency devaluation and shrinking GDP are further worsening the situation. Despite the fragile state of the global economy, IT exports from India have been growing steadily. With companies tapping more geographical regions, bringing innovations in their products and services, and providing a balanced portfolio of offerings, India’s IT services exports have stood tall amidst the stormy world market. India’s IT exports have been growing steadily from 14% in FY10 to 22% in FY11 and almost 27% in FY12. This certainly demonstrates the resilience of the Indian IT industry and its ability to hold its own despite the tough economic conditions. While the rupee-dollar exchange rate continued to play off the wheel, but the overall IT services export market grew from `213,760 crore in FY11 to about `271,475 crore in FY12. DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 119
IT SERVICES EXPORTS
This year some companies went for leadership change like HCL bid farewell to one of the founders, Ajai Chaudhary. The cloak is now squarely on Harsh Chitale’s shoulders to chart the next course in HCL’s history. Recently, it roped in Neeraj Jaitley from Wipro to head its enterprise solutions. Intel promoted Debjani Ghosh to managing director’s role in India in place of R Sivakumar and under her leadership the company manages to inch revenue up by 5% even though market was badly hit due to Thai floods and increase in currency fluctuations. The fiscal year has also witnessed a significant change of leadership in the tier-2 companies as well. MindTree appointed Subroto Bagchi as chairman and became the fastest Indian IT services company to cross $100 mn in Q2 annual in FY11. The company also announced declassification of Ashok Soota as promoter. CMS Infosystems has appointed Anoop Neogi as senior VP and COO of the Securitas Cash Management System in 2011.
Business Strategies
Most of the tier-1 and -2 organizations had reformed their core business strategies to meet the demands of the ever changing economy. They realigned their business models with new market realities and focused on hot-tech areas such as virtualization, big data, storage, enterprise mobility, and security. Despite a challenging market scenario and recessionary conditions, TCS gave a commendable leading performance. The company built a world class business automation suite for SMBs and became the first Indian IT company to cross the $10 bn milestone posting annual revenue of $10.17 122 | August 31 - September 15, 2012
Highlights
IT Services Exports
Rupee-dollar exchange rate continued to play off the wheel. Tier-1 and -2 organizations had reformed their core business strategies on hot-tech areas such as virtualization, big data, storage, enterprise mobility, and security. After the crises in US market, companies are moving towards European market.
bn, growth of 5 times in 8 years. Infosys sought to transform itself from a technology solutions company to a business solution company and came up with products like Flypp, iEngage—a digital platform to engage consumers across the entire marketing life cycle. Wipro launched cloud based applications including NextGen Care Management solution for the US healthcare market and ‘Wipro SprintHR’, to deploy Oracle Fusion Human Capital Management. For the Indian, Middle East, and African markets, Wipro tied-up with Eucalyptus Systems, a widely deployed open source on premise infrastructure-as-a-service (IaaS) cloud platform. Cognizant continued with its stellar performance growing at 36%. CTS won major deals with Hunterdon Healthcare, HIS, INTTRA, Telefonica UK, Future Group, etc. HCL Tech won a deal from a Fortune 500 company to provide services in 16 European countries. The company also signed agreements with leading names such as Mecom Group, Deutsche Bank, etc.
Geographical Distribution
The geographical contribution from India’s top 6 IT services players hardly changed in FY12. Contrary to the belief, post recession and the US contribution to India’s IT services exports would come visit www.dqindia.com
(In `crore, Growth%)
27% 21% 5%
176,321
213,760
271,475
FY10
FY11
FY12
Source: DQ Estimates
Leadership Changes
FY12 was a good year for Indian IT exports. The companies are tapping more geographical areas and bringing innovations in their products and services by providing balanced offerings
down. It has only shown a marginal decline from 58% to 57%. Even Europe, where the continuing recessionary trends were observed held firm at 27%. This proved 2 things: the quantum of outsourcing from the US to India has reached such a magnitude that slowdown or not will have little chance of it getting impacted; two, even if some organizations stop or reduce their offshore outsourcing work to Indian firms, there are several more waiting in the wings to more than offset the losses. The debt crisis is now moving closer to the heart of euro zone, with the fear that the bane may now spread from Greece and Italy to Spain and France. The IT services gained by increased outsourcing by companies in the European zone, which are trying to cut cost. Europe now forms the second largest market for the Indian IT service providers. So as the crisis in the region deepens, companies are likely to outsource more in an attempt to cut costs. Clients which were hesitant to outsource functions like application management in the past have now started to look for outsourcing such type of services.
DATAQUEST | A CyberMedia Publication
GrapeCity India Pvt Ltd A-15, Sector 62, Noida - 201307 Tel: 120-2470111 | 2470123 Fax: 120-240124
IT SERVICES EXPORTS
Geographical Distribution
Contribution from Verticals
Top 6 Companies Africa & Middle east 2% Latin America 3%
Government 9%
ROW 3%
Healthcare 6% Media 2%
Source: DQ Estimates
North America 57%
BFSI 42% Retail 13%
Utilities 3% Telecom 11% Manufacturing 9%
Source: DQ Estimates
APAC 8%
Europe 27%
Others 1%
Travel & Leisure 4%
Total Revenue: `150,441 crore
Total Revenue: `150,441.59 crore
Europe now forms the second largest market for the Indian IT service providers. So as the crisis in the region deepens, companies are likely to outsource more in an attempt to cut costs
BFSI segment still remained the top vertical. BFSI gave 42% while another 24% came from the emerging verticals compromising healthcare, retail, media, and utilities.
When recession hit the US market, which forms the major exporting market for the Indian IT industry, has persuaded IT companies such as Infosys, Tata Consultancy services, CTS, and Wipro to shift their focus to the European and Asian markets. The debt crisis in Europe will have a short-term impact on the business. TCS has also been steadily expanding its geographic footprint. In addition to the traditional markets for its services namely, North America, UK, and Continental Europe, the company has been expanding its presence in emerging markets like Asia Pacific, India, Latin America, Middle East, and Africa. Infosys has plans to double its revenue from the European market to 40% towards the end of 2014 financial year. CTS expects to earn significant revenue from the region in the next 4-5 years. CTS revenue out of Europe crossed $1 bn in FY11 and its focus on building local teams on the ground across key markets in Europe to address the specific needs of European clients seemed to have clicked well. 124 | August 31 - September 15, 2012
Both Infosys and CTS are trying to scale up their operations in continental Europe by going for acquisitions. The emerging geographies like Asia Pacific, Middle East/Africa, and Latin America started contributing APAC increased by 1 point to 8% while Latin America also increased by 1 point to 4%.
BFSI All Over Again
After the global financial crisis of 2008, the services industry has been adjusting and adapting to an environment characterized by higher instability and extensive regulations. Customers are looking at optimization while still investing in new technologies like cloud, enterprise mobility, and big data to create newer revenue streams and also for ensuring compliance and alignment with changing regulations. BFSI segment still remained the top vertical. BFSI gave 42% while the other 24% came from the so called emerging verticals compromising healthcare, retail, media, and utilities. A fifth from visit www.dqindia.com
the telecom sector and the rest from manufacturing. But going forward the biggest opportunities will be in the emerging verticals. BFSI continued to be the lifeline for top IT companies contributing to a large part of their revenues TCS 27.44% , Infosys 35%, Wipro 13%, and CTS 41%. TCS highly valued brand (Brand Finance) ranked as the #4 most valuable brand in global IT services. The brand value of TCS stands at $4,068 mn in 2012, up from $3,718 mn in 2011. Infosys had a good success with Finacle, its core banking software. Retail at 13% ceded some ground as did telecom and manufacturing at 11% and 9%, respectively. But the story of FY12 was that of the emerging verticals. These 4 emerging verticals are supposed to be the main growth engines by 2020.
Takeovers Continue
Though there was some action on the takeover front but mainly from the tier-2 companies which include CSC India, Genpact, Spanco, Polaris Financial Technology, Sai Infosystem, SunGard Technology India, and many more. SAP India made quite a few acquisitions globally?SucessFactors and Ariba. It bought SucessFactor for $3.3bn. Acquisition also formed a key part of Genpact’s growth strategy as it doubled in size with a series of takeovers including Symphony Marketing Services, Empower Research, and Headstrong. The mega merger of the year was between Mahindra Satyam and Tech Mahindra. The merger was to create the fifth largest software services exporter by market value and helping it compete with bigger rivals for large outsourcing deals. The merger will result in combined revenue of about
DATAQUEST | A CyberMedia Publication
IT SERVICES EXPORTS
Software Exporters From India Companies
FY12
FY11
Growth (%)
TCS
39,590
29,801
33
Infosys
33,734
25,477
32
Cognizant
30,987
21,393
45
Wipro
23,779
19,421
22
HCL Technologies
17,575
13,264
32
Mahindra Satyam
5,583
4,797
16
MphasiS
4,561
4,453
2
Tech Mahindra
4,734
4,144
14
Capgemini India
3,638
3,077
18
Aricent
2,928
2,502
17
CSC India
2,833
2,267
25
Syntel India
2,726
2,178
25
Polaris Financial Technology
1,785
1,395
28
MindTree
1,753
1,388
26
3i Infotech
1,009
1,213
-17
iGate
4,776
1,210
295
Zensar
1,711
1,065
61
Hexaware Technologies
1,421
1,033
38
NIIT Technologies
1,391
903
54
Tata Technologies
1,169
879
33
919
821
12
1,011
817
24
768
794
-3
Genpact
1,656
789
110
Glodyne Techoserve
Infinite Computer Solution Texas Instruments Sonata Software
2,652
788
237
Sapient
912
736
24
Persistent
920
722
27
Geodesic Information System
674
652
3
Rolta India
808
609
33
Geometric Software Solution
759
590
29
ITC Infotech
566
572
-1
Mastek
631
571
10
Synechron Technologies
738
509
45
IBS Software
577
487
18
Subex System
477
471
1
Ness Technologies
430
391
10
Infotech Enterprises
31
36
-13
$2.4 bn and more than 350 clients across different geographies and industrial sectors. “The aim is to consolidate the information technology and related businesses and form a single entity, providing services to the sector,” a joint statement from the companies says.
The Software Captives
India is one of the favored R&D hubs of the world. More than onethird of the global R&D spenders already have centers in India and DATAQUEST | A CyberMedia Publication
many more will be here soon. Companies like TCS, Dell, Texas Instruments, and Google have R&D centers in India. And the fact that for many of them their India centers have become either the first or second largest outside the US and all this is an endorsement of the quality of the workforce involved. Even these R&D centers were impacted during the slowdown, many continued recruiting even in FY12. This clearly shows India is still rated as one of the most preferred R&D hotspot globally. visit www.dqindia.com
The country is enjoying the label of being one of the cheapest R&D locations worldwide with highly talented engineers. In a direct comparison with China, operating cost in India is still 25% cheaper, finds Zinnov. The fact that R&D centers in India have helped the parent organizations save a cumulative of $44 bn for the last 3 years is a testimony to that. The focus is now shifting from cost to innovation, competency creation, and leadership roles as the centers look to sustain and grow their operations in India. Most software companies looked to maximize RoI from their software products, while extending their output from their R&D teams on newer products. SAP India invests about 14% of its revenues on R&D lab in India that houses 4,200 engineers. Centers are looking at further investments and innovation which will ensure that India retains its competitive advantage over other emerging countries.
Outlook
Looking ahead, global macroeconomic challenges may continue to persist. Currency fluctuations, lasting debt crises, unstable financial markets, and government austerity programs in the US and Europe could have a negative impact. Apart from this the players will have diverse opportunities like higher growth from tier-2 and -3 cities and SMB sector, cloud computing and virtualization, and convergence of mobility and web. MNC’s R&D centers in India are expected to continue focus on various key enablers for higher value generation. Overall, the scenario in the industry looks positive and the road ahead seems to have great potential. n August 31 - September 15, 2012 | 125
Working Well in
Tandem Virtualization and server consolidation drove increased demand for structured cabling, racks, and enclosures AKANKSHA SINGH akankshas@cybermedia.co.in
DC Equipment
I
t is interesting to see that the Indian data center value chain comprises multiple markets that work in tandem. Different vendors have different strategies, with some present only in key segments, while some are present across all the segments of construction, consultancy, products, and managed services. The data center equipment market is primarily judged on 3 aspects—economy, data center construction and refurbishment, and the trend towards virtualization and server consolidation. Last year, the DC equipment market showed promising growth with structured cabling and racks and enclosures equally contributing to its growth.
Industry Overview
IT racks and enclosure market showed considerable growth in FY12. Consolidation, virtualization, information explosion, energy demand, and cloud computing have driven racks and enclosure market to a new era. Finance sector, government initiatives, and projects opened new market opportunities for the DC equipment sector. Considering that the growing economy and increasing deployment of IT hardware will drive the need for racks and enclosures
Highlights
Uptake of 10 G systems is on an increase, generally by the larger enterprises that are looking to implement the latest cabling technology to ensure longevity The data center equipment market is judged on namely 3 aspects— economy, data center construction and refurbishment, and the trend towards virtualization and server consolidation
in the future; Indian market will also bask in this sunshine. The older establishments which are on unstructured cabling will migrate to structured cabling when they will renovate or upgrade their facilities. The technology associated with data centers is undergoing significant changes in the aspects of efficiency, compactness, and green computing. Data centers are driving the growth for high speed solutions. We also see an increased interest in intelligent cabling systems. The Indian market is reviving and has seen growth in the past year. The boom in data centers has also raised the bar on technology. A reliable power supply is vital for business, especially for data centers. Power continuity for businesses has become very crucial especially in tier-2 and -3 cities where there are frequent
DC Equipment Market Others 10%
20%
629
FY11
FY12
Rittal India 50% Schneider Electric 28%
Rittal introduced innovative products and strengthened its portfolio,while APC by Schneider Electric India is now a one stop solution provider with the acquisition of the acquisition of APW President
DATAQUEST | A CyberMedia Publication
visit www.dqindia.com
Source: DQ Estimates
524
Source: DQ Estimates
Emerson 12%
power outages. Companies are increasing their focus on providing cost effective and energy efficient power suppliers and DC equipments.
