United India Insurance Company is not exactly regarded by all and sundry as a bold innovator. But two months ago the state-owned insurance company took the information technology (IT) industry by surprise when it struck a mega deal with Sun Microsystems to buy its Star Office software licence for 10,000 desktop users across the country. Crows Vishal Dhupar, Sun's sales director: "It is the biggest single order in the country for an office productivity tool and the company used it to replace Microsoft Office." Dhupar points out that Sun's software product was more than 40 per cent cheaper than Microsoft Office.
Microsoft bashing by rivals is not unusual at all. But the Redmond-based software giant has reason for concern: it is under attack in India like never before. Its hegemony in the desktop operating system (through products like Windows 2000 or Windows XP) and application tools space (which includes products like Microsoft Office) is being challenged by price warriors like Sun, IBM and Red Hat.
All three are using a potent weapon to challenge Microsoft "� Linux, the open source code standard"� to offer a range of products as alternatives to Microsoft's software.
To be sure, this battle is being waged across the globe. That global battle is now hitting Indian shores. Among companies spearheading the attack is Red Hat, the US company founded in 1993. Buoyed by the success of its operating system (OS) software offering, Red Hat Professional Workstation, Red Hat is scheduled to launch a upgraded version in May this year in India.
Red Hat has other ambitions too "� it wants to increase the number of original equipment manufacturer (OEM) partners (these now include IBM, HCL and Acer) that bundle the new product with their personal computers. It also wants to double its distribution network, from 40 channel partners to 80.
Says Javed Tapia, managing director of Red Hat India: "Our new desktop offering will definitely add to the momentum of putting Linux on desktops."
Red Hat estimates that over 200,000 desktops shipped to India run on Linux. Indeed, Linux is already making a dent on key markets. For example, the Life Insurance Corporation of India (LIC) uses a Red Hat OS in 25,000 desktops. The Madhya Pradesh government uses the same system in schools in over 6,000 desktops.
The second challenger Microsoft faces is Sun, which launched its Java desktop OS just a few months ago. This is available at a special price of US$ 50 (Rs 2,220.50) which Sun claims is virtually a third of the price of Microsoft's Windows. Says Dhupar: "It is the first real alternative to a Windows environment in 15 years." Sun hopes to grab at least 10 per cent of the desktop OS market in the next 12 months.
It just might achieve that goal, if it markets the product properly. Its OS has the look and feel of Microsoft's Windows. For instance, instead of Internet Explorer, Sun offers the Mozilla browser. Sun is showcasing the product across the country and is in negotiations with Indian OEMs to bundle it with PCs.
Sun has reason for confidence. Star Office, its application tool, has been a runaway success and now accounts for more than 15 per cent of the desktop office productivity tool software market (some 20,000 copies of Star Office were sold last year). The target for the next two years: a 25 per cent market share.
What could also be of concern to Microsoft is that PC manufacturers too report rising customer demand for Linux OS "� and manufacturers are responding to that demand. In the last two quarters about 15 per cent of HP India's commercial desktops had Linux OS, up from 5 per cent to 7 per cent of total desktop shipments a year ago.
Says Nitin Chaudhry, country manager, commercial desktops, at the personal systems group of HP India: "We are not promoting one technology against others. But in the last few months there has been a demand from our customers for Linux and we are providing them with that choice."
IBM India too had expected to ship out PCs with Linux OS in single digit numbers. But in the January-March 2004 quarter, these accounted for 15.5 per cent of total commercial PC sales. Says Alok Ohrie, vice president, personal computing division, IBM India: "We have seen demand for Linux go beyond just ideal markets like call centres, telecom verticals and educational institutions. Even corporate clients are trying it out, especially in areas of office automation like the desktop of the secretary."
Nevertheless, don't get carried away by the charge of the Linux brigade either. Microsoft estimates that the total number of Linux-based PCs shipped to clients accounts for much less than 4 per cent of the market (70 per cent of PCs are unbranded, and most assemblers use pirated OS in any case).
What is more, a large percentage of those who buy PCs with Linux inbuilt do not use Linux. Instead, they download pirated editions of Windows and Office. According to a survey of users by the Manufacturers Association of Information Technology, which reflects the interests of hardware manufacturers, only 2 per cent of PC users actually work on Linux.
But Chaudhry has a point when he says that many defence services tenders specifically demand Linux OS, that educational and research and development centres demand Linux, as do small manufacturing enterprises that want a cheaper product, namely, Linux-based PCs. He also points out that many companies use Linux-based OS for their servers (used for back-end IT work) and now want to integrate the front-end desktop by inducting Linux OS.
Linux is slowly making inroads into the government too. A survey on e-governance readiness in central government departments by the ministry of information technology suggests that 15.9 per cent of government computers are also powered by Linux (most government computers have more than one OS and nearly all of them have Windows).
If Linux-based products have a big edge, it's clearly price. IBM executives point out that the price difference between a Microsoft OS and a Linux-based OS could be Rs 4,000 to Rs 5,000 per desktop. Sun claims that its Star Office is available for less than Rs 2,500 versus Rs 20,000 for Microsoft Office. Adds Red Hat's Tapia, who hawks its OS for Rs 3,250: "In our OS, the office suite, web browser, e-mail client, anti virus software and data base are all included. In the case of proprietary software you pay an additional cost."
PC makers also say that Linux-based software products have another advantage. Says Ohrie: "Linux currently is also considered impregnable and is virus free, unlike proprietary products which have been facing serious problems."
