Business Today Net Special

Dell's India Plans

He sells more boxes on-line than any other computer company in the world. And he now wants a big chunk of the PC market in India. Michael Dell of the Texas-based Dell Computers shares his plans for India with BT's Ashutosh Sinha in an e-mail interview. An exclusive

Dell On Competition

Dell On The Dell Business Model

Dell On The Future

BT: India is the 13th direct market in Asia that Dell has entered into for business. How important is India in that regard? With just five million computers in India, well under six million that New York City has, what makes Dell think that India is a promising market?

Dell: We have been in India for well over three years. Thus far, the Indian market has been largely retail and home segment dominated. On the other hand, Dell focuses on large corporations, governments, and large customers. However, India is now at the beginning of a market transition where we expect large customers to significantly increase their share of the market.

That apart, all the indicators tend to show that India is on the threshold of quantum growth. In 1999, India crossed the 1 million mark in PC unit sales and the current PC base of 4.3 million is a good launching pad. The PC market is growing 40 per cent annually and we believe that this will go up dramatically. Other indicators of the health of the Indian infotech segment include total software exports from India touching the US $1 billion mark and the projection of US $50 billion computer and Internet service market in India by 2008. India is also in the midst of a huge end-to-end telecom and Internet revolution which will drive infotech growth.

These trends are validated by mounting infotech spend, opening up of private gateways, setting up of broadband networks, and the high degree of interest in India in e-governance. Recent proposals in government for 100 per cent first year depreciation for computer systems used in government's e-governance projects are an indication of the government's emphasis on infotech in India. India is one of the few countries in the world where key states have geared development around the infotech industry: Andhra Pradesh and Karnataka---two states of India where the government has invested heavily in creating infrastructure for infotech while other states are not too far behind. I am pleased that Dell is going Direct in India at a time when the infotech revolution has gathered momentum.

BT: In the last year or two in India, Hewlett-Packard, a serious competitor for Dell, has grown dramatically in both volumes and revenues. Dell's core philosophy is that it will not compromise on margins. But several transnationals operating in India, and also conventional understanding, suggest that India is a very price sensitive market. How does Dell hope to achieve revenue growth in such a situation?

Dell: We have been in the market for the past three years through our distributor system. I can assure you that we have stayed competitive without compromising on our margins.

The pricing position we face today is really no different than what we've experienced in the past. What you see is top tier companies continuing to capture marketshare from second tier companies.

We have found that pricing is only one-third of our customers' decision-making process; the other two thirds represent service and support. Customers today recognise and seek value-added services in their infotech investments. Dell is also focused on actively helping customers with lowering their total cost of ownership through stable, reliable systems with planned transitions and longer life cycles.

As the world's leader in direct computer system sales, we offer customers in India all the benefits of our direct model: customisation; latest relevant technology; price for performance as well as excellent service and support.

By fully integrating the entire business with the Internet integration, we benefit in shortening cycle times with customers and suppliers through virtual integration, achieving greater efficiency with on-line service and technical support, and providing the ultimate, defining on-line customer experience.

BT: I understand that Dell's business has shown impressive growth in India over the last couple of years (231 per cent was the figure mentioned for the last year). Compared to other markets, did Dell have to drop prices to suit the needs of the Indian market? Are the margins that Dell gets from India the same as that of other countries in the world?

Dell: I can assure you that we have stayed competitive, chalked up a growth of 231 per cent and secured the sixth highest market share without compromising on our business model.

BT: I understand that financing is one of the key elements of Dell's strategy of selling. How does financing work in the on-line business model? What percentage of Dell's customers opt for financing their purchases around the world? What is the percentage for India?

Dell: Financing is an option provided to our customers. I am not at liberty to say what percentage of customers choose financing. In India, we are at the moment talking to various partners to make this available to our customers.

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