Steve Robinson, vice-president of worldwide sales for IBM Rational Software, listens very attentively when software developers in India talk.
That is because if IBM is to achieve its stated objective of making half its profits by 2010 from software sales, it is very important to keep an ear-to-the-ground in India, which Robinson calls the 'ground zero' of software development.
That may be why the Big Blue acquired privately held Ounce Labs Inc earlier this month.
"One of the reasons for this acquisition was that application developers in India led us to it with a demand for such services," Robinson told DNA.
Ounce Labs makes software that helps companies reduce the risks and costs associated with security and compliance concerns. It will be integrated with the Rational Software business of IBM, which is targeting $1.8 billion in sales this year, up from just $700 million in 2002.
IBM Rational provides development platform to improve the speed, quality, and predictability of software projects.
"India is extremely important to us — it is the 'ground zero' of software development because of its huge developer community which spots trends much earlier and makes demands ahead of the rest of the world," Robinson said. "The trend I'm seeing is that it is continuing to go upstream where software development is concerned and will play a crucial role in IBM's growth."
Asheesh Raina, principal research analyst at technology research firm Gartner India, is not surprised at IBM's extreme focus on India in the application development (AD) space.
"India has already established its credentials as a software development giant including at a mature level of product development and frameworks for application development," he said. This means it also becomes an important staging ground for players in the AD market.
The AD market was estimated at $7.3 billion worldwide in 2008 by Gartner with big players such as IBM, Microsoft, Computer Associates, HP, Oracle and Compuware holding on to their shares. Gartner named IBM the worldwide market share leader in this space during the year with a 27.1% share, growing 7.9% as compared with the overall segment growth of 4%.
Though relatively much smaller in size, India is the favourite destination for AD tool vendors because of its large software developer community.
It is also a very important market globally for testing new AD tools. If it does not work here, it will not work anywhere, Raina said emphasising that India was the only market that grew in the Asia-Pacific last year while the rest of the world degrew.
Talking of software testing, IBM Rational has other reasons to look at India closely particularly after rival Hewlett Packard's resurgence in the space following its acquisition of leading IT management software and services company Mercury Interactive Corp in 2006 at an enterprise value of approximately $4.5 billion.
"There have been some challenges on the testing side, but three years back we decided to go aggressive in the market and launched many new tools," Robinson said.
And that trend has continued with IBM Rational kicking off 78 new products in 2008 alone including seven built with IBM Research around Jazz, a new technology platform for collaborative software delivery. This year IBM intends to refresh the entire portfolio, he said. India is also an important market to make inroads for large AD vendors as developers here use a lot of freeware tools which account for 15% of the market.
The focus on India is also not surprising considering the global slowdown has hit all vendors and the large ones such as IBM will try to acquire niche vendors as they have to add to their portfolio of products, Gartner's Raina said.
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