Racks and Enclosures
Shifting its focus to data center in-a-box and mobile data centers, Rittal introduced innovative products and strengthened its portfolio while increasing its FY12 revenues by close to 37%. Rittal introduced the 12 meter long XL version of its turnkey Rittal data center container. Also, Rittal launched its energy saving cooling units of the ‘Blue e’ generation. Rittal India, in FY12, provided cooling units to Tata Institute of Fundamental Research and DC services (including racks, cooling units, etc) to financial technologies. Rittal India has also completed the largest project of providing rack facilities to Cisco India in Bengaluru. The company also launched its energy saving cooling units of the ‘Blue e’ generation. The company also plans to launch DC management software. Earlier this year, Rittal and Siemens announced a power distribution solution that employs Siemens busbar distributor systems in Rittal’s live data centers. Rittal India plans to launch rear door cooling units, new IT racks, and inline cooling units as well along with data center management software in near future. With the acquisition of APW President in January 2011, APC by Schneider Electric India strengthened the racks and enclosures and cooling portfolio and is now a one stop solution provider for data center physical infrastructure solutions. Also the acquisition of 74% of Luminous in May 2011 has put the company in the forefront August 31 - September 15, 2012 | 127
DC Equipment
DC Equipment Market
ADC Krone 3 Belden 4
20%
Commscope 10 TE Connectivity 29
Molex 10 DigiLink by Schneider 19
FY12
Source: DQ Estimates
FY11
1,614
Others 13
R&M 6
Source: DQ Estimates
1,345
Uptake of 10 G systems is on an increase, generally by the larger enterprises that are looking to implement the latest cabling technology to ensure longevity
Panduit DAX 4 2
Telecom Business for TE Connectivity performed well for the company;the acquisition by Schneider Electric proved significant for Digilink’s increase in market share
of inverters and secured power domain. APC is introducing the Green UPS line with Back-UPS Pro, which not only saves data but also optimizes the power consumption. Emerson, throughout the year, showcased new and innovative products and solutions. Emerson Network Power (EMR) introduced the next generation of Avocent data center planner,
a component of its portfolio of DCIM capabilities. The company also introduced smart design approach to optimize data center infrastructure. Company’s global uninterruptable power supply and precision cooling business along with acquisitions drove its considerable revenue growth. The Avocent and Chloride acquisitions along with Avtron Load-
bank acquisition contributed to its FY12 revenue.
Structured Cabling
Structured cabling growth in India is linked to the growth in economy, especially in services and manufacturing sectors. The segment witnessed a double digit growth but the industry has slowed down in the last couple of months considering that it is not meeting the
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MIIM™ Bridging the gap between IT investment and critical business results A cornerstone of any business is an IT network that operates efficiently, reliably, and one that delivers powerful information to drive decision making on demand. With today’s streamlined operating budgets network managers and IT teams must operate with fewer resources, yet provide networks with greater speed and resolve network issues quicker. Now by taking control of the most extensive IT asset - the physical layer infrastructure - businesses can know more about network status and connected devices, resolve issues quicker, and provide a more robust and secure network to users and the business than ever before. MIIM™ Advanced Physical Layer Management solution enables IT investment to improve results through increased productivity, quality information, reduced down time, and generate a healthier organisation.
www.molexpn.com
MIIM™ is the bridge between network investments and providing measurable improvements to the wider organisation. Unlock the potential in your network. For over 30 years Molex Premise Networks has manufactured comprehensive copper and fibre optic cabling systems for the transmission of voice, data and video imaging signals. Through our new and innovative technologies, we now offer solutions that deliver unprecedented productivity gains, process enhancements and incremental value to all businesses in their infrastructure deployment and management. For further information visit our website or contact us directly on +91 9004091665
DC Equipment
growth expectations of the cabling vendors. This slow growth is also because of the fear of recession and rupee depreciation. Segments such as data centers, telecom, education, hospitality, etc, are seeing higher growth. Category 6A deployments have been growing steadily especially in data centers and in high endoffice applications. With the increasing need for greater bandwidth and ease of installation, there has been a growing demand on pre-terminated solutions such as MPO/ MTP solutions. There is also a greater emphasis on security at the physical layer. Cabling security systems with modular plug-in/plug-out protection, color coding, and physical locking protection offer an additional layer of security to protect against any disruptions in the network. In FY12, TE Connectivity delivered its services to 800 130 | August 31 - September 15, 2012
customers, both direct and indirect. Its customer base includes Capgemini, Vodafone, Idea Cellular, Bharti airtel, Tata Teleservices, Axis Bank, Barclays, and Reserve Bank of India. The telecom business of the company has performed considerably well. In the past 6 months, it has worked on FTTH projects for over 40,000 homes. It has provided GPON solutions to 5-star hotels across the country. The acquisition by Schneider Electric proved significant for DIGILINK. The company has primarily focused on the Indian market and now got an access to international market as well to a larger extent. Schneider Electric is promoting DIGILINK in Middle East, Europe, and other countries. Schneider Electric is not a very prominent player in India but has got a major market share through this acquisition. visit www.dqindia.com
The other acquisitions by Schneider Electric such as APC (2007), APW President Systems in May 2011, and Luminous in April 2011 have also given an edge. Schneider is competent to address the market with a complete portfolio; it is one step ahead by providing cabling solutions, power solutions, racks, etc, under one roof. R&M has added regional distributors in the west of India along with the states of Gujarat, Maharashtra, Kerala, and Tamil Nadu. In FY12, the company provided embedded infrastructure to the college campuses and also bagged deals in retail and hospitality sectors. CommScope has refocused on certain critical areas of business such as logistics, sales, marketing, channel partners, and business processes. It has now resolved its indifferent supply chain. The company has IT/ITeS
DATAQUEST | A CyberMedia Publication
DC Equipment
as one of its major verticals and has presence in tier-1 cities. It also intends to expand into tier-2 and -3 cities. On technology front, it will focus more on category 6 and 6a installations, intelligent cabling, and on safety technologies like low smoke halogen. FY12 was a dull year for Dax Networks as its cabling business had nil growth. The company states that its revenue on cabling has not met the expectations because of several factors including the fluctuation in copper prices and the steep rise in dollar. Its key projects include Manappuram Group, ELCOT, and SSA (Sarva Shiksha Abhiyan). This fiscal, Panduit had been making noise in the Indian cabling industry. The company
DATAQUEST | A CyberMedia Publication
has gone through some changes and is planning to invest on human resource. It is also likely to invest in new offices, customer briefing centers, and marketing activities. The company has also bagged a deal from Tulip Telecom to provide cabling solutions to Tulip’s data center in Bengaluru, the third largest data center in Asia. The company has opened Customer Briefing Center (CBC) in Bengaluru to showcase its wide range of products to its customers and channel partners. It plans to set up CBC in Asia Pacific region as well. Uptake of 10 G systems is on an increase, generally by the larger enterprises that are looking to implement the latest cabling technology to ensure longevity. There is a higher uptake in the BFSI vertical and manu-
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facturing research vertical. PoE still has limited uptake. PoE is used for security applications but hasn’t been adopted across large enterprises due to its currently limited capacity. However the segment still faces considerable challenges. Fluctuations in copper price pose a challenge for the customers to plan their budgets. These have doubled over the past one year and have also gone to their peak values. The IT/ITeS sector is still sluggish and is dependent on the global scenario. Hopefully, this sector will return to its original growth phase soon. Structured cabling, at times, provides technology necessary for infrastructure build up, but is labeled as a commodity, which is another concern for the industry. n
August 31 - September 15, 2012 | 131
Gain, with Pain! The market for structured cabling is tricky, with a lot of potential but enough roadblocks too
Malini N malinin@cybermedia.co.in
Structured Cabling
S
tructured cabling market had re-couped completely in the last fiscal (FY11) from the global recession in 2009 and 2010. Infact, it had a double digit growth but from the last 2 quarters the industry has slowed down and it is not meeting the growth expectations of the cabling vendors. This sluggish growth is because of the fear of recession and rupee depreciation. And this fear has made corporates even more cautious and they are holding back on investments. Cash flow was dull since July, and the market is only slightly getting back on track since February 2012.
Market Scan
TE Connectivity:The industry witnessed a strategic acquisition of ADC Communications by Tyco Electronics in December 2010 and the company was renamed as TE Connectivity. In the first 2 quarters of FY12, the company had a very slow growth as it was grappling with the integration process. But the growth gained momentum in the third and fourth quarters. And most of the accounts of ADC Communications fell into the piggy bag of TE Connectivity. The company intends to keep the product ranges of both Tyco and ADC as a separate entity as this would help them to address both the cost-sensitive and the high-end technology conscious customers. ADC’s wireless segment has been a value addition to TE and its products and solutions for telecom vertical complement the Tyco’s product portfolio. TE is strong in verticals such as IT/ITeS, telecom data centers, and BFSI and now ADC has added its strong verticals including government and education. DATAQUEST | A CyberMedia Publication
Highlights
The SMB and residential and commercial complexes are also the key drivers for growth There is a huge acceptance of Cat 6A deployments FTTX/ FTTH is another major driver for structured cabling business in the country
Digilink’s Acquisition by Schneider Electric
Again, the acquisition proved significant for Digilink. Schneider Electric is promoting Digilink in Middle East, Europe, and other countries. Schneider Electric is not a very prominent player in India but has got a major market share through this acquisition. CommScope has now resolved its indifferent supply chain. Its major clientele includes Seven Hills hospital, United Commission Bank in Bangladesh, and Sri Lankan airlines amongst others. On technology front, it will focus more on category 6 and 6a installations, intelligent cabling, and on safety technologies like low smoke halogen. R&M products and solutions are used across a myriad of sectors like telecom, IT/ITeS, manufacturing, BFSI, education, automotive, etc, to name a few. R&M has added regional distributors in the west of India along with the states of Gujarat, Maharashtra, Kerala and Tamil Nadu. In FY12 the company, provided embedded infrastructure to the college campuses and also bagged deals in retail and hospitality sectors. FY12 was a dull year for Dax Networks as its cabling business had nil growth.The company states that its revenue on cabling has not met the expectations because of several factors including visit www.dqindia.com
August 31 - September 15, 2012 | 133
Structured Cabling
the fluctuation in copper prices and the steep rise in dollar. Its key projects include Manappuram Group, ELCOT, and SSA (Sarva Skisha Abhayan). Leviton in its third year of operations, has tripled the headcount at present. The key revenue driving verticals for the company include infrastructure, IT/ITeS, government, education, and data centers. Its key customers include Bengaluru international airport, University of Hyderabad, NTT, WNS, Omega healthcare, etc. It has launched offices in Kolkata, Pune, and Hyderabad. It also intends to focus heavily on data centers and large enterprises. The prominent products of the company are 40/100G Ethernet on fiber MTP, retention force technology, high density plug, play solution, etc. Within 2 years of operations in India, 3M has a huge of growth. Two huge deals have contributed immensely to it. The company has offered cabling solutions to Cognizant Technology Solutions (CTS) It has installed cabling solutions at Pune campus. It plans to focus on tier-1 cities at present and aims to hit $10 mn in India by 2015. 3M has a customer base across the industry viz IT/ ITeS and transportation sector with their biggest installation in the IT/ITeS space. Belden is betting big on emerging markets and its prominent markets include India, Brazil, and China. It is focusing on high growth end markets namely transportation systems, alternative energy, data centers, oil and gas, and broadcast. The company is growing at a compounded annual growth rate (CAGR) of 25% in BIC nations. Belkin has posted a revenue of `150 crore in 2011, with a growth rate of 60% in 2011 over DATAQUEST | A CyberMedia Publication
2010. It seems that the company is reinforcing its strength. Between October 2010 and September 2012, Belkin India aims to target sales of `250 crore. In September 2011, Belkin entered into an agreement with BrightPoint India as its national distributor. Along with the government, the key growth verticals for DLink structured cabling solutions have been education, manufacturing, hospitality, and the retail segment. In addition to this, railways and court projects will be the growth drivers along with BFSI, data centers, and disaster recovery (DR) centers. The company has expanded into international market such as Middle East, Russia, and Africa. D-Link has bagged Goa broadband project (GBBN) which was one of the biggest projects rolled out in India for passive products along with a lot of D-Link active products.
