Computer data storage company EMC Corp. grew its business the fastest—28%—in the Asia-Pacific region, including Japan and Australia, in 2006. India is not yet a big part of the growth, but EMC’s president of Asia-Pacific and Japan Steven Leonard says it is an important country for the Massachusetts-based company for at least two reasons: a fast-growing customer base and global product development from its India offices. Leonard tells Mint that to boost growth, EMC is considering a version of its products with less features, tailor-made for small and medium sized customers. Edited excerpts:
Tell us about the importance of India for EMC?
India is important to EMC in a variety of ways. Firstly, it is important for us in Asia-Pacific and Japan as India represents one of the fastest-growing regions for our South Asian markets as we focus on developing our business potential with firms such as ICICI Bank Ltd and State Bank of India. It is important enough to us from the intellectual capability perspective to have announced a $500 million (Rs2,300 crore then) investment a year ago for some substantial engineering development capabilities; we recently acquired Hyderabad-based Valyd Software through our security division for encryption development. India is a source of engineering capability for worldwide development of products. It is also important to us from the business support perspective—financial operations, customer support and service.
India is a source of engineering capability for worldwide development of products
An IDC study predicts digital information—161 billion gigabytes in 2006—will grow sixfold by 2010, nearly 70% of which will be created by individuals. How do you look at leveraging this potential?
Information that is created and replicated has to be managed, stored and protected. How do you deal with such large volumes of information? For instance, most of the rich media information like on (video portal) YouTube is created by individuals, but has to be managed by companies. This expands complications. Around 75% of intellectual property inside corporations is in emails and is unstructured. EMC, through its 24 acquisitions in the past three years, has got 21 software companies and some services companies. The intention is to continue to expand and develop our overall portfolio in information infrastructure management.
How have you transitioned from being essentially a storage hardware company into a firm that looks at information and infrastructure management? What is your strategy going forward?
Three-four years ago, we were helping companies store information in tiered structures so as to find less costly ways to store information. Storing, protecting, optimizing efficiencies and leveraging content have since become the core dimensions of EMC's information infrastructure business. Today, the issue is of protecting information from misuse, from unauthorized access, from inappropriate sharing and from hackers; applications and business intelligence is left to other companies. The challenges in this transition are the cultural issues of bringing together some 20-odd companies and integrating them under one umbrella; not only small and large company integration, but also hardware and software company integration.About 46% of EMC’s revenues come from hardware, and the rest from software and services.
How easy is it for you to sell your products in India?
It depends partly on the customer’s business maturity. The more the market has been familiar with some of these topics and valued them, it is a very direct conversation because we bring a very powerful answer to their problems.
In the mid-tier and SME (small and medium enterprise) market in India, these issues will be much more in the education section.
For example, the Indian Evidence Act lays down some very specific requirements that companies have to follow. Emails are covered by the law, but even some larger firms have a different understanding of what is required underthe law.
But bulk of the Indian opportunity is in the SME space...
We are also trying to understand how best we should position our capabilities in an appropriate way and whether we should create product offerings like a ‘lite’ (lighter variants with less number of features) version of some of our technologies. It will take a few more years for the SME market to continue moving further up into that business environment where records retention, legal discovery and effectiveness of business content will become more important at the lowest cost.