The mobile business

Medium businesses are investing in notebooks and Wi-Fi, but they are still cool towards WANs, says Kusum Makhija

A robust infrastructure is crucial for medium businesses as they enter the global market. The average mid-sized enterprise has an installed base of 148 PCs and the PC-to-employee ratio is 0.27, which translates roughly to one PC for four employees. Investments made in enterprise hardware account for 23 percent of the IT spend of a mid-sized organisation. This is expected to drop to 20 percent in this fiscal. The reason for this could be the fact that medium-sized businesses have already invested in infrastructure. Almost every organisation in this space has achieved a basic level of computerisation.

Vote for branded PCs

Branded PCs are gaining ground with aggressive pricing policies that are driving sales. HCL Infosystems has introduced a PC at Rs 12,990, while Xenitis Infotech has launched a sub-Rs 10,000 desktop. However, in the medium business segment, customers base their buying decisions on features instead of price. Vendors such as HP, IBM and HCL have large-scale deployments across verticals in the mid-market. Most companies in this space believe in buying from a single vendor, as it helps them gain better support and pricing. For example, the pharmaceutical major Eli Lilly India always buys PCs from HP as a part of the company’s policy.

Factors such as better support and service are fuelling the growth of branded PCs. Some vendors bundle in software to offer better value. Acer has announced a new initiative called SPACE (SMB Programme for Acer Customer Empowerment). The company is bundling in Tally 7.2 (single user) with the Acer Power S111 for Rs 22,949.

Mobility is key

Notebooks are widely used even by junior staff. Sudhir Chaturvedi, IT Manager, Eli Lilly, says, “We have 90 HP laptops that are used by anybody in the organisation having a travelling job profile, irrespective of his level.” The marketing department uses the multimedia applications on these laptops to make effective presentations. Sales force automation is a key trend driving notebook sales. Pharmaceutical companies are using notebooks for marketing speciality drugs where they use them to demonstrate the effectiveness of products to doctors.

Vendors are trying to grow the market by reducing prices. Acer, for example, has launched a sub-Rs 30,000 notebook that runs on Linux. Other vendors are launching Celeron-based models targeted at the mid-market.

We have come up with a new range of Toshiba laptops for the mid-market Rajendra Kumar Vice-president HCL Infosystems

According to Rajendra Kumar, Vice-president, HCL Infosystems, “We have come up with a new range of Toshiba laptops for the mid-market.” The company has introduced a Celeron-based notebook priced at Rs 44,990.

Vendors are also hopeful that with the gap between PCs and notebooks thinning, companies will replace PCs with notebooks when the time for upgrades comes. Comments Rajiv Grover, Country Manager, Consumer Notebooks, PSG, HP India, “With prices crashing, laptops have become a necessity among enterprise users today, and PC users are switching to notebooks.”

Service and support is a key factor here. Explains Ramanjeet Singh, Country Product Manager, Note PC, Samsung, “Most medium enterprises look at a product lifecycle of 18-24 months with extensive service and support.” Almost all vendors are looking at enhancing their support levels by setting up a huge channel network.

With service providers such as Bharti and Sify setting up wireless hotspots, the demand for wireless notebooks is picking up. Also, with the cost of setting up wireless infrastructure coming down, Indian organisations are opting for this technology. Late entrants such as Samsung India have boosted their marketshare by betting their entire product range on Wi-Fi notebooks.

Another trend that is picking up is of lighter notebooks. Toshiba has launched the Toshiba Protégé that weighs 995 grams. Similarly, Dell has introduced the Latitude X1 that weighs 1.14 kg and is priced at Rs 95,000. Opines Dinesh Pai, General Manager, Dell India, “Lighter notebooks with the latest mobile processors and a wide-screen display are what users are looking for today.” Vendors are also trying to woo the corporate customer by bundling in security features.

No penguin play

While vendors such as Red Hat have announced an uptick in the sales of desktop Linux software, this has not changed the perception of desktop Linux. Most medium businesses do not seem comfortable deploying Linux-based PCs. Affirms Sudhir Chaturvedi, “We do not have a single Linux PC in our organisation simply because we are not comfortable using it. There is a perception that Linux is not user-friendly.” Awareness levels about Linux are low among these companies. Most have apprehensions about the kind of applications available on Linux, and they perceive it as a low-priced alternative with fewer features than Windows. Says Pankaj Kumar, IT Manager, Delhi State Co-operative Bank, “We are not sure if PCs running desktop Linux will be able to support the kind of work we do.”

All about LAN

There is a huge demand for networking equipment in the auto ancillary space Rajesh Sahore Country Manager Allied Telesyn

Investments in a basic LAN infrastructure remain a high priority among mid-sized enterprises. 89 percent of the respondents have LAN. Not many of these organisations are looking to experiment with wireless LANs, as their priority is to have a basic network in place. “Our foremost priority is to set up a functioning LAN so that we can network all the 15 PCs in our office,” adds Pankaj Kumar.In terms of infrastructure, a switch and a router make up the basic set-up that most medium companies have. Comments Sudhir Chaturvedi, “We have a mix of Cisco switches and routers for connectivity. We have also gone in for Avaya structured cabling solutions.” Verticals such as BFSI, IT and auto components are driving the demand for networking equipment.