Growth Drivers
Advanced cabling systems are now being demanded in India and newer technologies are being adopted. There is a huge acceptance of Cat 6A deployments which meet higher bandwidth needs in data centers as well as at work stations. The SMB and residential and commercial complexes are also the key drivers for growth. There has been a shift towards converged networks and fiber. In a new township, enterprise and telcos are getting intertwined to offer the best converged network solutions to the end users. Data center implementations have gathered huge momentum. FTTX/ FTTH is another major driver for structured cabling business in the country. Higher performing connecting devices replaced legacy supplies. visit www.dqindia.com
August 31 - September 15, 2012 | 135
Structured Cabling
Growth drivers in structured cabling have remained same since 2003 such as the growth in the software exports, exponential growth in IT-enabled services, government initiatives to enhance IT deployment across various departments, growth in BFSI segment, higher deployments in educational institutions, hospitality, retail, and manufacturing. After healthcare, government is the second largest sector, with an 11.8% share, followed by retail sector with 11.6% share. Other leading sectors include professional and technical services at 8.7% share and manufacturing with a share of 8.4%. These 5 vertical sectors account for more than half the SCS market and are expected to continue with a positive growth till 2015. Earlier, the tier-1 cities were the high revenue earners, but now new opportunities are being thrown open by tier-2 and -3 cities viz, Coimbatore, Cochin, Chandigarh, Bhopal, Puducherry, Mysore, etc. The mid-sized market has picked up, despite its price sensitivity, because of the industry verticals?IT and ITeS, BPO, BFSI, PSUs, government, healthcare, SoHo, and residential. These drivers will roll out in a positive growth curve for the market. The data center cabling market is poised to grow several times and is expected to drive the potential market for Cat 6A and above. In addition, FTTH deployment is also projected to grow multiple times in the near future. Emerging markets like the tier-2 and -3 cities and verticals like manufacturing, IT/ITeS, and hospitality are expanding. Data centers in India are booming. We will see more and more data centers coming in the future with green facilities. With this, there has been a growing need to 136 | August 31 - September 15, 2012
deploy faster and secure cabling systems in data centers and even horizontal cabling. The boom in data centers has also led to increased deployment of high-end systems. The need of IT-enabled services is growing at a faster pace in this country which is fueling the growth of structured cabling market. Another trend has been of the technology buyer shifting towards addressing their large scale and vast location applications using Intelligent Physical Layer Management Solution (IPLMS). Plug and play solutions are also gaining preference as they are easier to install and manage. Increasing security requirements for sophisticated networks crave for intelligent networks which can locate and identify physical intrusion. Collaboration via unified communications and video is also driving the cabling market to handle bandwidth hungry application. Customers are demanding intelligent cabling solutions because traditional network management tools offer limited value because information through these is collected manually. But the manual process is time consuming, sometimes inaccurate, and can prove to be costly in terms of money, man hours and network downtime. The intelligent infrastructure management system allows easy planning and detection of MAC’s while maintaining accurate records for handling help desk tasks. The solution offers features that help to trace all devices connected to the network and in mapping and documentation of the ‘end-toend’ physical infrastructure. It helps in monitoring all connections and events. The automatic log reports, alarms, and alerts generated by the system in case of changes and/ or disruptions in the network, allow network man-
agers to detect and trouble shoot problems much faster. Asset and configuration management teams can also optimize their processes and tools by using system derived real-time connectivity information to locate assets for audit or upgrade purposes, establish the potential impact of the loss of a network device or to establish departmental usage of network assets for recharge purposes. Security, facilities, network availability, continuity management teams, and processes can all benefit from the information derived from the system. It naturally follows that more the work-streams and processes that are aligned to intelligent cabling system, the more savings can be realized thus creating better RoI. The key drivers for growth in the structured cabling market in recent years were in commercial real estate, airports, hospitals, hotels, malls, and educational institutes. Other segments supporting the growth are IT/ITeS, BPO, KPO, and government projects. There is a shift towards converged networks and fiber, which plays a significant role in converged technologies. This trend is catching up in new township networks where enterprises as well as telecom networks are getting collapsed to offer the best converged networks. Fiber-tothe-home is another trend which is increasingly being proposed in new realty projects. Cabling industry is consolidating and is seeing more copper and fiber deployments in manufacturing industry, hospitality, health, and government. More townships will have fiber-to-the-home concept deployed and with security taking importance, there will be lot of solutions on perimeter security being deployed in offices, factories, and townships.
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DATAQUEST | A CyberMedia Publication
Structured Cabling
Technological Trends
At present, most of the cabling vendors have quit category 5 manufacturing. Currently, category 5e is widely installed across India than any other cabling infrastructure. Category 6a operates at a frequency of 550 MHz and is backward compatible with the existing standards. This technology is suitable for industry sectors utilizing high performance computing platforms to support very high bandwidth intensive applications. 10G/Cat 6a applications would initially be deployed in server farms, storage area networks, and data centers. It supports 10G. Currently, most organizations are migrating either to Cat 6 or 6a, based on the applications required in India. However uptake of Cat 6a is still slow and in pockets mainly in financial sector. Cat 6a is the evolution of UTP cabling to support 10G or more bandwidth when compared to Cat 6. We hardly see any difference between Cat 6a and Cat 7. Moreover, Cat 7 is likely to have a natural death as it is unadaptable, have issues in installation and cables ought to be re-pulled. Category 7a is known to operate at 1,000 MHz, but it is yet to be ratified. It is at a very nascent stage. Cat 6A will see an increased deployment as it is in line with the growth in sectors such as data centers. Also, end customers are future proofing critical parts of the network such as their storage, server farms, and backbone with latest technology. Shielded Twisted Pair (STP) cabling is generally in use for residential environments and is largely refrained when it comes to commercial environments. Unshielded Twisted Pair (UTP) is cheaper, and therefore more common, since the shielding DATAQUEST | A CyberMedia Publication
from electromagnetic radiation is not generally needed. There are circumstances under which STP is beneficial or required. Specifically, steel mills generally use shielded cabling (or optical, where possible) because of the massive currents in use, which play havoc with the signal in a traditional UTP Ethernet cable. Intelligent cabling has stolen the show of late. IT managers are demanding intelligent cabling as it enables proactive network monitoring and fault diagnosis. It is more efficient, reduces costs, and resolves issues like unplanned downtime, inefficient manual moves, reliability, redundancy, additions and changes, redundant ports, and inaccurate records. It will provide real-time management of the physical layer. Having an intelligent cabling solution enables an immediate rectification, as this system can indicate where exactly the network is experiencing problems. It can track IP based addresses and the network manager can access, control, and manage them from one central location, thereby troubleshooting them remotely. Fiber is primarily used for backbone applications and despite its improved viability as a fibreto-the-desk solution, the cost of active equipment is still stagnant. Increased use of fiber connectivity particularly, factory terminated plug-and-play fiber solutions, can be attributed primarily to the data center applications where the density is critical. Multimode (50/125, 62.5/125um) OM1, OM2, and OM3, Single mode (9/125um) in fiber category are ruling. OM4 fiber cabling was seen last year in parts. OM3 fiber cabling is gradually picking up and plug-and-play copper and fiber solutions have been employed in key installations. Outdoor plant fiber cabling visit www.dqindia.com
August 31 - September 15, 2012 | 137
Structured Cabling
also saw an increase in usage last year. OS2 (Low Water Peak FiberG652.d) is the standard for most deployments. OM4 in multi-mode technology will see increased deployment to support 40G and 100G applications. Fiber requirement has gone up to address campus networking situations. Fiber optics has an advantage of being immune to electromagnetic interference. It uses less power and provides less signal degradation than copper cables. Fiber cables are generally non-flammable and virtually unable to be tapped. It is also of smaller diameter and is of less weigh than its copper counterpart, making it ideal for a variety of cabling solutions. Fiber optics has always been the preferred choice for backbone cabling in buildings and campuses. The cable costs much less to maintain and offers greater signal capacity. The fiber optic cable’s smaller diameter also makes it impervious to interference, with a much lower transmission loss. 138 | August 31 - September 15, 2012
Market Crisis
The growth of business in all verticals is directly proportional to the growth of structured cabling market. The doldrums in Europe and the US have impacted the market to a certain extent. A rise in dollar has also affected the industry. OEMS are facing tough times in meeting the price expectations vis-a-vis margins trade off. Further reduction in prices would be difficult for the players considering steep rise in dollar. Most of the OEMs are not based in India; as they import, thereby increasing the cost of material which ultimately results in higher cost of ownership. Several organizations are reducing capital expenses (capex). Telecom is one of the strongest verticals for structured cabling market. But its contribution is relatively low. Government is also slowing down but not finalizing any decisions. Liquidity has also impacted the industry. Industry consensus states that whole supply chain is under pressure. There is a severe shortage of quality system integrators
in the market. Due to the growth in fiber-to-the-home, fiber-to-thepremises, fiber-to-the-building, etc, employees of structured cabling are being absorbed. The cabling industry in India does not have any set guidelines. It follows TIA/EIA 568B and other ISO standards. The market is extremely fragmented and competitive. It tends to push price down. Cable price is derived from competition, the price of copper at MCX, LME, and exchange rate fluctuations. It is approximately 50% of the BOM in projects. Industry is also facing problems in shipment. Manufacturers are primarily concerned with the fluctuations in copper prices and foreign currency. The prevailing low sentiments in the market coupled with the fixed price contracts, which most large projects are heading too, are the major challenges OEM’s in India are facing. It is difficult to resolve this as most customers are using this to mitigate their risks and push OEM’s amongst themselves. n
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Unified Communication
Celebrating Collaboration After large enterprises, even the mid-market segments and small enterprises are now embracing UC AKANKSHA SINGH akankshas@cybermedia.co.in
DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 139
Unified Communication
140 | August 31 - September 15, 2012
Highlights
Small to Medium Enterprises are new markets for UC Mobile collaboration is a hot trend Greater adoption of mobility and video IM presence has grown tremendously Indian SMBs grapple with bandwidth constraints
Moreover Unified Communications and its component technologies are speeding up businesses on their path to going green while reducing carbon-heavy overheads. The adoption is also seen not following a single particular pattern; since last year unified communications has been adopted across major verticles. Traditionally, some of the verticals that were adopting UC services were BFSI and IT/ITeS. In addition, some of the manufacturing companies consolidating their infrastructure and rolling out unified communications. Another industry which is fast adopting unified communication is education and government as well.
Growth Boosters
One of the intriguing things industry has seen is greater adoption of mobility and video and this will continue to grow in future also. The other area is the IM presence which has grown tremendously
from 2010-11 and we expect that to grow in 2011-12 also. Since the network and IP infrastructure of the country has already begun to improve, IP telephony has also shown tremendous growth over the last year. Apart from this, conferencing and collaboration, which include audio, web, and video conferencing, have always been lucrative areas. The video collaboration sector in India is at an interesting stage in its evolution, with an increasing number of enterprises realizing and reaping the benefits of video collaboration solutions to aid in organizational growth. The past year has seen new sectors such as entertainment, healthcare, finance, education and manufacturing explore and deploy video collaboration solutions, while existing customers are looking to enhance their existing video environment. On the other hand, cloud based voice solutions are gaining popularity among businesses as they not only reduce equipment costs, but also ensure greater reliability. As users’ communication habits evolve, infrastructure and operations leaders need to consider new telephony and UC vendor relationships, as well as the use of managed services, outsourcing, hosted, and cloud based solutions.
Unified Communication Market (In `crore, Growth% and Size in%)
22%
3,647
FY11
FY12
Collaborative Platforms 37% Voice Solutions 45%
Source: DQ Estimates
2,989
Audio Visual 18%
Source: DQ Estimates
T
remendous growth is seen in the mid-market segment and the smaller enterprise segments which have increasingly invested in UC services over the last year. The affordability and huge benefits of this collaborative technology has led Indian SMBs to end the gestation period and adopt the technology. Unified Communication market showed impressive growth of 22% taking the overall market to `3,647 crore in FY12 from `2,989 crore in FY11. Under various scanners, UC market is being split under various divisions. Globally, the split is defined between on-premise, hybrid, etc. Vendors prefer define their operations under voice based platforms, conferencing, or messaging. According to Indian market vendors are split under audio visual, voice solutions, and collaboration platforms. The awareness of streamlining their business processes and boost productivity, reliability, and competitiveness using collaborative tools like audio/video/web conferencing, email, IM, voice, presence, etc, is pushing sales for UC in small and mid markets. Earlier with interoperability, bandwidth and affordability constraints, Indian SMBs faced difficulty in UC adoption. However with technology coming at hand and with the advent of cloud based UC solutions, UC players have started catering to the SMBs. Over the long term, opportunities also exist to design entirely new businesses and approaches using mobility, such as virtual manufacturing, virtual meetings, virtual logistics or new modes of operations, such as office-less businesses.
With the advent of cloud based UC solutions, UC players have started to cater the SMBs
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Unified Communication
Market Watch
Cisco leading the wagon has been on the forefront in deploying unified communication products across industries in India. It is currently focussing on introducing innovative products in market. Testament to this is BE3000, a new unified communication solution for small and mid-sized businesses. The company has been vouching on its Borderless Networks portfolio of products as well. Cisco’s telepresence business flourished last fiscal with integrated architecture, comprehensive network based end points and infrastructure portfolio. Microsoft, on the other hand, strengthened its foothold in IM and email space has introduced innovative products and services maintaining its market presence. Microsoft recently unveiled the customer preview of the new Microsoft Office. The new office features an intuitive design that works beautifully with touch, stylus, mouse, or keyboard across new Windows devices, including tablets. Avaya showed considerable growth. It acquired Radvision in FY12 and another company, Sipera in FY11. After the company acquired Nortel enterprise solutions (NES), Avaya started catering to NES customers as well. Avaya is growing y-o-y in the UC space, which comprises IP DATAQUEST | A CyberMedia Publication
Market Share (In%)
Siemens 6%
Others 6%
Polycom 7% Cisco 31%
Microsoft 24% Avaya 26%
Source: DQ Estimates
Employment of IP-PBXs will vary according to current investments, maturity of an organization’s network infrastructure, and incumbent vendor strategy. The industry is viewing VoIP application as a potential cost saving technology as its adoption is likely to mitigate enterprises’ operational costs.
