Transformation of the system

Undeterred by the declining share of white-box PCs,

leading systems builders are innovating to develop
indigenous purpose built appliances that  promise to have a
much wider market       

 By Ramdas S

The market dynamics over the past several years is slowly and
steadily creating a lost tribe—system builders, better known as
assemblers. According to Gartner, at the beginning of the last
decade the assembler market share was over 70 percent, but in
the end of the decade it was hovering around 35-40 percent.
Over the last decade thousands of white PC makers across the country have abandoned the
business, have taken to reselling branded PCs, or moved to other forms of business. The most
common explanation given by these partners is that with the price difference between a branded
MNC PC and a white PC coming down, the customers would prefer to buy a branded MNC PC.

“These days I have cases where, on some large servers, Dell has offered me prices that are
cheaper than the best I can get out of my OEM suppliers of building blocks,” says Sunil Kumar,
CEO of Lampo Computers.
Observes Diptarup Charkraborti, Principal Analyst, Gartner India, “Over the past decade or so,
MNC PC brands have done extremely well in investing in channels and promotions, and
definitely their more aggressive pricing has also helped. At the same time, system builders have
also taken the easier route to reselling, and that’s making sense. The fact that the white notebook
PC market never took off has also not helped system builders because the market notebook
market continues to grow as compared to the desktop market.”
Nevertheless, there are a number of white box PC makers who are simply not giving up. Instead
of becoming another cog in the wheel, they want to become the wheel itself. They are creating
products that can help them differentiate themselves from rest of the crowd, and even make them
look and perform better than the best that an HP, Dell or EMC dishes out.
These products range from embedded devices, thin clients, security and network appliances, PCs
of small form factors, blade servers, 3D notebooks, and NAS and SAN solutions. Their
principals are also doing their bit. Vendors such as Intel, AMD, Nvidia and Via also matches
them with the right ODM and OEM suppliers, and helps the partners create niche product and
solutions “Intel works with key Indian partners in enabling them to build appliances here in
India,” says Rajesh Gupta, Director, Intel India. “Enabling includes early samples, match-making
with ODMs outside, expert support, and validation support from the Intel development center.
Then there’s a go-to-market plan for taking it to the market.”
Here are the systems builders that are leading the way in product innovations.

Connoisseur Electronics

Bengaluru-based Connoisseur Electronics has stayed focused on system building since 1991.
“We started looking beyond the traditional desktop and server market once we figured out that to
stay alive against stiff competition on price by MNC vendors you need to create innovative
products,” explains Harish Kumar RP, CEO of Connoisseur.

Over the past decade, Connoisseur has ventured into creating specific products to address
specific situations. “Initially the idea was to deliver products on a project basis or as a solution
for a specific customer. However, we soon realized that we needed a more holistic approach and
started building products that had a wider market,” says Kumar. “Moreover, we did not want to
compete on price alone, and the focus was to build products with features that the competition
could not boast of.”

At first Connoisseur was focused more on the Intel Premier Provider (IPP) Program, where IPP
partners were trained to build servers and storage solutions using building blocks supplied by
Intel. Later, the company also signed on with Nvidia to focus on the Nvidia Tesla-based desktop
super computers besides high-end gaming notebooks. “In 2008, we released a notebook which
was adjudged at that time by an independent media company as the fastest notebook in the
world. We were also the first to launch the Tesla-based desktop supercomputer,” adds Kumar.

Meanwhile, the company also designed and delivered a car PC based on the Intel Atom platform
to a US-based vendor. Another OEM execution was for the Indian Railways, for whom
Connoisseur developed an information kiosk. However, Kumar clarified that there are no plans
for building products based on such solutions.

Connoisseur is all set to launch a number of products that Kumar says will be much cheaper than
the best offered by the competition. After once again being ahead of the MNC brands in
launching 3D desktops and notebooks based on the Nvidia 3D vision platform, Connoisseur is all
set to launch an all-in-one (AIO) with a touch-screen and 3D vision.

“At Rs 25,000, which is cheaper than all brands that sell regular AIOs, we are providing you
with an AIO with touch-screen and 3D vision. This is the cheapest product in its class, and also
ships with a wireless keyboard and mouse,” he adds.
The company has also launched a tablet netbook which Kumar describes as the cheapest tablet in
the world. “At Rs 22,500, we offer a totally rugged tablet PC with a 10-inch screen. You cannot
get a cheaper tablet in the market.”

