A well-respected economic policy think tank will approach the newly set up Competition Commission to break up the software-hardware nexus in the $500 million Indian server market.
The Indian Council for Research on International Economic Relations (Icrier), which brought out a 88-page report on the subject on Thursday, will make a presentation in front of the Commission in the coming days, said Icrier professor Rajat Kathuria.
India is expected to spend billions of dollars on its IT infrastructure build-out in the coming years, most of it in the form of corporate servers.
Icrier is calling for establishing a level playing field and fair competition ahead of the build out. "The server market in India is going to grow at 10% or more for the next 10 years," Kathuria said.
"A lot of government projects, such as the unique ID project, subsidy targeting project and crime record digitisation project are going to be implemented," he pointed out.
Servers are high-power computers that are typically used for dealing with very high volumes of data, such as in web hosting, corporate back-ends, banking and finance etc.
Unlike normal computers, servers, especially the mid to high end ones tend to come in a hardware-software combination. Some of the best high-end server operating system, like the UNIX operating systems of HP, IBM and Sun cannot be run on hardware other than those supplied by the respective company.
"This is like Microsoft saying that if you want to run Windows, you have to buy your PC from us and we will charge you ten times the normal market rate for it," said Jeff Gould, CEO of Peerstone Research, who supported the Icrier report.
"The ten times figure is not an exaggeration, because that is what most of these server companies charge for their hardware, when compared to similar hardware you can buy from the market," Gould added.
The problem is more acute in the mid and high end segments as they typically use special processors, such as IBM's Power or Sun's Sparc chips.
The most popular operating system, however, does not run on these processors. The Unix-based operating systems that do, however, are not licensed out by IBM, Sun and HP to others like Dell.
As a result, Dell, known for its low-cost servers based on the normal x86 chips, has lagged IBM and HP at the number three position. The situation has resulted in the high end server market in India being parcelled out between only three players -- HP, IBM and Sun.
"It is in India's interest to have open systems.. The high end server market in India is an oligopoly of a few American corporations," Gould said.
India, accounting for 5% of the global sales is emerging as the fastest growing destination for servers worldwide along with China. According to Gartner, Asia Pacific grew the fastest in worldwide shipments of servers in the final quarter of 2009, registering a nearly 20% jump over the previous year, compared to 4.5% for the world as a whole.
The newly set up Competition Commission of India has the power to order companies to change their selling practices, including the possibility of forcing companies to 'unbundle' their products.
The Commission, however, is yet to make any big judgements after being set up a few months ago.
Comments