Cisco’s telepresence business flourished last fiscal whereas Microsoft strengthened its foothold in IM and e-mail space; Avaya and Polycom increased their presence in video
telephony, email, and contact center application where Avaya is #1, unified messaging, IM presence, mobility presence, conference, and collaboration. Avaya doesn’t cater to areas like email, etc but quite recently the company is expanding its reach by providing solutions in its non-operating areas like video. Avaya did not cater to video in 2010-11 but they now have an end-to-end solution. Polycom with immense focus on strengthening its cloud strategy to enable service providers to fast-track delivery of videoas-a-service and accelerate the adoption of video collaboration among SMBs and enterprises. Polycom acquired ViVu as well as HP’s halo business and Accordant Technologies. The company has a formal alliance with airtel and Tulip to offer managed services to the enterprise. Polycom developed first enterprise software solution for Apple, Motorola, and Samsung. Panasonic is also entering the dynamic industry of UC with its audio video conferencing offerings recently. n visit www.dqindia.com
August 31 - September 15, 2012 | 141
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Adv.
Web
APC Avaya Cubix Donjin Eaton Finolex Fluke Fujitsu Golgotia University Grape City HCL Infosystem HP IBM ISACA Juniper Lenovo Microsoft Mindlance Molex NEC NIIT Nikom Nulcon Oracle Panasonic Patel India Qualcomm R&M Rashi Peripherals Pvt Ltd. Readington Ricoh Rittal India Safenet Sai Infosystems Samsung Seagate Shyam Networks Smartlink Socomec UPS India Tulip Tyco Viewsonic Western Digital Xerox
www.schneider-electric.co.in www.avaya.com/in/ www.cubix.com www.donjin.com www.eaton.in www.finolex.com www.fluke.com/ www.fujitsu.com/.in www.galgotiacollege.edu www.grapecity.com www.hclinfosystems.in www.hp.com www.ibm.com isaca.org.in http://www.juniper.net www.lenovo.com/in/en/ www.microsoft.com/ www.mindlance.com www.molex.com in.nec.com www.niit.com www.nikom.in www.nullcon.com www.oracle.com www.panasonic.net www.patelindia.co.in www.qualcomm.co.in/ www.rdm.com
142 | August 31 - September 15, 2012
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149
www.redingtonindia.com ricoh.co.in/Default.aspx www.rittal-inida.com www.safent-inc.com www.saicare.com www.samsung.com/in www.seagate.com www.shyamnetworks.com www.digilink.in www.socomec-ups.co.in www.tulip.net www.tyco.com www.viewsonic.com www.wdc.com www.xerox.com visit www.dqindia.com
36,37 33 50,51,126 115 63 47 87 43 133,135,137,139,141 59 23 170,171 155 89 7
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IT Distribution
CDimensions hanging
Still the hot seat for ambitious plans, IT distribution saw more successes than failures Shilpa Shanbhag shilpas@cybermedia.co.in
DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 143
IT Distribution
T
he distribution industry, following its traditions, continued to be the hot seat of ambitious plans. While some saw a lot of action, sending revenue margins rocketing like those for Redington India and Savex Computers, others like Ingram Micro had be content with stable margins. Some others like HCL Infosystems received a beating; it was the only tier-1 company that was an exception. As a result Redington India overtook Ingram Micro in the ranking position where it seemed to have maintained a steady claim over the years. Meanwhile, other distributors like Neoteric Informatique, Rashi Periperals, and Iris Computers continued to scale on the growth chart, while Supertron managed to pull its margins towards stability.
Changing Market Dynamics
Even some of the challenging issues like credit policy continued to plague the segment. Several companies of the order of Supertron, Savex, Mediaman Infotech, Savex, Sogo Computers, among others continued with challenges of ‘cheque bouncing’ and partners ‘not paying on time’. The entire distribution segment is estimated to be plagued by this trend leading to a bad debt scenario. Apart from that in continuance to the trend of FY11, the distributors adhered to its credit policy while the channel partners kept on raising the issue of stockpiling and hoarding. Distributors blame that lack of effective credit control and policy is resulting in stockpiling and under-valuation of the commodities for the channel partners while the counter argument raised is that there is flux in market operation price and trade terms. Also, distribu144 | August 31 - September 15, 2012
Top 10 National Distributors Companies
FY12
FY11
FY10
Redington India
10,938
9,274
7,024
Ingram Micro
10,547
9,766
7,234
HCL Infosystems
7,087
7,282
3,871
Savex Computers
2,972
1,916
1,166
Compuage
1,598
1,412
1,088
Rashi Peripherals
1,502
1,097
838
Neoteric Informatique
1,400
1,135
945
Iris Computers
1,269
965
961
Supertron Electronics
1,189
1,107
929
480
327
265
Fortune Marketing
Highlights
On the national front, the distribution industry recorded a nominal growth of 21.23% across regions with south and north India generating a major bulk of the revenues to the pie The inability in meeting demand owing to shortage of products had a negative impact on national and regional distributors alike and also fueled panic in the market
tors have often been blamed for the ongoing scenario of putting partners under pressure for hoarding and the impending case of DoA (dead on arrival). Even the natural calamities seemed to weigh hard on the segment with the Thailand floods resulting in a hard disc crisis in India. The unavailability and shortage of essential components led to the products being sold at 60% more than their normal price. The inability in meeting demand owing to shortage of products had a negative impact on national and regional dis-
tributors alike and also fueled panic in the market. This led to some distributors even hoarding products. South and west India emerged as the regions that were badly impacted by the crisis. To add fuel to the fire that was already burning the segment, the rupee continued to weaken against the US dollar. A US dollar that grew from strength to strength meant dearer imports resulting in the retail and corporate segment hitting the panic button. It was a wait and watch policy for this segment for the last fiscal. SMBs and SMEs acted as the cushion during this crisis. The crisis that plagued the market led to corporate billings declining by 2.3% and an estimated retail loss of 1.8% of market potential. Another key trend that prevailed in FY12 was the rising expectations of vendors from their distributors.
Vendor Metamorphosis
The changing dynamics of the distribution segment in the last
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IT Distribution
fiscal is best exemplified by the shifts undergone by leading vendors with respect to their distribution models. HP transpired from a Regional Distributor model and telecom Regional Distributors model to a National Distributor model. Dell, traditionally a direct vendor, also started going the National Distributor way while LG, one of the first vendors to go regional moved to the National Distributor model. Telecom vendors like Samsung also started resorting to the IT National Distributor model. On the national front, the distribution industry recorded a nominal growth of 21.23% across regions with south and north India generating a major bulk of the revenues to the pie. East registered a low 16.67%, while the north grew by 2.2% compared to FY11. West registered a growth of 7%. Even as Asus pressed into action the service of regional distributors, there were new vendors who also appointed regional distributors. Even Lenovo followed suit after its internal restructuring activities. With all the activity from the vendor community, regional distributors witnessed an increase in aggregate market size by 16%, with the western region increas-
146 | August 31 - September 15, 2012
The Regional Kings (In `Crore) Regions
Company
North
West
South
East
FY12
FY11
FY10
Comexcell Technologies
195
195
98
Elcom Trading Company
153
127
107
Modi Infosol
135
125
150
Datacare Corporation
432
432
300
Maxtone Electronics
428
382
400
Mediaman Infotech
424
369
321
Aldous Glare
245
175
120
Shwetha Computers & Peripherals
240
230
211
Sogo Computers
224
189
170
Lalani Infotech
220
220
178
Eastern Logica Infoway
193
148
108
Datamation
141
121
100
ing stake by 4.3% compared to the previous year. Meanwhile, the eastern region also recorded a significant jump rising by 25% in regional distribution, attributing it to Lenovo, Acer, Dell, Seagate, HP, etc. Owing to the diversified presence of sub-distributors and the poaching activity by tier-1 players, the southern region reflected a
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growth of 5%, while the growth figures of the northern region remains a topic of hot debate. HP gained back the market share that it lost in FY11 to Dell. Besides continuing to focus on exclusive distribution rights for the 300 odd HP Worlds panIndia, the return of the pro-IT distribution policy (both national as well as regional) by HP helped
DATAQUEST | A CyberMedia Publication
IT Distribution
Savex register the highest growth rates. Though Dell topped the priority list with its extensive channel plans, it remained diversified with its regional distribution model, though Dell’s command over market share was hit in a minor way. Acer also witnessed a negative movement. On the other hand, Lenovo’s ‘protect’ and ‘attack’ strategy can be said to be well implemented in India too. An adherence to this strategy led to the vendor managing an enormous growth, fetching the company a global share at 12.2%. The bounce back was on the back of revision in the channel policy and the focus on LES. Major government deals and aggressive channel expansion plans, targeted at SMBs and retail segment, helped to a great extent. During Q4 (JFM) Lenovo was awarded major government orders in Tamil Nadu and it is also riding high on expectations of pocketing a second tender in TN. Government tenders (UP) under the governance of Akhilesh Yadav are expected to prove to be a game-changer. In the future, Dell, HP, Lenovo and Acer which rule the roost with equal shares.
The Top Players
In order to grab a better picture of the fiscal that breezed past, let’s put the top players under the scanner. Ingram Micro After a comeback in FY11, Q1, Q2 and Q3 bore the brunt of the economic downturn. Even though during Q3 consumer goods reflected good growth, there was a significant shrinkage in revenues. But Q4 reflected trends of resurgence in the growth graph. Factors like inflation, non-direction of the government decisions weighed large. Even though vendor experimentation to garner its marDATAQUEST | A CyberMedia Publication
FY12 was witness to regional expansion and national poliferation. On the whole, India’s top distributors made a comeback on the back of volumes of business while other players adopted the expansion mode
ket share continued, there were major appointments. Western Digital appointed Ingram Micro as a ND for its entire range of products in India. It partnered with RIM to offer BlackBerry mobility solutions to large corporates and SMBs. It was also appointed as distributor partner by Zoho to resell its entire range of products (productivity, collaboration and business applications) in India and other SAARC countries such as Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. Ingram Micro got into a strategic alliance with Netmagic to distribute the latter’s managed hosting and cloud services focusing towards the needs of the SMB market. In order to ride on the navigation boom, it entered an alliance with SatNav Technologies to increase the presence of their products. During FY12 Ingram Micro forayed into surveillance & security and AIDC (automatic identification and data capture). HCL Infosystems Q4 of FY12 showed signs of revival with large visit www.dqindia.com
August 31 - September 15, 2012 | 147
IT Distribution
contracts from enterprise and the government sector. Maxell, Asder and Lexibook were added to the bandwagon even as it went on a rampage to increase ist footprint in the rural market and tier-3 and -4 towns. It also signed brands like Hitachi and Emtec for distribution and marketing mandates. It became the first national partner for Cisco WebEx for the Indian market and was also awarded the LOI for managed service provider from UIDAI in addition to the order that it bagged with ELCOT. Redington India: Even its bad H2 failed to dampen the good spirits that H1 had registered. Growth in the non-IT business gained momentum in the smartphone category (BlackBerry portfolio). Even the digital lifestyle business recorded good growth owing to Apple products and XBox gaming devices. Infrastructure related businesses took a dip during the latter part of the year. Virtualization, Storage and Security businesses continued to gain significant traction. Savex Computers: HP again ruled the roost as it drove revenues and improved its stand. During FY12 three growth drivers namely, Samsung (mobiles and smartphones that grew approximately 90%); HP Networking (new addition); and HP Servers and Storage (100%) pulled up revenue margins. HP and Samsung notched the top slots as both contributed approximately 60% to revenues, while other vendors like Microsoft, Logitech and Acer added positively. Even the northen region (36%) contributed the highest to the revenues. Savex Computers expanded its geographical reach to 72 points of presence across India (43 148 | August 31 - September 15, 2012
The peripheral companies are making the right moves with the mix and undefined pattern of distribution while major vendors have been successful in playing the role of a game-changer in the last few years branch offices with warehouses and 29 sales offices). Compuage Infocom: It seemed to be riding high on new distribution alliances during FY12. On the alliance front, Foxconn appointed Compuage as exclusive distributor with an aim to capture around 10% of the Indian motherboard market by end of 2012. Meanwhile, Edifier International also entered a partnership agreement with Compuage to distribute (consumer electronic and multimedia products including PC, multimedia, docking, IT and home audio). Samsung appointed Compuage as its regional distributor for Delhi for its entire smartphone range, including tablets and were also appointed by HP for its consumer PC business in Gujarat.
Passing Thoughts
Even on the portfolio front, mobility and non-IT businesses seem to attract a lot of attention from tier-1 and -2 distributors and even sub-distributors tried to rake in their share by entering into this space. While some players leaped at the opportunity, some others maintained a safe distance. Take the case of visit www.dqindia.com
the larger players like Redington, its non-IT portfolio garnered 25% of its revenue while others like Ingram Micro restrained from testing the non-IT waters and instead played a safe game around mainstream IT only. Having tasted success in its plans on mobility and traditional non-IT products, Neoteric Informatique intends to focus on mobility even in the current fiscal. The trend is to offer a complete package of solutions for the partners and offer a diversification of product lines. Gone are the days when increasing vendor tie-ups and increasing brands on it bandwagon ensured success stories. FY12 was witness to regional expansion and national poliferation. On the whole, India’s top distributors made a comeback on the back of volumes of business while other players adopted the expansion mode. While the national distributors are leaving no stone unturned in covering every place on the map, regional players are dreaming big to take center-stage as national players. The regional distribution model remains lucrative but it is a volatile and risky affair and needs to be handled with care. Meanwhile, peripheral companies are making the right moves with the mix and undefined pattern of distribution while major vendors have been successful in playing the role of a gamechanger in the last few years. Hence, moves of any major vendor necessitates extra caution to avoid instances like HP, Nokia, LG, and are also keeping the distributors on their toes. Will vendors learn from the past instances and make the right game-changer moves or will distribution ambitions lead them to new heights are questions FY13 holds answers to. n
DATAQUEST | A CyberMedia Publication
ADDING VALUE BEYOND LOGISTICS.