Still, Microsoft dismisses all this. Says Sanjiv Mathur, group manager, customer and partner experience, at Microsoft: "We have different kinds of licensing agreements, which include prices based on volumes, or a global pricing for the organisation and special prices for academic institutions. But rivals always take the highest street price in comparing, which is unfair."
Last week Microsoft launched a Microsoft Office version for students and teachers priced at only Rs 7,000. It also says that the price for large companies that buys large volumes of Microsoft Office is as low as Rs 10,500.
Mathur fires a broadside of his own "� the price for annual yearly support for Linux-based software is steep. In two to three years, the total cost of operation exceeds the bill for a Microsoft OS. So the price advantage could be illusionary.
But IBM's Ohrie steps in with a counter-point. IBM's client feedback is that it is cheaper to maintain computers with Linux-based OS. The reason: most companies that sell Linux products like Red Hat offer upgraded versions free of cost within a time frame, unlike Microsoft. Microsoft's reply? It offers comprehensive support which Linux cannot.
Says Mathur: "They don't have that kind of vendor or support base. In the case of Linux you have to decide on which variation you are talking about, what kind of commercial applications you will do, what mail system will you use? But we have guys who can put these functionalities together and customise the system. So why should you make such a tectonic shift at all?"
Nor is Microsoft overly perturbed by Sun's challenge in the OS space. Mathur says that Sun is a hardware company, that it has no experience with the end user who uses the PC.
Yet it's useful to ask companies and government officials how they rate Linux-based OS. Most view it with caution. Bharti Televentures, for instance, uses Linux OS in back-end servers but is wary about using them on desktops and at the front-end.
Says Jai Menon, Bharti's director, IT and technology: "I give Linux in the desktop space a 50 -50 chance.There are many issues "� people are familiar with Windows, there are problems of interportability (for instance, converting a Microsoft Exchange document into a Star Office format), and then there is need for training which means an additional cost. Of course, the pricing is fantastic."
Internet service provider Sify Ltd has about 5 per cent of its desktops on Linux. That's because, says Rustom Irani, the company's chief technology officer, users are more comfortable with Windows. "But those who are working in technology backup, or are managing support systems, have already shifted to using Linux desktops in our company."
Government officials too express wariness. In Karnataka, hardly any project has been executed on Linux desktops, Microsoft still holds sway. Says Rajiv Chawla, secretary, e-governance, Karnataka government: "I strongly feel that Linux needs to mature much more for field purposes. Linux can definitely be more popular than Microsoft. It is an exciting technology. But it lacks the expertise. There are not too many people available to service this technology."
Indeed, many state governments prefer not to plump for either Linux or Microsoft. Says P Raghuveer, additional secretary, information technology and communications, Andhra Pradesh government: "We do not have a strategy for Linux and neither are we pushing Linux. We have a centre for good governance, which has developed about 30 web-based applications using open source tools." Raghubir adds that the state government has taken a neutral approach.
So while Linux-based products are certainly making their presence felt, they've not exactly won the desktop war either in India.
Menon sums up the position when he says: "The jury is still out on how Linux will fare in the desktop space."
(Additional reporting by Freny Patel in Mumbai, Sanjay K Pillai in Hyderabad and R Raghavendra in Bangalore)
| In servers, the penguin has a long way to go Microsoft is king of the desktop OS market, but Linux is gradually catching on in the server market. According to Red Hat, nearly one in every four servers shipped to customers in India run on a Linux OS. At Sify Ltd, over 90 per cent of the severs run on Linux. At the Bharti group, Linux is used in operations like customer relations management or in building a firewall. The Life Insurance Corporation of India has switched from the Unix platform (the other alternative OS for servers, apart from Microsoft and Linux). Over the last two years, it has invested Rs 130 crore in 2,000 servers based on Red Hat's Linux. Says LIC's IT chief D D Singh: "We have never used Microsoft for back-end operations." Yet even in servers, Linux has a long way to go. Many say that they would still stick to Unix, because it's more rugged, especially for mission-critical operations. Says Amrish Rao, business manager in the teradata division of NCR, one of the largest data warehousing companies in India: "For processing data volumes of over 300 gigabits we only use Unix because it is a more stable system. For data volumes below that we look both at Unix and Microsoft. Linux is still not in the picture." Some also argue that Linux's price (it was available virtually free with support costing less that US $100, or Rs 4,450, a year ) is now over. Says Srikanta Acharya, managing director in India of SCO, which sells Unix platforms: "Earlier Linux was cheap and companies like Red Hat offered free software downloads. But now Linux vendors charge anything between US $700 and US $1500 for their OS as support fee. So the difference in prices is now over." But Red Hat executives reply that there is still no license cost. Says Red Hat's Tapia: "We charge only for support and services and these vary according to the level of support needed. There is no per user cost." But Microsoft and Unix have been put on notice: they'll have to gird up their loins for battle in the server market too. |
Where Linux stands on desktops
- HP India says that 15 per cent of its commercial desktops were shipped with Linux, up from 5 per cent a year ago
- Between January and March 2004, 15.5 per cent of IBM India's commercial desktops were shipped with Linux
- Red Hat says that over 2 lakh desktops shipped in India annually run on Linux operating systems
- Almost 16 per cent of the desktops in central government offices are loaded with Linux operating systems. But virtually every machine is also loaded with some version of Microsoft Windows
- Sun claims that it has a 15 per cent share of the office productivity tool market and has sold 20,000 copies of Star Office annually. But in central government offices only 3 per cent of the desktops are loaded with Star Office
- According to a Nasscom user survey, only 2 per cent of desktop users run their systems on Linux
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