It’s a leading global manufacturer of servers and personal computers (PCs) with annual revenues of around $120 billion. However, on the back of falling PC sales, Hewlett-Packard — which gets revenues of over $3 billion from India — now plans to sharpen its focus on making mobiles, and not PCs, the centre of computing. The HP-EDS combine (HP acquired EDS last May for $13.9 billion) has almost 35,000 employees in India and can offer a suite of solutions ranging from hardware, middleware and outsourcing to its clients, which makes it a formidable player in the commercial and enterprise computing segments. In an interview with Leslie D’Monte, Hewlett-Packard India Managing Director Neelam Dhawan explains the way forward in a changing landscape and not-so-encouraging economy as she comes close to completing a year in office after she left Microsoft.
A major part of your business comes from the personal systems group. But if I were to look at worldwide data, there’s a considerable slowdown in hardware, especially PC sales. The picture is not a happy one…
True. Growth in the segment has slowed to 18-20 per cent from the earlier range of 35-36 per cent. However, the dip should not be so alarming in constant-currency terms. It is currency depreciation which makes it look very big — we took a hit of almost 25 per cent due to currency volatility. Besides, when companies hire a person, they buy him a PC and that person in turn buys another PC for his home when he gets his second or third salary. Due to the slowdown, for each individual retrenched, you lose two PCs. Moreover, when companies spot a slowdown, they do not upgrade products easily. However, companies still need servers and software. So the slowdown has hit us in pockets.
So what kind of turnover figures are you looking at, given the current scenario?
As of now, we are looking at a flat figure and I would be very delighted if it continues like that till 2010. Even to remain flat we need to take care of the currency depreciation. Last year, for instance, you sold Rs 4,000 worth of goods to get $100 in revenue. This year, you have to sell Rs 5,000 worth of goods to get the same $100. That’s the impact the whole industry is facing.
Which segments are doing well for you in India?
To begin with, banking has done well. It has always been a strong sector for HP in India. Nationalised banks are where we have seen growth and that’s where we see our revenues growing. They are taking decisions and seeing growth in their account holders, especially since many multinational banks fared poorly. We just closed a deal with Bank of Baroda. We have rolled out core banking solutions for 1,000 branches of the bank. For Bank of India too we offered similar solutions.
Data warehousing is another area that we are excited about. It makes you efficient and takes your operations to the next level. But if I’m a banker with an operational role, I would ask: So what will give me more revenue, how do I manage customer care better? That’s where data warehousing and business intelligence step in in a big way. We see a lot of business here. While I cannot give figures, all I can say is that these are multi-million dollar deals.
The fast-moving consumer goods (FMCG) sector too is very good for HP. We just closed Godrej last month and then we got another big deal from it. Britannia is an old client and the deal keeps getting renewed. Supply chain is crucial to this sector. And we bring our expertise from the automotive sector where we have done a lot of work.
The second area is network management. We have done large deals for the information technology sector in India and we have got good strength on analytics — for example, which dealer is moving goods, from which town it’s moving. The FMCG companies face similar challenges. Hence, we are able to look at how dealer management can be more efficient. The third thing is portal creation (a web presence) for the FMCG sector.
We continue to focus a lot on the government and public sector. We are looking at power in a big way, which will see a lot of reforms. When compared to China, India has a lot of catching-up to do in the power sector. One of the solutions that EDS has developed is the digital meter. If you have a digital meter installed in your house, nobody needs to come and do the meter-reading. Your bills get automatically generated because the meter is connected to the Internet. The bill also comes as an alert on your mobile phone. We are currently implementing it in China. India should not be far behind.
What about telecom? It appears that IBM is a clear leader in this space…
When Indian telecom companies went for outsourcing services, the deals went to IBM. It has a model which we could never match but we have products in both hardware and software that are used internally for billing purposes. These are solutions that HP has continued to sell in the country and that’s helping us grow. Now that the government has announced licences for five new operators, we are very excited. They will need infrastructure. And we have developed new ways of designing data centres with cooling and power efficiency. Take, for instance, our dynamic smart cooling solutions. Data centres must have air-conditioning which costs a bomb. Dynamic cooling reduces costs by sensing hot spots and cooling them rather than cooling the entire data centre. This reduces air-conditioning costs by 40-45 per cent. Some telecom companies have already given us orders which we executed in December, March and April.
But you appear to have woken up late when it comes to low-cost netbooks and the mobile space which is booming…
To think that PCs will be the device that will be used to access information is erroneous. Mobile is surely the way to go. However, our focus is not to make a mobile device. Rather, our focus is on how the mobile device can become the centre of computing. Whether you want to access your bank or make a secure payment, security is a big issue. Consider a streaming video-on-demand or direct-to-home (DTH) broadcast or any Visa/Mastercard transaction — all these applications link back to storage or server applications. The question, however, is how do you enable all this in a secure environment? So our focus is on secure transactions using the phone.
Every time you see a reality show where you need to SMS a number, there is a server doing the backend work — and 90 per cent of those servers are from HP. I have 130 organisations that do value-added services for telecom service providers using our product.
I must now come to netbooks. Let me tell you that we launched netbooks in February. A little late though, we launched consumer and commercial netbooks. We also got the consumer netbooks designed and offered them in different colours. They also have a slot for a 3G simcard. Netbooks are doing well for us. February was a record month for us.
What’s your take on the competition?
The competition scenario is very different than it was three years ago. First thing that is different is IBM sold its PC business to Lenovo. If the customers now want end-to-end solutions, then IBM can offer everything except PCs. So IBM is a competition for us but in select areas. If you look at Cisco, we partner with Cisco very strongly and by next year you will see it with servers in the US (HP acquired Ochar which is a networking business and so competes with Cisco). Oracle has bought Sun Microsystems. At the end of the day, Oracle is a software company not known for hardware; so integration will be the key. This too will change the scenario. As of now, we are collaborating with Oracle and have a lot of wins with Oracle in the country. In fact, for its data warehousing solution, HP has a product which is designed only for Oracle and only Oracle can sell it.