Distributed in India by
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Trapped, for
Now
The Indian IT training industry saw some growth, thanks to demand for software certification programs. But pure-play training vendors didnâ&#x20AC;&#x2122;t have much luck Charu M charum@cybermedia.co.in
IT Education & Training
Individual Training: Dwindling Revenues
The impact of global recession is certainly visible in the individual training market, which has seen a decline in FY12 as the preference of customers is now shifting more towards shorter, job-oriented courses. NIIT and Aptech are the largest providers of individual training courses across various sectors including IT/ITeS, BFSI, management, English, and professional skills. NIIT’s individual training market contributes nearly 59% of the company’s total revenue and has witnessed a drop of 1% over the previous year. Its GNIIT program offered under cloud campus enroled over DATAQUEST | A CyberMedia Publication
The Overall IT Training Market
Top IT Trainers Market Share
(In `crore)
Jetking Infotrain 5% Aptech 7%
2,376
FY11
2,355
FY12
FY12 revenues include the revenue of major training companies like NIIT, Aptech, Jetking Infotrain and others. The overall market remained flat as the preference is now shifting
NIIT 54%
Source: DQ Estimates
Others 34% Source: DQ Estimates
T
he last few years have seen the pure-play training companies gasping for breath, increasing revenues marginally by 2-3% y-o-y. In FY12, the story was the same. IT companies having a focus on IT training to support their technologies, though, celebrated good growth. Revenue of pure-play companies and others in FY12 stands at `2,355 crore compared to `2,376 crore in FY11. Another trend is that although the industry is seeing marginal growth, usage of technology in training is growing. Many reasons can be behind it: the rising inflation rate, high economic uncertainties, etc. Companies like NIIT and Aptech also failed to impress. In fact, Aptech went down 9% in growth and NIIT saw a marginal 1% over the previous fiscal. But industry leaders are hopeful that there is enough potential for the market to grow as the demand for ready workforce will increase as soon as the slowdown is over.
NIIT is a dominant player in this industry, followed by Aptech and Jetking Infotrain. Others include revenue from unorganized sector, software certification programs, and e-learning related to IT industry
Note: The DQ Estimates of FY11 do not include revenues from unorganized sector and software certification
13,800 students. The company tied-up with 80 engineering colleges with an ‘NIIT Inside’ offering plan to enhance students’ employability through well-established training solutions. IFBI, a combined initiative of NIIT and ICICI, completed 5 years of business. With focus on banking, specific placement oriented programs were launched including Bank Vantage series career programs. It also launched a certification program in capital markets in association with NSE and also tied up with Axis Bank. It also launched a specialized technical and soft skill training program for Uttar Pradesh police personnel which will help them efficiently handle calls made to the emergency number. NIIT also entered into a joint venture with the National Skill Development Corporation to form National Yuva Jyoti. Aptech’s individual share of the training market witnessed a decline of 7-8% as compared to the previous fiscal. This decline is owing to a drop in MAAC and IT training bookings. Although the company visit www.dqindia.com
continued its focus on network expansion in FY12 and added a total of 95 centers as against 29 in FY11. The total number of students enrolments for the year in the domestic market witnessed a drop of 16% over the previous year while the international market improved by 1%. Overall, booking witnessed drop of 10% y-o-y. FY12 was a challenging year for MAAC as the overall revenue for the brand dropped by 21%, largely of the entry of new years and competition for the formal sector. The company is now focusing on tier-2 and -3 cities and has signed up 13 centers in FY12 as against 12 in the previous fiscal. Arena animation, too, saw 11% drop in revenue. Revenues from the IT training brands declined by 29% as compared to FY11, largely on account of closures of own centers. Aptech renewed its alliance with Oracle (includes Sun) and Red Hat to offer their certification programs. It also signed up a new alliance with Google for the subSaharan Africa to deliver training on Google technologies. The August 31 - September 15, 2012 | 151
IT Education & Training
E-Learning: Scoring Well
Source: DQ Estimates
A lot of activity has been seen in the elearning industry in FY12 and is expected E-learning Industry to become bigger and better in the coming (In `crore) years. It is growing at a rate of 15-20% 15% in India Not only the outsourcing market 7% in e-learning is doing well in India but the domestic e-learning market also scores pretty well. Revenues from the Indian e-learning industry stand at approximately 1,721 1,841 2,209 `2,209 crore. A large number of reasons are contributing to its growth including the FY10 FY11 FY12 The e-learning industry in India is showing good rapid evolution of technology and high growth. Tata Interactive Systems (TIS), Educomp, consumption of digital content. Moreover NIIT, and Gurukul Online Learning Solutions are the cost of devices and bandwidth has e-learning pioneers. IT companies like Accenture, been decreasing at a rapid pace, leading IBM, Oracle, KPOs, BPOs, and publishing houses have ventured into the e-learning space in the last to a decrease in the e-learning adoption years after seeing the captivating growth shown costs for companies, educational by the industry institutes, and individuals. Another key driver is the pervasiveness of mobile devices such as smartphones and tablets. These devices have provided huge mobility in learning further allowing companies to provide e-learning on-the-go to employee segments such as sales force, field staff, and shop-floor executives. Another trend emerging in the e-learning industry is that IT companies like Accenture, IBM, Oracle, KPOs, BPOs, and publishing houses have ventured into the e-learning space in the last years after seeing the captivating growth shown by the industry. Even the government is also making the most of the e-learning as the Government of India is spending over `600 crore on an IT project to upgrade e-governance and IT services in all the north-eastern states. NIIT, Tata Interactive Systems (TIS), Gurukul Online Learning Solutions, and Educomp Solutions are the pioneers in this industry. Other players making significant contribution to this sector include Lionbridge, Skillsoft, Sify E-learning, Tutorvista, and Harbinger Knowledge Products. TIS clocked strong growth of 45% in FY12. With much focus on mobile learning, TIS launched mobile learning platform LearNow for organizations and TM superscript, a tool that allows users to create and deploy content. It has added more than 1,000 schools in India in FY12. Majority of its clients were from telecom, BFSI, and manufacturing. Educomp is a leading player in the e-learning space with its innovative products including the much-popular Smart Class which is expanding very rapidly. In FY12, the company launched Smart Class 3D product for premium schools. It is now present is as many as 12,652 schools. The company received `60.72 crore order from the Chhattisgarh government for implementation of ICT solutions across 582 government schools and higher secondary institutes.
company was also empaneled by the Ministry of External Affairs, Government of India, to provide quality training to participants under the ITEC program. A specialized 10-month professional course ‘Netlink’, based on hybrid technologies, and a new 7-month course ‘Aptech Certified Web Developer’, for the web de152 | August 31 - September 15, 2012
velopment market were launched. It also signed up an alliance with Mahatma Gandhi University, Meghalaya, for offering degree and diploma programs. Another player is a computer hardware and networking major Jetking Infotrain. Its revenue declined by more than 30% in the last 2 years.
In FY12, it witnessed a drop of 11% in revenues compared to the previous fiscal. Following the footprints of many of its peers, it also launched cloud this year and opened 2 new international centers in Nigeria. The company has tied up with Sikkim University to launch a 3-year degree program-Bachelor of Science in Infrastructure Management. The company has also got a mandate worth `60,000 crore from the Gujarat government to train SC/ST students.
Corporate Training: Potential to Rise
The corporate training market in India is huge and is witnessing good growth. Pure-play companies like NIIT and Aptech have shown growth in their revenues. The high-end certification programs by the IT companies with a focus on IT training too are showing good growth. These companies including IBM, SAP, Oracle, Microsoft, Red Hat, Citrix, Cisco, CA Technologies, etc, are aggressively leveraging advanced technologies like smartphones, games, labs, etc, to impart better knowledge. According to a Gartner report, the software certification and training market in Asia Pacific is estimated to grow from $5.59 bn in 2008 to $13.8 bn in 2013, it will not escape the glabl economic slowdown. Companies are focusing on enhancing employee productivity, so the demand is likely to increase. Another reason driving the growth is India’s becoming a hub of offshore resources. Moreover there has been a perceptible shift from long-term courses to short-term high-end certifications. Companies are looking after vendors which have the ability to provide customized training and can deliver
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IT Education & Training
content using several advanced technologies. NIIT’s corporate training solutions won 9 global contracts in comparison to 6 in FY11 for multi-year managed training service engagements including global oil and gas major and a leading technology player. The company also entered into collaboration with IBM, a global technology company to offer experimental learning to early professionals ready to join the IT industry. NIIT will train and enable the students at its centers, providing them with the required skills training and mentoring throughout the project duration. IBM experts will evaluate the completed projects and provide certificates to successful students. NIIT divested its stake in its step down subsidiary, Element K Corporation by selling it to SkillSoft Corporation for consideration of $110 mn and entered into a strategic long-term services and licensing agreements with SkillSoft to expand its MTS business as a key platform for growth. In FY12, Aptech received 3 major orders for corporate training from a state electricity distribution company, a cosmetics major, and a leading infrastructure finance company. The company successfully renewed its 3 existing large customers, 2 telecom companies and one automotive major. In all, the corporate training market of Aptech witnessed pretty good growth. An offshore IT training order was executed for a Kolkata based IT services company. Aptech ties up with TRRAIN Foundation, to help people working in the retail sector and effective communication. In this venture, Aptech will be providing content, training and the academic support processes to run the training program, DATAQUEST | A CyberMedia Publication
Highlights
Pure-play companies are witnessing marginal growth. However, the high-end certifications with a focus on IT training are showing good growth The preference of customers is now shifting more towards shorter and more technology-enabled courses The e-learning industry witnessed robust growth, and is growing at 15-20% in India
while TRRAIN will provide the infrastructure required (be it mobile education centers or classrooms) at retail dominant locations like malls and high streets to conduct these programs. The collaboration aims at training 20,000 people in 3 years in major cities like Mumbai, Bengaluru, Delhi, and Hyderabad. Another player which ventured into corporate training in FY11, Jetking Infotrain did not take off much in FY12. HCL Learning, a division of HCL Infosystems, also launched special IT training programs for ‘Green Computing’. HCL Learning has teamed up with Global Science and Technology Forum (GSTF) for providing these training programs.
Smart Education
Schools are still the hotspot business for companies as many schools are now inclined to become technology-enabled. NIIT has done pretty well in this space in FY12. It continued its focus on the nGuru solution for non-government schools and witnessed robust growth in this sector. It continued its focus on smaller metros and tier-2 cities. The company surpassed 10 mn-students’ mark in FY12. NIIT NGuru-solutions for schools got empaneled by CBSE’s Continuous and Comprehensive Evaluation (CCE) training program for visit www.dqindia.com
teachers. It also launched cuttingedge ICT enabled solutions for the schools of tomorrow. It added 687 private schools during the year compared to 581 in FY11. NIIT NGuru also announced the launch of a new-age International Pedagogical ICT Teacher Training Programs, to upgrade the existing skills of the teachers by leveraging ICT. These certification programs would help in empowering teachers with the latest technology and pedagogic skills and encourage collaborative peer learning. NIIT NGuru’s Mobile Science Lab, an innovative learning solution which integrates IT-led Science Lab with classrooms, received the ‘Best Innovation in Science Education of the Year’ award. TIS and Educomp have also done extremely well in bringing technology to schools. Other players dominating this segment include Career Launcher, IMS, Kangaroo Kids Education, Liqvid, Tutor Visa, Shri Ram New Horizon, Shloka Infotech, Tree House, ETCN (Zee Learn).
Expectations
The IT training market is quite mature in India as the large players are seeing lower revenues and margins. The growth in the industry has been sluggish, so the focus should now shift to have optimum value with quick returns. These players are now either focusing on international market or planning to penetrate into tier-2 and -3 cities. The focus should now move from students as its immediate customer to the IT professionals who are looking for specialized certification programs and short-term technology-enabled courses. The demand for specialized courses is likely to increase in future. n August 31 - September 15, 2012 | 153
Projectors
Boardrooms to Classrooms
Technological advancements and demand from the education sector are driving the projectors market in India PRERNA SHARMA prernas@cybermedia.co.in
F
Y12 was a year when a lot of action revolved around the projectors market in India, making it one of the leaders in the peripherals space. Much can be attributed to the growth including the rising demand from the education sector, many technological advancements which have consequently decreased the prices, etc. Earlier sky rocketing prices had made projectors a very niche market in the peripherals space. But times have changed...
Market Dynamics
The market for projectors witnessed a significant upsurge (11%) in demand in the last financial year. The trend is highly encouraging for both the market leaders and the new entrants. However the demand is more from the education sector, that in the consumer segment has also shown encouraging signs. And most vendors think its wise to focus on this vertical in the near future. BenQ leads the market with 15% share where in Epson is giving a strong competition with a market share of 12%. Other key players are Acer and Hitachi with share of 9% and 8%, respectively.
