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INTEL: Race for $300m Indian Graphics Card Market | Third largest Number of Internet Users by 2013 | MICROSOFT: Low-cost to R&D | SATYAM: SEC Review | WIPRO: ‘Keep Pressure on U.S.’ | Bucking Global Recession | INFOSYS: Strategic Investment | R&D Hot Spot

INTEL: Race for $300m Indian Graphics Card Market

Intel and Advanced Micro Devices, traditional rivals in the global chipset space, are now set to take each other on in the $300-million Indian graphics card market.

With the country turning out to be a hub for graphic industries like animation and design, both the companies are reworking their India strategies to grow their businesses in the computing segment.

The move has been triggered by the emergence of high-end games involving real-time 3D rendering (such as first person shooting or racing games). A FICCI-KPMG study claims the Indian animation industry alone will grow from the current Rs 17.4 billion to Rs 39 billion by calendar 2013.

Global and domestic entertainment companies like DQ Entertainment, Yashraj Films, Disney, MGM and Paramount have announced that they will tap the Indian market through locally-produced animation and graphics content.

Such heavy-duty content development requires stand alone or discrete graphic cards, as against integrated graphics chipset (essentially graphic capabilities within the computer motherboard). Integrated graphic chipsets are best suited for basic applications like multimedia, high-definition videos, photos and digital music.


Third largest Number of Internet Users by 2013

he number of Internet users worldwide is expected to touch 2.2 billion by 2013 and India is projected to have the third largest online population during the same time, says a report.

"The number of people online around the world will grow more than 45 per cent to 2.2 billion users by 2013 and Asia will continue to be the biggest Internet growth engine.

"... India will be the third largest internet user base by 2013 - with China and the US taking the first two spots, respectively," technology and market research firm Forrester Research said in a report.

Globally, there were about 1.5 billion Internet users in the year 2008.

Titled 'Global Online Population Forecast, 2008 to 2013', the report noted that emerging markets like India would see a growth of 10 to 20 per cent by 2013.

"In some of the emerging markets in Asia such as China, India and Indonesia, the average annual growth rates will be 10 to 20 per cent over the next five years (2008-13)," the report said. India's number of Internet users was estimated to be 52 million in 2008.

In the next four years, about 43 per cent of the Internet users globally are anticipated to reside in Asia and neighboring China would account for about half of that population.

"... the shifting online population and growing spending power among Asian consumers means that Asian markets will represent a far greater percentage of the total in 2013 than they do today," Forrester Research senior analyst Zia Daniell Wigder said.


MICROSOFT: Low-cost to R&D

Billionaire Bill Gates urged India to move away from low-cost labor toward high-end research and development. On a visit to New Delhi, the co-founder of Microsoft Corp called on the Indian government to speed up its commitment to R&D and to boost low number of home-grown PhD students.

Gates told a panel discussion that India's "IT success story" should strive to add value and move away from low-cost labor as other developing countries play catch-up.

"At first some of that (IT boom) was built on low-cost labor. And, of course, as time goes on, you don't want to have that as the only differentiator and it's not a sustainable thing, because others can come along with that as well," Gates said.

India's R&D sector has made strides in recent years and attracted some big foreign hitters, including Microsoft, in keeping with its IT- and service-driven economic boom.

But hampered by structural problems and a lack of government commitment, India's R&D still lags behind the United States and Asian rival China. China has more than 1,100 R&D centers compared to less than 800 in India.

"Leading companies here are contributing a lot of ideas and techniques. Even more of that has to happen and bring it to its full potential," Gates said.

"You've got to get the government, universities ... and companies like Microsoft to deepen their commitment to R&D."

India produces 100 computer science PhDs a year -- a fraction of China or the U.S -- even as it exports a large number of students abroad. While English-speaking India is cheaper than China for R&D, New Delhi gives few incentives to researchers.

Beijing offers incentives like tax breaks for R&D centers, and special economic zones provide infrastructure for hi-tech and R&D industries.



A high-level U.S. Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services with audit firm KPMG, Mahindra Satyam CEO C.P. Gurnani told ET.

The U.S. SEC team, accompanied by SEBI officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.

Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B. Ramalinga Raju confessed to fudging the books for seven years.

The U.S. SEC is probing the violation of U.S. Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the U.S. Shareholders alleged that the executives issued false and misleading statements.

A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. SEBI is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.


WIPRO: ‘Keep Pressure on U.S.’

Wipro chairman Azim Premji has said India should continue to exert pressure on the United States not to switch over to an era of protectionism.

Premji said the visit of the U.S. Secretary of State Hillary Clinton to India had stated that Washington would not "switch over to protectionism".

"I think our Prime Minister (Manmohan Singh) and the External Affairs Minister (S. M. Krishna) have taken this up at the appropriate levels in Washington,” he told reporters in response to questions. "The prime minister has taken this up three times with President Barack Obama," he said.

So, as of now, the issue seemed to have been contained, said the chairman of the software giant which is listed on the New York Stock Exchange.

"But one should be alert to the fact that the U.S. is facing an unprecedented degree of unemployment...excess of 9.8 percent," Premji said, adding that one should continue to keep the pressure on the U.S. not to "switch over to the methodology of protectionism."

He also said Wipro was taking proactive steps to increase the number of local people in its workforce in overseas operations. Today, locals constitute as much as 30 percent of its headcount overseas.


Bucking Global Recession

The Indian IT industry managed to limit the impact of global recession last fiscal and maintain the growth momentum, albeit lower than that in the boom times, says tech publisher Dataquest.

"Export firms did better in recession-hit developed markets than those whose business is limited to the Indian market," Dataquest editor Prasanto K. Roy said.

Though the business of top 20 firms led by Indian IT bellwethers TCS, Infosys and Wipro, and multinationals such as HP and IBM, grew by an average 19 percent, seven of these posted single-digit revenue growth.

"Overall, the top 20 Indian software and hardware firms reported a combined revenue of Rs.183,621 crore (Rs.1.84 trillion/$39.52 billion) in 2009, compared to Rs.149,250 crore (Rs.1.49 trillion/$32.12 billion) in 2008," Roy said, citing findings of a survey.

Among the seven, four are multinational subsidiaries - Microsoft India, which grew a mere one percent year-on-year to Rs.32.98 billion (Rs.3,298 crore); HP India up two percent to Rs.157.63 billion (Rs.15,763 crore), Oracle three percent to Rs.59.62 billion (Rs.5,962 crore) and Cisco by four percent to Rs.60.84 billion (Rs.6,084 crore).

"One of the reasons for export-driven firms maintaining the growth is because of increasing IT outsourcing in a downturn to keep costs flexible. In the domestic market too, global firms such as IBM and Wipro fared very well," Roy said.

Among the top 20 firms, eight firms grew fastest despite slowdown and negative sentiment in the market.

These include Mphasis, with revenues increasing 69 percent to Rs.31.73 billion (Rs.3,173 crore); HCL Infosystems, up 60 percent to Rs.80.89 billion (Rs.8,089 crore) and Cognizant Technologies, up 49 percent to Rs.94.10 billion (Rs.9,410 crore).


INFOSYS: Strategic Investment

The Indian IT industry, which has grown rapidly due to innovation and low cost products, has not reduced strategic investment despite cutting costs, Infosys Technologies Chief Executive and Managing Director S. Gopalakrishnan said.

Addressing a session on “Role of Innovation in an Economic Downturn,” organized by CII, he said that IT industry was still on a strong footing and bound to grow with more investment in research and development.

"We invest more in new services, value additions, new solutions and products, so that even if they don't pay now, they will pay later on. Though radical innovation is time consuming, it will definitely pay in the longer run," he said.

Though Indian companies were focusing on process innovations, they should switch over to product innovations, he said, adding Universities should also focus on R and D.

Indian companies were also buying companies located in the developed countries. This also helped them market their products globally and would also help to accelerate growth. "They can be successful and make a significant impact if they focus on new products and innovations also," he said.

Gopalakrishnan said telecom and construction sectors, and the automotive industry are growing at a rapid pace in India despite the recession and were creating jobs and more business opportunities.

He suggested that the automotive industry should go in for next generation cars to protect the country's ecosystem.


R&D Hot Spot

At Microsoft's research centre in a leafy lane in India's tech capital, a new generation of researchers are being groomed half a world away from the software giant's sprawling headquarters in Seattle.

Complete with beanbags and coffee served in steel tumblers, the centre is helping change the perception that India is no place for top-end research and development.

Staffed with about 60 full-time researchers, many of them Indians with PhDs from top universities in the United States, the centre is at the cutting edge of Microsoft's R&D. It covers seven areas of research including mobility and cryptography.

Its success, including developing a popular tool for Microsoft's new search engine Bing, underscores the potential of R&D in India at a time when cost-conscious firms are keen to offshore to save money by using talented researchers abroad.

Showing off the Bing tool which enables searches for locations with incomplete or even incorrect addresses, B. Ashok, a director of a research unit at the centre, said the innovation would never have taken root if the R&D had been done in the United States.

"It was completely inspired by the Indian environment, but is applicable worldwide," he said.

While India might seem like a natural location to expand offshoring into R&D, it is hampered by some serious structural problems that range from not enough home grown researchers to a lack of government support.

India produces about 300,000 computer science graduates a year. Yet it produces only about 100 computer science PhDs, a small fraction of the 1,500-2,000 that get awarded in the United States, or China, every year.

"Students here are not exposed to research from an early age, faculties are not exposed to research and there's no career path for innovation because there's a lot of pressure to get a 'real' job," said Vidya Natampally, head of strategy at the Microsoft India Research Centre.



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