INTEL PLANS TO CAPITALISE ON INDIAN DEMAND PERSONAL COMPUTERS

By Khozem Merchant, Financial Times (London, England), June 6, 2005

Intel has announced plans to target India's rising demand for personal computers, marking a strategic step up in a country that has mostly been a source for offshore technology skills for the world's largest manufacturer of micro-processors.

The US company's expansion in India comes as lower broadband costs and reduced duties on computer hardware have boosted the domestic market, a traditional minnow compared with India's booming export-driven technology services sector.

Encouraged by these developments, Intel will develop computing platforms for the Indian market. The new products will be based on Intel's existing technologies and should be ready for launch within 12-18 months.

To support its determination to capture a share of the fast-growing computer products market, Intel has also signed partnerships with several banks, including the Small Industries and Development Bank of India (SIDBI), the largest lender to small and medium businesses.

The aim was to "ensure affordable financing and technology know-how reaches potentially the largest community of new computer users," said Mr N Balasubramanian, SIDBI's chairman.

In spite of recent strong growth, only nine out of every 1,000 people in India possess a computer, in contrast to China where ownership is five times greater. Only 18 per cent of India's 8m small and medium sized businesses own a computer.

"This is about reaching the next 1bn users, the bulk of which we believe will come from India and China," said Mr Ketan Sampat, president of Intel's Indian unit.

Intel has begun hiring for its "platform definition centre" in Bangalore, which will develop the new products. Customised features will include energy efficient components to reflect the high cost and poor access to power in rural India.

The India initiative - simi lar schemes have been launched in Brazil and Egypt - will be based in Bangalore, where Intel's 2,500 engineers are helping to design the next wave of server micro-processors and chips for notebooks.

Mr Sampat said he hoped the new Indian product range would "contribute significantly to Intel" in terms of sales, though he declined to say by how much. Intel's revenues and unit sales last year in India expanded by about 40 per cent.

India's domestic IT services market, which excludes hardware, grew 24 per cent in the year to March.