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June 11, 1997


Fridgewallah gets nerdy

Salil Murthy in Bombay

Videocon International, India's consumer electronics and white goods giant, has set up a subsidiary company to leverage its nationwide distribution channels to sell computer software and hardware.

India OA Systems Limited, the wholly owned subsidiary, is currently overseeing a radical plan to use Videocon outlets in the country as one-stop shops for home computer users.

The promise is that of being able to offer under one roof, everything from just a mouse to a complete high-end multimedia PC and an Internet account.

Software and computers sharing display windows with television sets, refrigerators and washing machines may not be a new concept in the West. But in India this is unheard of.

Indian homes have been less enthusiastic about adopting computers than they were expected to be. The 'small office home office' revolution is being predicted to happen in the next few months for over four years now. But there still is no sign of it happening despite information technology taking over the workplace at a mind-numbingly rapid clip.

Videocon Group Chairman V N Dhoot says "India has among the lowest penetration levels of computers and IT infrastructure in the world. Given the forces of economic liberalisation unleashed in the country, we expect this to change quite rapidly. The tie-up with Microsoft is a part of our effort to tap this large and lucrative market."

Dhoot was commenting on Videocon's deal with Microsoft to sell software through its network of showrooms.

Videocon is also buying technology from Tatung Inc of Taiwan to make computer monitors and other hardware equipment in its electronics manufacturing unit at Aurangabad.

Chinmay Batra, manager, Internet Division, India OA Systems, told Rediff On The Net "We will not be importing computer hardware from Tatung. The issue is solely of technology transfer and Tatung will not be making any investment in Videocon's operations."

Does India OA System's positioning signal a shift in focus from Videocon's core business of white goods to information technology?

Batra doesn't think so. "Videocon is trying to position itself as a major player in the IT field. This is a lucrative business and we are taking advantage of our retail distribution network to make our mark."

Lucrative? Perhaps not at a time when infotech majors like PCL and Microland are reeling under the onslaught of the market's liquidity crunch. Microland, the 100 per cent growth company recently jolted the capital markets when it announced a 30 per cent growth in turnover. PCL has not paid salaries to some employees for some time now.

Batra is not threatened: "We know it is not going to be easy but the crunch cannot last forever. We will be engaged in setting up our infrastructure for the first one-and-a-half to two years, and then we shall see. In any case, no one expects phenomenal sales or growth immediately. In fact we will be quite pleased with a growth of 40 to 50 per cent."

But sceptics may point out that event the 40 to 50 per cent growth may be impossible in face of the 'vapour' market Batra is talking about. Where is India's 'small office home office' segment? Has the number of PCs in this niche reached critical mass for a marketing venture of the scale that OA Systems is attempting?

Batra agreed with Rediff On The Net. "It is true that the market has not exploded. Our research shows the growth is only about 25 to 30 per cent. However, the industry focus is shifting from large corporations to home users. Therefore, the boom will definitely come. It may be a bit delayed because the cash flow squeeze has spread to the homes too, but it will come."

Batra, however, is surprisingly glib on the issue of software piracy. "Microsoft has its own methods of tackling this problem. We are only selling their software so we don't really have an anti-piracy policy. We will combat it by trying to spread awareness and through magazine articles. I believe NASSCOM (National Association Of Software And Service Companies) is also trying to tackle this but it is anybody's guess how successful they will be."

India OA Systems is also a marketing agent for India's monopoly commercial ISP, the Videsh Sanchar Nigam Limited.

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