South Asia

Microsoft takes on Linux in India
By Indrajit Basu

KOLKATA - In his third visit to India, which ended on Thursday and which he called his most radical yet, Microsoft chief Bill Gates unveiled a US$400 million investment plan over the next three years for the country.

According to Gates, this will be Microsoft's biggest non-manufacturing investment outside of the United States, and the largest share of this - $280 million - will be devoted to the development of skills around the "dot net" platform to increase business opportunities for Indian companies by leveraging Microsoft product development.

But for the Microsoft honchos in India, even as that appears to be the most important mandate as crafted by their chief, there is a different task in hand. This is capturing Indian software developers to adopt Microsoft's operating systems as the platform of choice for developing software, says Dilip Mistry, Microsoft's director at the Bangalore office.

But why should Microsoft be worried about losing share when eight out of 10 computers used in India run on Microsoft? The much discussed battle between Microsoft and Linux - the free operating system - that has been raging all over the globe has finally spilled over to India.

All around India, the noise of the user benefits of Linux as an operating system - the underlying layer of software, like Windows, MSDOS, Unix, etc, on which everything else runs - is deafening. Here are a few examples of Linux's increasing popularity in the country. Starting with the government, the Supreme Court - India's apex judiciary - has a few pilot projects under way. So have the High Courts in Karnataka and Andhra Pradesh states, and the government of West Bengal. The Central Excise Department has moved 1,000 desktops to Linux. The Delhi Road Transport Office has implemented a pilot scheme to examine its viability. C-DAC, the government's supercomputing arm, has moved lock, stock and barrel to Linux.

Then there is the National Stock Exchange - among the early adopters to use Linux to implement a solution unique to stock exchanges anywhere in the world. Companies such as Asian Paints and IDBI are cheerleading the free-source operating system. Others, like Reliance, Texas Instruments, the Times of India group, Raymond, Bombay Dyeing, Godrej Infotech, HDFC Bank, Hindustan Dorr Oliver, Central Railways and Air-India, have deployed Linux to power at least a part of their back end IT system.

At India's Ivy league educational institutions, such as the Indian Institute of Technology, the Tata Institute of Fundamental Research and the Bhabha Atomic Research Center, Linux has achieved official recognition. Many not on the bandwagon are slowly getting onto it. To get a sense of that, there are already three virtual user groups - with clogged web sites- spread across the country, spending time at educational institutions, companies and individual users spreading the gospel of Linux. Clearly, Microsoft needs to control the beast before it gains too much attention in the country, because as Dilip Mistry puts it, "This country can affect our [Microsoft's] destiny."

Although at the current year's revenue of about $330 million that India generated for Microsoft - a company that is expected to notch $32 billion of global revenues by year 2003 - the country's market size is not too significant. But the importance of India's market lies somewhere else.

Estimates put the present number of India's software developers at anywhere between 450,000 and 600,000. That's about 10 percent of the world's developer population. By end-2002, India will probably have more developers than any country in the world. And, this is why it is important to gain control of this group.

Why is the mindset of software developers so important for operating system product companies like Microsoft and Linux? In short, developers actually build applications that run on operating systems. And if the developer community perceives that an operating system is gaining credence with the end-user community - like you and me - they shift attention there. Sales of an operating system software, thus, are a direct function of the extent and availability of end user software that can run on it.

But for Microsoft, the developer community is not the only issue. Although the present size of the Indian market is tiny for Microsoft, it still holds huge potential. At least theoretically. The country's shrink-wrapped software market is currently $409 million, in which Microsoft has an 80 percent share - but this is not its actual size. For every licensed piece of software Microsoft sells in India, there are eight pirated copies doing rounds. Which means, in an ideal world, Microsoft could sell software worth $2.64 billion (8 x $330 million) in India. There is another factoid here. In 2001, while IT spending was being slashed across the world, the packaged software market grew 37 percent in India. Growth rates are expected to continue at this rate for a few years to come. Clearly, therefore, the numbers are compelling.

From another angle; the government picks up two-thirds of the shrink-wrapped software sold in the country. The rest is largely accounted for by the private corporate sector. India, thus, would certainly be a different world for Microsoft if the government and companies make a conscious decision to move towards Linux.

Bill Gates, however, refuses to recognize Linux as a threat in India. Shrugging it off as a serious competition to Windows, he said during his visit, "There are a few cases where Linux is used in some parts of India, China and Malaysia, but it does not have a uniform acceptance. Moreover, Windows offer much better price point performance." But he conceded that Linux was gaining popularity in the country. "There is a shift somewhat within the Unix space away from Sun and towards Linux, " he said. "That's partly a reflection of the fact that the price performance coming out of standard PC platforms, whether used at the desktop level or the server level, is just so much better than the specialized, more expensive systems."

But many do not see eye-to-eye with Gates. Richard Stallman, for instance, the founder of the free software movement - called GNU/Linux - who is challenging the might of Microsoft, was also in India during those four days that Gates was, to convince the Indian government to let go of proprietary software. "I have met people in [Indian states of] Kerala, here in Karnataka, in Andhra Pradesh, and some people in the government of India. What they say sounds favorable," said Stallman, adding, "But what matters is how they carry it through into action."

Companies in India, though, are certainly adopting Linux. At a recent Hewlett-Packard seminar on solutions for the manufacturing industry, attended by 300 chief information officers, almost 60 percent said that they would be moving to Linux-based systems. According to Kamal Dutta, HP India's country business manager, companies are deploying Linux to the extent of 15-20 percent of the total applications.

But even as Linux is emerging as a challenge in India for Microsoft, it doesn't mean that the future of Microsoft in the country is at stake. At least not just yet. That is because, for all its strengths, Linux has chinks in its armor. The most fundamental problem, according to sources, is the fact that there is a lack of unity among the Linux vendors and developers. Moreover, fighting a giant like Microsoft in a country where Linux is still being explored as an operating system is not easy. Then there is a lack of policy support. Despite the fact that Linux evangelists have been pushing for increased acceptance of the software in India, the truth is, until now, no policy documents have been framed by any state government, which in turn could pose a hurdle for Linux's adoption in government departments.

Finally, support and services of Linux in India are still nascent and have some way to go before they can catch up with Microsoft. For Microsoft baiters like Stallman, therefore, beating the world's most popular operating system could be a long haul.

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Nov 16, 2002

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