Connoisseur is also set to launch a campaign called Go Small, Go Green, focused on nettops and
netbooks. “Considering the current power situation in the country, and the environment
friendliness of customers, we are launching a series of nettops and netbooks which consume just
20W of power. Both Intel and Nvidia have supported us in finding the right ODMs, and we have
just launched a nettop model that could be the thinnest in the market.”

The company spends around $20,000 every quarter on R&D, a majority of which is spent in
creating demo products and ODM interfacing, and for dedicated manpower.
While at present the company is selling directly, Kumar is toying with the idea of approaching
peers in the industry. “We are also thinking of white labeling our products so that channel
partners can brand them as their own.”

 
Enjay Network Solutions

The Rs 4.5 crore Vapi-based Enjay Network Solutions has stayed focused on thin clients since
1998. While during the first four years the company was selling only boot ROM-powered
Network Interface Cards (NICs) to create diskless nodes, Enjay later started building its own thin
clients. “The hardware is imported and we embed a firmware based on Linux. Our product is
fairly indigenous that way, and today we are selling close to 40,000 thin client units and over
200,000 NICs a year,” reveals Limesh Parekh, CEO, Enjay.
Over the last couple of years, the vendor has started leveraging its strengths in open source to
create devices such as NAS, firewalls, VPN gateways and kiosks.

 
“We have a strong open source skill set, and we have now started shipping our products in
storage, security and networking. Plans are also on to look at other areas.
The idea is to bring into the SMB space some of the products and solutions that so far have only
been used by enterprises,” explains Parekh.

“Market conditions in India are quite conducive for the thin client business, and we have
competition from vendors such as Wyse and Ncomputing,” says Parekh. “We see Ncomputing
strong in the entry-level thin client market, and Wyse in the higher end. We take a middle path,
and have been successful in the SMB and education space.”

The company addresses the market through channel partners across the country, and Parekh says
that most of the country is covered through distributors and stockists.
Enjay is a Microsoft Embedded partner and a Redhat Enterprise partner. The vendor also has
relations with Intel and AMD. “We are now shipping thin clients using the AMD Geode
processor. We also have strong relations with Intel, and have started shipping products on Atom
processors,” Parekh adds.

Enjay is betting on its 17-member R&D and support team to help it come out with more
products. “We have several new products for specific verticals in mind, but it’s a little too early
to announce them. We have recently started shipping products for the global market, which I
believe is a huge achievement for a company like ours operating from a small town like Vapi.”

Vardhman Technologies

The Rs 20 crore Mumbai-based Vardhman Technologies is yet another company trying to make
a difference. In business for over 13 years, Vardhaman focuses on four areas: small form factor
PCs, point of sale PCs, digital signage and thin clients.
“Today, we are actually three companies,” explains Amit Rambhia, CEO, Vardhman
Technologies. “Vardhman is the flagship company and is focused on manufacturing with a plant
in Daman. We are soon to start a new plant in Bhiwandi. Then there’s Panache Technologies,
which is our services arm. Panache is also the brand under which our products are shipped.
Finally, there’s Aditya Technologies, a company we have recently launched. Aditya will do
consulting, R&D and ODM on our behalf.”

Three years ago Vardhman had bagged a large order from Gigabyte for manufacturing thin
clients. While the relationship no longer exists, the contract gave the Intel partner a lot of
confidence to venture into new areas of manufacturing.
One of Panache’ major breakthroughs has been shipping a PC the size of a palm. “I believe this
was the smallest PC based on Intel Atom architecture at that time anywhere in the world. It was
precisely the size of a BlackBerry device.”

Rambhia says that the Intel Atom processor has been a boon to manufacturers like Vardhman.
“Atom comes in several flavors, and the types of devices are just left to our imagination. We
have recently launched a car infotainment solution based on the Atom. We are also planning to
launch tablet-like devices, which we plan to call Slate, which will also be aggressively priced.”

Vardhman is a partner of Microsoft for the Embedded Windows platform, and of Novell for the
Suse Linux Appliance program.
Other plans include creating an appliance to run Tally, which Rambhia says the vendor will very
soon announce.
Rambhia also informs that the vendor is planning to invest more in its consulting arm, Aditya
Technologies. “We now want to be an ODM, and not wait for designs to come from Taiwan or
US. We’d like to use India as a manufacturing base.”

Netweb Technologies
Delhi-headquartered, