HCL: Zipping ahead on the corporate desktop

HCL Infosystems sold more than 1,00,000 desktops in Q1 2004 to become the top gun in corporate desktop sales. The government and BFSI sector helped the company achieve these figures, says AKHTAR PASHA

GEORGE PAUL says that HCL has employees for providing direct technical support in 200 cities and towns

HCL Infosystems couldn’t have asked for a more action-packed first quarter. The company shifted to overdrive during the January-March (JFM) quarter this year, becoming the first vendor in the Indian PC market to log one lakh units in desktop PC shipments. It sold a record 1,02,305 units in this period, way ahead of competitors HP and IBM. The company revved up to grow its desktop business by 42 percent sequentially (both commercial and consumer). Meanwhile, competitor HP’s business grew by 17.9 percent and IBM’s by 5 percent sequentially, according to IDC India. Analysts feel that HCL capitalised on the edge it has in bagging government deals, especially since the JFM quarter is prime ‘shopping time’ for the government. Robust momentum in banking, financial services and insurance (BFSI) spilled over from the previous quarter giving an added boost to the company’s fortunes.

It’s boomtime for commercial desktops

5,35,301 commercial desktop PCs shipped in JFM 2004. The segment grew by 12 percent sequentially. HCL increased its rank by 37 percentage points over the previous quarter. HP and IBM grew by 23 percent and 6 percent respectively. As mentioned earlier, this strong growth was largely due to increased government spending and purchases by BFSI. According to a source at Corporation Bank, “During the tender process of public sector banks, it’s generally the lowest bidder that gets the order. This was the case with HCL during Q1 2004.”

Says K R Nimbalker, general manager, Indian Overseas Bank, “HCL has been a major supplier of hardware to our bank for the past four-five years. With its wide network of branches and service centres, the company has delivered on-time support, helping us offer quality services to our customers with minimum down-time.”

The top five nationalised banks—SBI and its subsidiaries, Punjab National Bank, Canara Bank, Corporation Bank and ING Vysya Bank—contributed 35 percent of HCL’s commercial desktop sales, and in this segment it was HCL’s Infinity Pro BL that proved a winner. (see box: Made to Order).

Unlike HCL, which is the only PC manufacturer to offer direct support to government and BFSI agencies, players such as HP and IBM rely on niche channel partners to address these verticals. Says George Paul, vice president, marketing, HCL, “The IT infrastructure of the government and BFSI segments extends to remote towns, and branch offices in these remote locations need technical support. We have a direct presence in 200 towns and cities manned by HCL employees for providing direct technical support.”

In contrast, Nitin Choudhary, country manager, commercial desktops, HP India said, “We address the government and BFSI segments through our partners and system integrators, though we do have the capability to directly address these two verticals.”

It’s in the details

HCL’s products offer some advanced management and security features such as a built-in local firewall. For hush-hush government projects, HCL offers PCs with encryption tools loaded on to

the PC. HP’s D330 and D325 desktops, both targeted at the government sector, do not offer built-in firewall protection or encryption. Moreover, HCL’s centralised asset management console (which helps keep tabs on system updates, and software and application licences) helps system administrators manage and safeguard their network effectively.

AMD for the government

Says Paul, “Out of 11,000 AMD desktops sold during Q1 2004, 20 percent went to the commercial segment. We sold our Infinity Orbital Range running the AMD Athlon to the Tamil Nadu state police, the governments of Maharashtra and Andhra Pradesh (for e-governance projects), and the government of Kerala for a school project. These instances clearly show that AMD is entering the run-rate business as customers find these processors a better option in the price-performance matrix.”

Sanjeev Keskar, country manager, AMD Far East (India), says that AMD desktops running Linux are carving out a new price point in the PC business. “Our engagement with HCL for commercial desktops and servers happened in the second half of 2003, and it’s working out well for both of us. With HP we bagged an important order from the Tata Group for D325 desktops; these are AMD Athlon 2400-based machines running Linux.”

A matter of reach

Having targeted the government segment effectively, HCL is now looking at the corporate segment in a bid to repeat the same growth in Q2 2004. However, there is some concern that the defence segment, which traditionally buys Indian brands, is moving away from HCL. The Directorate General of Supplies and Disposals (DGS&D), which gives guidelines for defence purchases, has started buying directly from vendors such as HP. Clearly, HCL needs to rethink its strategy if it is to make inroads into defence establishments.

Made to order

HCL’s Infiniti Pro BL 1200 desktop PC is based on the Pentium-4 processor with hyperthreading technology. It uses the 915G chipset with dual channel DDR RAM, an integrated graphics card, and it supports PCI Express. Other key features include integrated firewall protection and encryption features to protect local hard disks. The desktops are built-to-order for banking customers, with configurations varying according to a bank’s needs.

Laughing all the way to the bank
Customer	Application	Product used
SBI and its subsidiaries	Core banking application	HCL Infinity Pro BL in various configurations
Punjab National Bank	Core banking application	-do-
Canara Bank	Total branch automation	-do-
Corporation Bank	Core banking application	-do-
ING Vysya Bank	Core banking application	-do-
Source: HCL Infosystems

Sequential growth in overall desktop PC market (Q4 2003 to Q1 2004)
Vendors	Q4 2003	Percentage Share	Q1 2004	Percentage Share	Growth
HCL	71,874	10.6%	1,02,305	13.3%	42.3%
HP	64,776	9.6%	76,389	9.9%	17.9%
IBM	39,502	5.8%	41,480	5.4%	5.0%
Others	4,12,525	60.8%	4,20,721	54.5%	2.0%
Total	6,78,220	100%	7,71,984	100%	13.8%
Source: HCL Infosystems, validated by IDC India

Sequential growth in the commercial PC market (Q4 2003 to Q1 2004)
	Q4 2003	Percentage Share	Q1 2004	Percentage Share	Growth
HCL	59,781	13.2%	82,085	15.3%	37.3%
HP	44,293	9.8%	54,515	10.2%	23.1%
IBM	38,787	8.6%	41,360	7.7%	6.6%
Others	2,36,519	52.3%	2,47,810	46.3%	4.8%
Total	4,51,899	100%	5,35,301	100%	18.5%
Source: HCL Infosystems, validated by IDC India

akhtar@expresscomputeronline.com