Opines Rajesh Sahore, Country Manager, Allied Telesyn, “There is a huge demand for networking equipment in the auto ancillary space.”

While vendors are launching products that promise better security, most mid-sized enterprises are not aware of the benefits of the same. However, vendors are looking at this as a huge opportunity to convince medium businesses to buy products that promise integrated security. Almost every vendor has launched integrated routers with in-built security. Cisco launched the Integrated Service Router (ISR) with features such as VPN, security and wireless capability. The new Cisco ISR 1800, 2800 and 3800 series is aimed at SMBs looking for routers that offer security, voice and wireless in a single box. Cisco affirms that these switches and routers have been successful in the SMB segment.

Vendors expect features and not price to drive sales to the medium business segment. Believes Rajesh Sahore, “Cost is not an issue among medium businesses.” Additionally, features such as VPN and encryption that were available only in high-end routers are present at the entry level today. Cisco and others are educating users about the benefits of using routers with wireless built-in. These wireless routers will replace the need for separate wireless access points in a small office network.

Saying ‘no’ to WAN

Although the average mid-sized organisation has ten locations, this hasn’t translated to a corresponding investment in WAN infrastructure. Only 39 percent of the respondents have invested in WAN. These networks are commonly deployed by companies having more than 2-3 regional offices. Only a few organisations such as Eli Lilly have invested in a high-bandwidth WAN.

Adds Sudhir Chaturvedi, “We have a 1 Gbps WAN connecting our 11 principal offices while our 23 warehouses across the country are connected using leased lines.”

Mid-tier organisations are now looking at Gigabit Ethernet to accommodate their voice, video and data transfer needs Anand Mehta Manager New Business Areas Development D-Link India

Vendors such as 3com are trying to drive up adoption by educating users about the benefits of using Layer 3 switches in a WAN. Routers focus more on WAN ports and a limited number of LAN ports. WAN traffic generally varies between 64 Kbps to 2 Mbps per port while LANs work at 100 Mbps. Comments Vijay Yadav of 3com India, “Organisations planning multi-locational WANs should definitely go for switch-based MANs. The reason is simple– switches today offer many routing features such as BGP4 (Border Gateway Protocol 4) with 100 times the speed.” Yadav adds that the BFSI and IT space have been high growth areas for the company, as awareness about IT is high in these verticals.

Analysts, however, expect Layer 3 switches and routers to sell to distinct markets. The lines are blurring as Layer 3 switches start incorporating features such as access control policies—traditionally a router feature. The number of ports has also increased. A minimum port count of 12 and more often 24 is standard, with 48 port switches being deployed in call centres. Vendors expect Layer 3 switches to drive WAN adoption among mid-sized enterprises.

Gigabit Ethernet is fast becoming a preferred option among medium enterprises. According to Anand Mehta, Manager (New Business Areas Development), D-Link India, “Fast Ethernet and Ethernet are being phased out in mid-tier organisations. They are now looking at Gigabit Ethernet to accommodate their voice, video and data transfer needs.” There are enterprises in the mid-market segment, which use a 10-Gigabit Ethernet infrastructure for high-end applications.

Structured cabling is another area where mid-sized enterprises are making huge investments. The shift from Cat 5 to Cat 6 cabling is well underway. Adds Mehta, “Cat 6 cabling with Gigabit Ethernet is the favoured solution among medium enterprises.”

Wireless picks up

While the penetration of wireless is still low among mid-sized enterprises, some of these companies are experimenting with wireless deployments. For most enterprises, the need for investing in a Wi-Fi infrastructure is directly proportional to notebook penetration. Says Chaturvedi, “We have set up a Wi-Fi infrastructure for providing wireless connectivity to mobile users.”

Vendors believe that as the cost of wireless infrastructure drops, it will drive wireless adoption among medium enterprises. Jangoo Dalal, Senior Vice-president, Enterprise and Commercial, Cisco, comments, “Mid-tier companies have shown a propensity to adopt wireless technology as there are a large number of laptop users in this space.” Enterprises in the BFSI and BPO space, which have a large set of applications deployed, have adopted wireless.

While medium-sized businesses have a robust infrastructure in place, most are not swayed by the technology hype. The trick lies in developing tailored solutions for specific sectors. For example, Cisco is adopting a sub-vertical approach in manufacturing. This includes sectors such as auto components and garment manufacturing. The company has also identified specific regions for running pilot projects. For example, in Tamil Nadu, there are four distinct clusters. Tiruchi is known for engineering equipment, Madurai for readymade garments, Chennai for auto components and Coimbatore for hosiery. Cisco is trying to understand the pain points of these companies by developing vertical-specific solutions. The vendor will also bundle in solutions such as IP-based video conferencing for specific industries along with its networking equipment in an effort to offer a superior value proposition.

With a basic network infrastructure in place, the market opportunity for vendors to market new products such as IP phones is huge. To drive adoption, vendors need to educate users about the value proposition of using new technologies.

kusum@expresscomputeronline.com