Vendor Strategies
The digital projectors market in India is a highly cluttered one, with estimates of around 20 players. In terms of market visibility, BenQ, Epson, Acer, Hitachi, Vivitek, InFocus, NEC, Panasonic, Sony, and Dell occupy the top space. 154 | August 31 - September 15, 2012
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Projectors
Indian Projectors Market 11%
FY11
FY12
The market for projectors witnessed a significant upsurge in demand in the last financial year
BenQ, maintaining its top position, is determined to grow in DLP segment in which they believe the market has maximum demand and shall grow further with more adaption of projectors in the education sector. Acer, on the other hand, is giving a strong competition by introducing projectors with newer technologies. They plan to introduce a new line of projectors that will operate on hybrid technologies, that is consuming both laser and LED together. Saji Kumar, director, product management, Acer India believes, “This technology will be a breakthrough for Acer projectors in the market as the product aims to deliver better picture quality through higher contrast ratio and consumes less power.’’ Realizing the needs for the ever increasing demand for newer technology, BenQ came up with Joybee GP2, a digital lifestyle projector which can be attached to a smartphone for high-quality projection. Rajeev Singh, country head, BenQ India says, “Our projectors come with Apple’s iPhone/iPod compatible dock and are highly power efficient with 3 LED projection technology that can project up to 30,000 hours with 200 ANSI lumen brightness and just weighs less than 500 gms 156 | August 31 - September 15, 2012
Others 56%
Epson 12% Acer 9% Hitachi 8%
Source: DQ Estimates
576
Educational schemes like Sarva Shiksha Abhiyan, adoption of modern teaching aids have given a huge momentum to the market E-learning has also been adopted by many institutions and companies, consequently increasing the demand for projectors in the market Home segment has been projected to be the key area for the vendors in the years to come
BenQ 15%
Source: DQ Estimates
518
Highlights
Analyzing Vendor Market Share
(In `crore)
BenQ leads the market with 15% share while Epson is giving a strong competition with a market share of 12%
and comes with battery back-up.’’ Epson has also come out with 2 new series of projectors EBZ8000 and EB-Z10000. Both these series have brightness of up to 10,000 lumens, resolution of 1,920x1,200 pixels, and contrast ratio of 5,000:1. Dell, a relatively new entrant in this segment, is constantly focused on new innovations to suit the next-gen demand for mobile portability in this segment. Dell recently launched a new M110 light weight projector, small enough to fit in your palm.
Growth Drivers
Introduction of educational schemes like Sarva Shiksha Abhiyan, adoption of modern teaching aids (like smart boards), and new technologies (such as PCs and digital projectors) have given a huge momentum to the market. With education moving out of the orbit of blackboards, classrooms, and conventional methods of teaching to a digitized mode of imparting knowledge, the introduction of 3D technology has helped teachers in imparting knowledge through real-life audio/visuals aids. E-learning has also been highly adapted by many institutions and companies, consequently increasing the demand of visit www.dqindia.com
projectors in the market. Overall, education has clearly emerged as the major buyer for projectors, contributing to more than 35-40% of the total projectors market in India.
Key Challenges
Clearly the industry is at its boom and with this multiple challenges are on the way for the players. The entire IT industry is currently facing the turmoil of rupee devaluation but the market continues to be dynamic even in this scenario. A customer is indifferent in understanding the right projector technology required for his/her usage. Since, there are multiple choices of projectors available today, a customer needs to make a choice between high-quality resolution and product longevity. Durability and lifespan of the product is today a prime concern of the consumers. Customers focus on technologies that offer longer lamp life at a reduced cost.
Future Ahead
The Indian projectors market is expected to grow by 33% y-o-y. And the home segment has been projected to be the key area for the vendors in the years to come. Pico projectors are also expected to have huge demand in the consumers segment. Thus the usage of such projectors is best suited in an environment with small space. n
DATAQUEST | A CyberMedia Publication
Vertical Applications
An uncertain
ride
The vertical apps market continued to grow in FY12 despite the tough conditions, as it moved towards gaining a competitive edge through innovative paltforms
Onkar Sharma onkars@cybermedia.co.in
T
he vertical applications market growth in FY12 slowed due to a number of obvious factors like the global trends and slow demand. It hurt the Indian manufacturing sector where PLM applications always form an uptrend. While emerging from the recession in 2010, PLM market faced difficulties in terms of generating demand in the burgeoning manufacturing section in India. Despite this, what was noteworthy was the fact that a number of mid-tier manufacturers also tried to shun the traditional ways and DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 157
Vertical Applications
PLM: Fraught with Challenges
With suppliers moving up the manufacturing value chain, PLM solutions were seen percolating deeper into the manufacturing ecosystem. But the denial of the tough market conditions will keep the truth away. The automotive segment has the highest adoption rate followed by heavy engineering and industrial machinery. These sectors did not have a big impact on their growth numbers and perhaps helped the PLM growth in India up to some extent. But going deeper into the market dynamics, it becomes easier to classify the sub-segments in the PLM arena. Keeping all aspects in mind, the CAD market did not show up much and failed to interest the users. Yet DLM (design lifecycle management) was the talk of the town in most manufacturing environments. Focusing on the new areas vendors like Siemens PLM, DS, Autodesk and PTC showed interest in reaching out to new markets 158 | August 31 - September 15, 2012
Highlights
Core Banking Market in India
CBS Market continued to grow in double digits PLM market was down due to slowed manufacturing Graphics software market grew at 7%
At the Core
In India, the CBS solutions have again done well. But the worry was clearly visible in the last part of FY12. The segment was upbeat with activity, especially with the automation of cooperative banks. However, the previous year’s growth of 26% was reduced to 20%, given the global sentiment affecting IT spend in the Indian banks. Despite this, there was barely any change in the market positioning since the biggest performers are no doubt TCS and Infosys. They led the market upfront with a baggage of clients with them. Plus the RRB
-20% 26%
858
1084
1302
FY10
FY11
FY12
Source: DQ Estimates
beyond metros or traditional manufacturing hubs. Another trend which gained popularity was 3D. Siemens PLM introduced this feature in its latest launch of Teamcenter 9 while DS also depends on its 3D-based PLM application. The application has a growing acceptance in the intense manufacturing environment. All in all, the market was led by Siemens PLM with 23% marketshare, followed by DS with 19% and Autodesk with 18%. But the market is scattered and has a plethora of small players. The PLM market is also irked by piracy, since a number of small manufacturers resort on pirated applications. The vendors conducted a number of programs to spread awareness and count on the benefits of licensed applications which has to some extent resulted positively.
(In `crore, Growth%)
Core banking market continued to spread its wings, given the RBI’s mandatory guidelines for Cooperative banks to automate their infrastructure in a timeframe
Nucleus Others 5% Infrasoft FinnOne 4% Omni Enterprise 4% Infosys Finacle 20%
3i Infotech Kastle 10%
Oracle Flexcube 16%
TCS Bancs 25%
Polaris Intellect 16%
Source: DQ Estimates
adopted PLM solutions. Though such numbers are encouraging, they certainly are not inspirational for vendors like Siemens PLM and Dessault Systemes. CIOs were wary to take the PLM ride in the absence of buyers for the manufacturing companies. However, the banking sector continued to be part of the financial inclusion drive and opened its arms for the core banking applications to automate their processes to conform with the RBI directive. A number of RRBs and cooperative banks were seen lined up to ride the core banking bandwagon. Solution providers like TCS, Infosys, Oracle, etc continued to win contracts from Indian as well as international banks venturing into India.
TCS continued to outperform the competition due to a number of banking customers in its kitty. But the overall market had a number of players catering to banks
and cooperative banks’ drive to automate in the wake of financial inclusion plan further kicking the market expansion. The CBS segment is populated by several vendors that claim to be present in niche pockets. TCS registered 47 wins in the core banking segment in FY12 with overall 60 wins including the payments clients. With 25% share in the CBS segment, it focused on the RRBs and coop banks with the assurance of good service and support. In terms of marketshare, Infosys also follows closely with 20% marketshare. In order to enhance its reach in the smaller segment
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Vertical Applications
MSC 4% 8%
FY11
740
(In `crore, Growth%)
12% Siemens PLM 23%
9%
Ansys 8% Dassault Systemes 19%
Altair 10% Autodesk 18%
FY12
Source: DQ Estimates
684
OSS/BSS Market in India
Others 7%
PTC 7%
Source: DQ Estimates
22%
SAP PLM 2%
Oracle Agile 2%
(In `crore, Growth and Share in%)
PLM software market was hurt by the slowdown in the manufacturing market which, of course, affected the sale of PLM application. However, a number of releases and adoption of new trends such as 3D in PLM earned spotlight
(In `crore, Growth and Share in%)
Others 16%
FY11
FY12
Adobe 47% Autodesk 37%
Source: DQ Estimates
702
Source: DQ Estimates
7%
655
Marketleader Adobe had taken steps to revive growth with its CS6 that allows users to subscribe to the tools on pay-per-use basis
where it could be part of the financial inclusion drive, Infosys launched Finacle Lite for cooperative banks, RRBs and small banks which it offered on demand. While Oracle Flexcube and Polaris Intellect had a noteworthy presence with 16% each, the small vendors such as Infrasoft, Mindmill and Nucleus FinnOne had their share of customers.
OSS/BSS Market
Service providers focused on customization and convergence across disparate networks and applications. This was majorly contributed by BSS/OSS converged and transformed platforms. The mobile data explosion and services monetiDATAQUEST | A CyberMedia Publication
zation also added to OSS/BSS investments y-o-y. Push to make 3G services popular and mobile number portability seemed to play an important role in driving the OSS/BSS market. The new TSPs (telecom service providers) caught in tough competition were forced to differentiate, thereby helping the OSS/BSS market to thrive. However the market is not big enough for all to gain and prosper. The OSS/ BSS community deals with many challenges apart from keeping up the tough fight to be in the competition. Looking closely at the market, the players had an eventful year. Amdocs kick-started the last fiscal by completing the acquisition of visit www.dqindia.com
1490
FY11
FY12
New media, mobile solutions, mobile number portability and analytics drove growth in FY 12
Graphics Software Market in India 7%
1322
Source: DQ Estimates
PLM Market in India
Bridgewater Systems Corporation. In FY12 Comverse also gained from the expansion and managed operations at Videocon Mobile and a product upgrade and expansion at one of the tier-1 mobile clients in India. Almost every significant player lilke Aricent, Ericsson, Tech Mahindra, Elitecore, Subex, among others had client wins for one thing or the other. It kept the market abuzz.
Graphic Software Market
With high concern over software piracy in the market, Adobe benefited with its new creative suite which it pitched with a subscription option. It pitched its CS6 to cater to the large Indian creative community. Though a market leader in graphics software, it faced a stiff challenge of demand. Perhaps that is the reason that players like Adobe and Amdocs have seriously thought of offering their applications in the local flavor. Adobe’s CS6, thus, comes with support for 10 Indian languages. The graphics market has grown merely 7% in FY12, very similar to the growth it showed last year. The reason for slow growth can perhaps be attributed to slow growth for the media and entertainment sector. n August 31 - September 15, 2012 | 159
IP Surveillance
War Against Terror The worsening terror environment calls for continuous monitoring and complex video analytics—opening up the market for IP video surveillance Faisal Kawoosa and Rajat Kharbanda maildqindia@cybermedia.co.in
V
ideo Surveillance: What is it all about? The India video surveillance market has seen significant changes in the last decade. This is mainly due to the increasing security related issues arising from terrorist strikes, internal security threats, and the creation/launch of mega infrastructure projects that require a wide area to be monitored continuously for the safety and security of the users/occupants and the property itself. The 2008 Mumbai terrorist attack was seen as a trend setter in the industry that resulted in a complete rethink among the chief security officers of organizations and the police forces. Post the 2008 attacks, the market saw increasing government initiatives, funding in the areas of security, especially in video surveillance. Homeland security, airports, railways, bus terminals, etc, saw maximum installation of video surveillance cameras. Though analog surveillance systems have dominated the India video surveillance market; but the need for continuous monitoring, consistency of images, access over wireless networks, and the need for complex video analytics have propelled the market towards IP based surveillance system deployments. IP based surveillance systems are fully digital systems where video is accessible remotely over a wired or wireless network. As per the latest CMR estimates, the India video surveillance market generated `1,090 crore of revenues in 2011 and is expected to grow to `3,565 crore by 2015, a CAGR of 34.5% (2012-15). In 2011, analog surveillance systems dominated the India video surveillance market accounting 162 | August 31 - September 15, 2012
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IP Surveillance
for 68.2% of the market in terms of revenues. However, IP surveillance systems are expected to grow at a higher CAGR of 41.3% for the same forecast period.
India Video Surveillance Market Revenues, 2011-15 (In `crore) 4000 3500 3000
Towards IP Based Video Surveillance
DATAQUEST | A CyberMedia Publication
Source: CyberMedia Research (CMR), 2012
IP based surveillance systems include components such as network cameras, network switches, and monitoring systems such as PCs. In IP based surveillance systems, the network generally uses CMOS cameras to capture footage. The footage captured by CMOS cameras are compressed and then transmitted for monitoring and analysis purposes. The demand for 24x7 live footage, remote access, transmission over wireless networks, and the increasing presence of data networks as part of basic public telephony infrastructure has driven the market for IP based surveillance systems in India. The images/videos captured are encrypted first and then transmitted over the network. This encryption avoids access of the videos or images by intruders/hackers, which was an easy and common phenomenon in analog based surveillance systems. Like other countries around the world, India is too experiencing a shift from analog based surveillance systems to IP based surveillance systems, though the pace varies. Also, the shift is not resulting in total replacement of existing analog infrastructure. On the other hand, the existing analog surveillance systems are getting converted into IP surveillance systems by using encoders. Encoders allow the analog signal from cameras to be converted into digital output, which then traverses over an IP based data network—wired or wireless.
2500 2000 1500 1000 500 0 2011
2012
Homeland security and public infrastructure are some key areas where IP surveillance systems are getting deployed as a natural choice. IP based surveillance systems are now installed at over 20 airports across India.
