Financial Daily from THE HINDU group of publications
Monday, May 24, 2004
Info-Tech - Hardware
Parting of ways
Two corporates both alike in distinction
In fair Bangalore where we lay our scene
From old friendships to new action
Where software makes the competition keen
From forth the ventures of the two friends
A pair of business plans emerge well crafted
As computing and technology set the trends
Here's where their paths meet and are parted...
with apologies to Shakespeare... and his fans.
MELODRAMATIC it may sound, but it takes courage, guts and even a smattering of India-championship to lead two Bangalore companies on paths not taken. Both PicoPeta Simputers and Ittiam Systems have the vision, the tech savvy and the pedigree to achieve their missions. eWorld was interested in their differing approaches to their goals. Here is what they have to say about themselves.
Srini Rajam, CEO, Ittiam Systems, and the Simputer co-inventor and PicoPeta CEO, Dr Swami Manohar, were classmates from their days at the Indian Institute of Science, Bangalore. If technology companies drew Srini, the academic life beckoned Dr Swami Manohar and co-inventor Dr V. Vinay. Unlike the feuds that divided Shakespeare's households, however, Manohar and Rajam are still friends. When Rajam set up Ittiam Systems with a group of former Texas Instruments executives in 2001, PicoPeta (a licensee of that computing device for the masses, the Simputer) had been voted among the seven hottest start-ups in the world by the Massachusetts Institute of Technology.
Ittiam is focussed on a licensing model and has recently announced profitable operations in the three years since its inception. The company closed the year 2003-04 with a million dollars in net profits. "As the years go by, royalties will be an increasing component of our revenue model," says Rajam. PicoPeta Simputers has recently launched the Amida Simputer for the retail market and is planning a national rollout during the year, while also hoping to sell to the enterprise segment through its alliance with BEL, which also manufactures the sleek Simputer. PicoPeta has adopted a product company model since its Amida Simputer was launched less than two months ago. Amida is planned as the global brand for the Simputer licensed by PicoPeta from the non-profit Simputer Trust. Earlier, PicoPeta discovered that it was just not enough to build a revolutionary technology product; and it had to write application software that could be run on the Amida.
It has now identified some industry verticals that would benefit by using the Simputer and is encouraging a network of smaller companies and developers to develop applications for them.
The Amida Simputer is Linux-based with two USB ports. It has a 2006 MHz processor, 32-MB RAM permanent storage, flip-flop motion sensor, infrared port, built-in speakers and microphones and smart card. The Amida lets you send e-mail, surf, and has an MP3 player, Photo Album, some games (bowling, break out, chess...), Movie Player, note-taking software, Voice Recorder, Calendar, World Clock, Conversion Calculator, Address Book and even a panchangam or almanac in the current version.
A built-in camera and other additional features are expected to be added on to its list of features..
Ittiam is focussed on DSP (Digital Signal Processing) in the multimedia and communications space that it licenses to original equipment manufacturers (OEMs) and semiconductor companies on a licensing and royalty model. "A number of our customers' products have recently come into the mass market," says Rajam, adding that royalty revenues for Ittiam will start rising steadily until it accounts for 25 per cent of the total revenue by 2008.
"By creating and controlling the intellectual property and entering into non-exclusive licensing agreements with OEM and silicon companies, our technology will achieve greater penetration into various products and markets," Rajam says.
DSP systems are the core of new-age devices from mobile phones, digital modems, MP3 players, digital still cameras and palm-tops to high-end disk drivers etc, says Rajam. With DSP systems now becoming a pervasive technology, he adds that his model lets him get his technologies in products fast, cater to new and emerging requirements, and also tap into current and new trends.
"Were I to sell an Ittiam box, I would have to enter into manufacturing agreements and sustain three to five times the branding and marketing costs I do currently." Ittiam prefers to make its money on the licensing royalty model. Ittiam's technologies find their way into videoconference equipment, digital video players and digital camcorders.
Its V.92 modem chipset is getting into high-volume production now and its WLAN technology has about 10 licensees since its launch, whereas PicoPeta Simputers has only sold a few hundred Amidas since its launch.
On whether PicoPeta has any plans to license its software and technology, Dr Manohar is emphatic that the company has no such plans.
"Though India is reputed for software prowess, we have held to the dream that we can build a world-class product company right here. We are determined to have the Amida Simputer as a brand," he says.
That means the Amida brand will be on every Simputer and despite that being a sub-optimal revenue model in the short-term, Dr Manohar is confident it will yield rich dividends in the long run.
PicoPeta has tied up with the low-profile public sector BEL to make the products in India. Further manufacturing and distribution tie-ups will happen in different geographies. But the plans are for a test-marketing phase in Bangalore and further launches in metros later in the year.
"We are in this for the long haul and are targeting the populace without access to computing with this product," says Dr Manohar.
That is not to say the Amida Simputer is aiming to bridge the economic divide, although the lowest-priced one costs less than Rs 10,000. "It is the digital divide that we want to bridge: A number of people without access to computing can now have that access.
Since the Amida is built to serve people and applications that could be using a server-client model, its computing capabilities will be more than adequate for the applications we foresee," he says.
"This device also opens up the field for new and innovative applications to be written around it," says Dr Manohar. With a sales target of about 50,000 Amidas this year, the company is targeting a turnover between Rs 75 crore and Rs 125 crore. But from there to reaching mass market numbers is a long haul, needing investments, brand building, time and effort.
Picture by Shaju John
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