Factors Driving Demand
Need for robust homeland security n Increase in terrorist activities in recent years has driven the market to adopt enhanced and more robust homeland security solutions. The video surveillance market in India noticed remarkable growth after the 2008 Mumbai attacks and the 2011 Delhi terrorist attacks have further added a sense of urgency and resulted in large scale installation of video surveillance cameras across India. n Apart from terrorist activities, the rising crime graph has also resulted in wider deployment of surveillance cameras in India. A high crime rate pushes the government and security agencies to enhance security infrastructure, thereby leading to improved prospects for the surveillance system market in the country. The emerging security n
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2013
2014
2015
concerns have resulted in deployment of surveillance cameras in a range of establishments such as government, banking, industrial, commercial, and residential. However segments such as government and commercial are the major contributors to shipment; segments such as residential are regarded as upcoming growth opportunity. n Government/Public Infrastructure Investments: According to the 11th Five Year Plan (2007-12) 7.5% of the country’s GDP was expected to be spent on infrastructure development activities which include roads, railways and airports; this scale of infrastructure development was a big reason for attracting high level of investments in security in India. It is expected that India’s total homeland security spending is estimated to reach `4,324.3 crore by 2016; this includes `597.1 crore spending on hotel infrastructure security, `570 crore spending on transport sector security and so on. n Cost Savings: Though the initial capex for an IP based surveillance systems is relatively higher, compared to an anaAugust 31 - September 15, 2012 | 163
IP Surveillance
Typical Components of an IP Based Video Surveillance System
India IP Based Video Surveillance Market: Leading Players in 2011
CMOS Camera
Vendor
Market Share (% of revenues)
Network switch lan Video Monitoring
Internet/ LAN
Source: CyberMedia Research (CMR), 2012
Bosch
29.4
Honeywell
23.9
DVTel
18.1
Axis Communication
14.7
Pelco
9.6
Samsung
3.5
Base = `346.7 crore
log based solution, the opex is something that attracts decision makers. Since, no organization or public infrastructure facility can avoid IP networks in today’s data driven business environment, utilizing the same pipe for surveillance means savings in opex. This also saves on capex in terms of dedicated cabling etc, though the cost of IP cameras is still significantly higher compared to analog based cameras. n Remote Monitoring: Remote monitoring has also resulted in the growth of the IP based surveillance systems market in India. Remote monitoring of the footage can be easily done via IP based surveillance systems as they use networks which allow remote monitoring even via smartphones. Integration with wireless technologies such as Wi-Fi, ZigBee, and others is also possible in IP based surveillance systems. n Video Analytics: Video analytics is regarded as one of the key developments to impact the video surveillance market. Video analytics software is capable of detecting unusual activities in live or recorded footage, thereby providing timely alerts to the concerned authorities/security agencies. International players such as Genetec, Milestone, and March Networks have already 164 | August 31 - September 15, 2012
started supplying their VMS solutions in India. Their software is capable of providing face recognition services as well as gesture recognition that can help to identify a criminal or a terrorist.
Major Market Opportunities
IP based video surveillance systems are being deployed in all major sectors such as public infrastructure facilities, government, IT and ITeS, banking & financial services, and retail. Segments such as public infrastructure and government are key revenue generators in the India video surveillance market. n Public Infrastructure: Public infrastructure includes airports, railway stations, seaports, bus terminals, suburban metro stations, bridges, roads and highways. Public infrastructure is vulnerable and prone to attacks and damage on account of criminal activity. Therefore, public infrastructure deploys analog surveillance systems along with IP surveillance. A powerful IP based camera is installed along with a series of analog cameras within a specified perimeter zone. This is done to explore the advantages of a hybrid surveillance system at optimal cost. As per CMR estimates, IP based visit www.dqindia.com
surveillance systems deployed to secure public infrastructure facilities amounted to `139.5 crore in 2011 and is expected to grow to `573.5 crore, at a CAGR of 42.2% for the period 2012-15. In 2011, public infrastructure accounted for 36.8% of the total India video surveillance market. Upcoming metro rail networks and airports are expected to contribute in a big way to this market. Further, since metro rail networks are being laid in all major cities of the country such as Delhi, Chennai, Bengaluru, Kochi, Jaipur, and Lucknow, thereby opening up a huge opportunity for vendors of video surveillance systems. n Government: Government is the second major segment of the India video surveillance market. It includes key government buildings, important national buildings and monuments, large industrial complexes/refineries, and other important premises. The terrorist attacks on government institutions such as Indian parliament and Delhi High Court have created a demand for advanced surveillance systems. IP based surveillance systems deployed to secure government buildings and complexes accounted for `72.6 crore revenues in 2011, which is expected to grow to `287.4 crore, at a CAGR of 40.8% for the period 2012-15. In 2011, the government accounted for 21.5% of the total India video surveillance market.
Challenges
Expensive IP Surveillance Cameras: Expensive IP surveillance camera is regarded as one of the major issues affecting the growth of the India market. The high cost associated with IP cameras can restrict its adoption in India. For example, the Axis 211 IP
DATAQUEST | A CyberMedia Publication
IP Surveillance
The Way Forward
CMR expects that all the new major infrastructure projects currently under construction will deploy an IP based surveillance system on account of the fact that they will have an IP network necessarily laid for the facility. Large infrastructure projects including airports, shopping malls, railway stations, government offices, oil refineries, etc, will be the major users of IP based video surveillance systems. The wireless connectivity advantage will also enable petroleum companies undertake 24x7 remote monitoring of offshore drilling rigs, or allow hydel power companies and water utilities monitor remotely located water reservoirs via satellite/VSAT hook-up. For existing installations where analog based video surveillance systems are already in place, there will be a gradual migration to IP. Initially the critical and sensitive, areas or elements of the infrastructure will be migrated to DATAQUEST | A CyberMedia Publication
India IP Based Video Surveillance Market: Public Infrastructure (In `crore) 700 600
Source: CyberMedia Research (CMR), 2012
500 400 300 200 100 0 2011
2012
2013
2014
2015
India IP Based Video Surveillance Market: Government (In `crore) 350 300 250
Source: CyberMedia Research (CMR), 2012
camera can cost nearly `32,600 per unit. Such a high cost can hinder its adoption, thereby affecting the growth of the market. Compressed Footage: This is a major issue with IP cameras. Unlike, analog cameras where uncompressed footage is sent over the coaxial cable, the footage in IP cameras is compressed before transmission. This process raises the risk of degradation of image quality. n Compatibility with NVR: In IP surveillance systems, the Network Video Recorder (NVR) is unique for every manufacturer, which enables the communication process between each surveillance camera. When a new camera is needed to be added, the compatibility with NVR has to be checked at every instance.
200 150 100 50 0 2011
2012
IP solutions and later, in a 3- to 5-year time frame, other parts of the installation getting replaced. Another factor that will lead towards the growth of IP based surveillance systems is the vision of the government to have smart and intelligent infrastructure systems. For instance, metros and major cities having intelligent transportation systems that will involve monitoring traffic as well as the security of the city. The trends and factors explained above point to a positive outlook for the India IP based visit www.dqindia.com
2013
2014
2015
video surveillance market. From a growth perspective, the technology of video surveillance will enable vendors, system integrators and solution providers to pursue a ‘double-digit’ growth opportunity in the coming years. To benefit from this market shift, pure analog video surveillance equipment vendors are increasingly expected to switch to providing IP based solutions and some may completely discontinue the existing, legacy product lines. n The authors are analysts with CyberMedia Research SemiTronics Practice August 31 - September 15, 2012 | 165
Smart Metering
Energizing
India
India’s power distribution sector should subscribe to a ‘consumer friendly’ route including some smart grid initiatives for an appreciable growth
Ravindra Goswami
maildqindia@cybermedia.co.in
D
espite the somewhat lacklustre performance in recent quarters, the Indian economy has potential to grow faster in the long term. Energy is a critical input required for economic and social development and India, ranked the world’s 3rd largest energy consumer, accounted for about 5% of the world’s total energy consumption in 2010. Even after 185.5 GW of installed power generation capacity as of November 30, 2011, and an appreciable growth in electricity generation, India faces a chronic power shortage. This, in spite of per capita consumption of electricity in India being very low at 779 kWh (FY11), as compared to world consumption (Source: Ministry of Power, Govt of India). According to the 17th Electric Power Survey report of the Central Electricity Authority (CEA), electrical energy demand would likely reach 1,915 Tera Watt Hour by 2021-22, thereby doubling from the current level of demand. Just scaling up on power generation will not be enough to match the future energy requirements of the country. The other worrying issue 166 | August 31 - September 15, 2012
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Smart Metering
n Per capita consumption of electricity in India is very low at 779 kWh (FY11) as compared to the world consumption n To improve the current power scenario in India, Smart Metering solutions are required n The situation is expected to improve and gather pace from 2012 onwards. India is set to install 130 mn smart meters by 2021.
Smart Grid
Analogue/electronechanical metering
Digital/microprocessor metering
Unidirectional communication
Two-way communication
Reactive (prone to failures & blackouts)
Proative
No/limited consumer control
Customer can manage his energy usages
Limited control over power flows
Pervasive control systems
Manual (feld restpration)
Semi/Full Automated (Self-healing)
does not optimally utilize technological developments. Even to this day, consumers need to inform the utility of a problem or power failure in their area. To improve the current power scenario in India, Smart Metering solutions such as capability of remote disconnection on non-payment of dues by consumers, automatic alarms when network is being encroached or when people engage in theft will enable utilities to stop pilferage and avoid unsafe situations or accidents.
Current Scenario and Some Initiatives
According to industry sources, India is the third largest smart grid investment market in the world after USA and China. At
Conventional Meter vs Smart Meter: Key Features Conventional meter
Manual reading
Conventional Meter
Manual or Automated Processing
Home communication
Smart meter
Interface protocol
DATAQUEST | A CyberMedia Publication
Database
Smart Meter
Gateway
Interface protocol
Database
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Source: CyberMedia Research, 2012
facing the Indian power sector is the commercial viability of the distribution sector, stemming from inefficiency and high incidence of power theft. According to the Planning Commission, government of India, the Aggregate Technical and Commercial (AT&C) losses are presently in the range of 18% to 62% in various states. As per the Ministry of Power, the average AT&C loss across India for FY10 was 27.2%. The major portion of losses is due to theft and pilferage. More than 7580% of the total technical loss and almost the entire commercial loss occur at the distribution stage. The India distribution sector is beset with poor billing and collection practices too. The present day grid is unidirectional and
Conventional Grid
Source: CyberMedia Research, 2012
Conventional Grid vs Smart Grid: Key Attributes
Highlights
present, the market in India is nascent with only few smart meter rollouts on a pilot basis. This situation is expected to change and gather pace from 2012 onwards. India’s transmission grid is in urgent need of expansion and improvement. According to industry estimates, utilities worldwide will spend $378 bn in smart grid technologies by 2030 and India is set to install 130 mn smart meters by 2021. Apart from smart meters, a bulk of the investment will be geared towards grid automation, communication infrastructure, IT systems and hardware, residential area networks and system integration. However investors looking at India are deterred by the sector’s financial weakness, public ownership of utilities, bureaucratic delays, and political interference. In spite of these limitations, some smart grid initiatives are taking root in India. A few key ones are described here: n India Smart Grid Forum, Smart Grid Task Force, and Planned Smart Meter Task Force: The Ministry of Power (MoP) has set up the India Smart Grid Forum, a public-private partnership uniting utilities, industry, and academia with the August 31 - September 15, 2012 | 167
Smart Metering
prime objective of accelerating development and adoption of Smart Grid technologies for the India Power Sector. As per Sam Pitroda, advisor to the prime minister, government of India and chairman, Indian Smart Grid Task Force, the government is planning to set up a ‘Smart Meter Task Force’ that will look to modernize the primitive, manual ways of calculating power usage in India. Since the country is estimated to need approx 130 mn smart meters by 2021, the Smart Meter Task Force will be entrusted the task of introducing Low Cost Meters priced between `1,000-1,500 each. These would be 2-chip meters that can be connected through GSM technology—basically a dumb meter that is ‘smart enough’. These low-cost meters will feed critical data into the Smart Grids and thereby provide an economical, large scale solution for India’s primitive power sector, as per Pitroda. n Ministry of Power Supported `500 crore Smart Grid Pilot Projects: The MoP plans to announce 8 smart grid technology-related projects on a pilot basis worth nearly `500 crore in 2012. Fourteen utilities, which manage power distribution across India, have been asked to submit their proposals to qualify for the 8 pilot projects. According to MoP officials, the selected proposals will receive funding of `50 to 60 crore each. The pilots are expected to be completed in 12 to 18 months. While 50% of the total project cost will be borne by the MoP, the remaining 50% will have to be met by the selected utilities. n Reform of the India Power Distribution Sector: The Restructured-Accelerated Power Development and Reforms Programme 168 | August 31 - September 15, 2012
(R-APDRP) is often characterized as a proto-smart grid plan. The scheme comprises of 2 parts–Part A of the scheme being dedicated to establishment of ICT-enabled infrastructure for achieving reliable and verifiable baseline data systems in all towns with population greater than 30,000. Installation of SCADA/DMS for towns with population greater than 4 lakh population and annual input energy greater than 350 MU (million units) is also envisaged under the plan. The Ministry of Power had earmarked `10,000 crore for R-APDRP Part A. Part B of the scheme deals with regular strengthening and upgradation projects for the Sub-transmission and Distribution systems. The focus for R-APDRP Part B is on reduction of AT&C losses on a sustainable basis.
Expected Market Developments
As the India smart meter market is currently in a nascent stage of development, a sustained campaign is needed from vendors, solution providers, industry associations, R&D institutions as well as the government and regulatory bodies to evangelize and promote the concept of safe, efficient, need-based, on-grid/offgrid power supply. Companies like L&T, Secure Meters, Siemens, Wallaby Metering Solutions and others are working aggressively to create a marketplace where healthy competition can ensue. As India’s projected requirement for smart meters is very large, more vendors are expected to enter the market, but ensuring smooth supply, servicing and maintenance of 130 mn smart meters by 2021-22 will be a tall order by any benchmark. The other factor that needs careful consideration of the stakeholders at large, is visit www.dqindia.com
that the unit cost of smart meters is currently very high, ranging from `5,000 to 8,000 per unit for residential consumers.
The Way Forward
In India it takes a lot of time to adopt and install new technologies. India’s major focus for the 12th Five Year Plan is on increasing generation capacities. As per industry norms, for smooth functioning and sustained growth of the country’s power sector, investment should be in the ratio 2:1:2 for generation, transmission and distribution, respectively. To create a market for smart meters, many brainstorming sessions with decision makers in power utilities and government bodies will be needed. A suitable mechanism needs to be created to share the cost of smart meters between OEMs, power utilities and consumers, with minimal impact on consumers. As per CyberMedia Research preliminary estimates, the worldwide smart meter market is expected to surpass 128 mn units in 2016 from its current level of 46 mn units in 2011, a CAGR of 23% for the period 2011 to 2016. During this period, global smart meter revenues are estimated to cross $15,000 mn, up from $5,900 mn, a CAGR of 21% (2011 to 2016). The major chunk of this growth will be on account of deployment of smart meters by electricity distribution utilities. The good news is that industry watchers expect this activity to extend beyond its traditional bases in Europe and North America to the developing world and spread to emerging countries, particularly in the Middle East and Asia-Pacific regions. n The author is analyst, CyberMedia Research Energy & Utilities Practice
DATAQUEST | A CyberMedia Publication
BPO
Slow Growth,
But Maturing The market dynamics for global BPOs is undergoing tremendous change. Service providers are aligning themselves to integrate more technology to be able to deliver better business value beyond mere cost savings GLOBAL SERVICES maildqindia@cybermedia.co.in
T
he BPO industry in India had a tough year with an overall growth of around 6.8%. At `76,532 crore, the industry is still heavily weighted towards exports of nearly `63,000 crore. In part, the domestic market is fragmented and unorganized, operating under very different dynamics in terms of resourcing, process capabilities, quality consciousness, and most other metrics than global BPOs. The market dynamics for global BPOs is undergoing change in terms of smaller deal sizes, complex processes, outcome based pricing and delivery, and integration of substantial amount of technology into business processing. Service providers are therefore aligning themselves to integrate more technology to be able to deliver better business value beyond mere cost savings. Just like in IT services, the top Indian BPO companies have distinguished themselves in delivering complex processes through process engineering and technology. DATAQUEST | A CyberMedia Publication
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August 31 - September 15, 2012 | 169
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BPO
FAO: All Signs Suggest Maturity
The global Finance and Accounting Outsourcing (FAO) market echoed success in 2010 with 18% growth (ACV). However, in 2011 this growth diminished when the market grew by merely 11% (ACV). The year 2012 is expected to bring along a positive wave of prosperity as the FAO space is projected to rebound by 10-15% (ACV). According to a new analysis titled Finance & Accounting Outsourcing Annual Report 2012 by Everest Group, “The multiprocess FAO market is projected to rebound by 10-15% and top $4-4.5 bn in annual contract value (ACV) in 2012. 2011 saw the market reach an all time high in contract extensions that along with contract expansions, represented 70% of ACV growth in 2011.” The FAO market reached $3.8 bn in ACV in 2011, representing about $32 bn in the total FAO spending. Last year also witnessed a drop in total contract values (TCV) of new engagements in comparison to 2010. Abhishek Menon, research director, Everest Group explained the slow growth rate of 2011 is not a sign of worry but a sign of movement towards maturity. He highlighted, “The key reasons beyond the ‘denominator effect’ are reduction in new contract signings, reduction in average size of new multi-process FAO contracts, and risk-averse phased approach to FAO.” In 2011, 72 new contracts were signed and there were 126 extensions/renewals. The study predicts organic growth to continue as contracts valued $7.3 bn or more are up for extension within the next 3 years. Saurabh Gupta, vice president, Everest Group, articulated, “Although the market witnessed slow172 | August 31 - September 15, 2012
Contract Sizes-BPO Contract Sizes Upto $5 mn $5 mn to $19 mn $20 mn to $34 mn $35 mn to $50 mn $51 mn to $99 mn $100 mn to $299 mn $300 mn to $499 mn $500 mn to $749 mn $750 mn to $ 1 bn $ 1 bn to $ 2 bn
No. of Contracts 2,586 165 54 28 27 3 3 7 8 2
Source: Global Services (GS100-2012, Sample size35 BPO companies with total revenue of $21 bn)
er than expected growth levels last year, we nevertheless saw strong growth with nearly 200 contracts for new, extended, and renewed contracts. Along with fewer new contracts signed and some terminations, we also saw a drop in size of multi-process contracts largely due to cautious buyers opting for risk-averse phased approaches.” Last year 60% of fresh FAO contracts were signed by companies in the revenue bracket of less than $5 bn. Accenture, IBM, and Genpact continue to have the strongest foothold in this space. However, as per the same report, in the last 5 years, the market share of the top 3 providers has reduced from 65% to 50%. 2011’s highest new contracts had Accenture, Capgemini, and Infosys.
Contact Center Outsourcing: Growth Continues amidst Turbulence
2011 was the year that sparked some new transformations. This year is probably going to be even more interesting as we see the impact of all these combined forces coming to fore—technology advancements, integration of multiple communication channels, the power of analytics, and the social media puzzle. In fact, recessionary fears might pave the way for outsourcing growth, as visit www.dqindia.com
enterprises look at optimizing the cost of servicing customers, and at the same time increase their focus on improved customer experience. A notable change over the last year is the way in which contact centers are transforming themselves to become a more strategic part of an organization rather than just being a seen as a ‘call center’. The idea is to attract and retain customers by offering them the right type of experience, irrespective of what communication channel is being used. This might call for some investments in the short run but can also go a long way in building customer loyalty and brand image. Krishna Baidya, industry manager for ICT, Frost & Sullivan APAC, reveals, “End customers still value speed, accuracy, and ease of use, but they added a few elements: The convenience of performing ever more complex transactions on the go, personalized service at every instance, and seamless movement among various channels with a consistent experience at each.” The emergence of non-voice channels and automated technologies have taken customer care interactions to another level and the expectations have never been this high.
Analytics Outsourcing: The Science behind Data
The players in this market space can be categorized in 3 divisions. One is the global outsourcing major: IBM, Accenture, Capgemini, TCS, Infosys, Wipro etc, the second segment is pure play BPO providers, though they are not many of them left now like: WNS, EXL, and the third one is business specialist, these are very few. In the last category, the question is to what extend will they continue to operate on their
DATAQUEST | A CyberMedia Publication
BPO
own vs on being acquired. Analytics outsourcing started as financial and marketing function. Shipping and logistics, manufacturing, supply chain, etc, were initially not very active in this space. However, now they offer good opportunities. Web and web related services and package solutions that mix combine consulting services with delivery are very much in demand. According to Nasscom and AbsolutData Research and Analytics study titled ‘Marketing AnalyticsAn opportunity for India to Lead’, the Indian marketing analytics industry is expected touch $1.2 bn by 2020 from $200 mn at present. The analytics market is growing at a remarkable rate of 25% y-o-y. Anil Kaul, CEO, AbsolutData, said, “Marketing analytics is an exciting opportunity for Indian players and for India. Also, as we spoke with clients and thought leaders in the US and Europe, it became apparent that India has a leadership position and is well ahead of the curve in marketing analytics. Given that the industry is abuzz with big data, this report gains additional importance, since marketing is one of the first functions to adopt big data into its daily functioning.”
HRO: From Cost Savings to Strategic Advantages
The traditional belief that Human Resources Outsourcing (HRO) is simply a measure to reduce the burden on HR is changing and the strategic significance of HRO is being acknowledged more and more. The global HRO market retains its optimism, very much the way it did last year. But things are definitely not going to be the same, as the market continues to evolve under the influence of some significant changes-changDATAQUEST | A CyberMedia Publication
Top 15 BPO Companies 2012 S.No
Companies
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Genpact India Tata Consultancy Services BPO Aegis Wipro BPO Firstsource Solutions Aditya Birla Minacs Worldwide WNS Global Services Infosys BPO Serco Global Services EXL Services Hinduja Global Solutions HCL Technologies-Business Services Hero Management Service MphasiS Syntel
Source: Nasscom *This list does not include multinationals like IBM, Convergys, Accenture, etc.
ing employee demographics being one of the most significant. The global HRO market retains its optimism, very much the way it did last year. But things are definitely not going to be the same as the market continues to evolve under the influence of some significant changes. Of all the forces acting together, 2 primary forces are driving global HRO ahead in these tough times-HRO becoming a strategic initiative for enterprises and HR service providers coming out with new technology innovations. Targeted for multinational companies for a long time, HRO is now attracting interest from mid market enterprises as well and this is going to be a strong catalyst for growth in the coming years. Also, the concept of employee engagement is going to hold a lot of significance. Wile the overall HRO market grew at a healthy rate, the MPHRO grew by a modest 2% to reach an annualized spends of $3.12 bn in 2011. The M&A and partnership environment continue to play out in the market place. visit www.dqindia.com
Industry-Specific BPO: Being Explored Aggressively
Enterprises in almost all verticals are currently going through a tough phase, plagued by mounting cost pressures and customer expectations. What they need is a unique solution tailor made to their problems—a generalized BPO offering from their service providers is not going to work anymore. As the situation prevails, an increasing number of enterprises are exploring industry-specific BPO opportunities to drive better business outcomes. According to Horses for Sources research, there are strong signs of increased adoption of industryspecific BPO solutions, most notably in financial services and life sciences, and many other emerging verticals.
PO: The Expanding Scope of Contracts
Growth in 2011 was pretty decent with a 14% growth in annual contract value, which crossed $1.6 bn. According to Everest Group’s Procurement Outsourcing Annual Report 2012, 60 new multi-process PO contracts and 53 renewals/extensions were signed in 2011, which is the highest ever until now. Everest predicts that the global PO market will reach an ACV of $1.8 bn in 2012, representing managed spends of $250 bn. In 2012, end-of-term activity will be significant as 57% of PO contracts, valued at nearly $6 bn are up for renewal within the next 4 years. The adoption in 2012 will be led by companies with revenues over $1 bn while adoption by small/medium-sized businesses (SMB) segment will remain sporadic. This year the adoption in the public sector is expected to grow. n August 31 - September 15, 2012 | 173
LAST MATTER
Dissecting the $112 bn Industry Ed Nair,
The author is Editor of Dataquest ed@cybermedia.co.in
F
or a three-decade-old industry, the $100 bn mark is a great milestone to cross. Every decade past had its own characteristics, challenges, and opportunities. The first decade was marked by nationalistic fervor—local manufacturing, import substitution, setting up of national research institutions and agencies like CDAC, NCST, NIC amongst others, and a wave of computerization in the PSUs. Industry size—few millions of dollars. The second decade was marked by transnational moves—the multinationals trooped in, the development of IT distribution channels, the ERP wave, IT adoption in the private sector, the rise of software exports, the internet boom, home PC boom, and the Y2K rush. Industry size—hundreds of millions of dollars. The last decade was marked by solid globalization—cementing the reputation of brand India, rise of IT-enabled services, rise of captives, large e-governance projects, and unleashing of India as the emerging market. Industry size—tens of billions of dollars and crossing the $100 bn mark. In FY12, the Indian IT-BPO industry grew from $97.4 bn to $112 bn, a growth of 14.7%. Here are a few qualifiers of this performance: n Nearly two-thirds of the industry was exports, which grew by 25% in rupee terms. The domestic industry at `160,518 crore grew nearly 18% in rupee terms. However, if we remove smartphones and tablets from mainstream IT, the domestic market growth is 15%. The domestic market could definitely do better. n Percentage contribution of IT-BPO industry to GDP is 6.68% and growing percentage contribution of IT-BPO exports to total exports remains at around 25%. 174 | August 31 - September 15, 2012
The Indian IT-BPO industry represents nearly 6.13% of worldwide IT spending of $1.57 tn in 2012 (according to Gartner Worldwide IT Spending Report). The share is set to increase. n The split of Indian IT industry in terms of hardware, software, and services is 56%, 14%, and 30% respectively. Compared to worldwide IT spending and its break-ups, there are a few interesting skews. For instance, the worldwide IT spending on hardware is 27% whereas in India it is nearly double at 56%. This is due the fact that India is still under-penetrated in terms of hardware and the phase of infrastructure building would go a long way. This points towards vast market opportunity available for building up hardware. Software has kept faster pace in comparison—18% in worldwide spending and 14% in India. The real difference is in services. While India delivers services to the rest of the world, the Indian services market is a huge opportunity. Fifty five percent of the worldwide spend goes into services, whereas in India it is 30%. As you read in the previous issue of DQ Top 20, most verticals are poised for major growth. Government projects, transformation projects by PSUs, and adoption of technology by SMBs are the growth drivers. There are definite signs of maturity of the Indian market as evidenced by growth in areas like managed services, analytics, mobility, cloud, SaaS-based software, collaboration, and many other cutting-edge technologies. Let us now chart our course to the next milestone. At the current growth rate of 14.7% per year, we will be $222 bn in five years, adding another $100 bn to this year’s industry size. That’s a good number to gun for! n
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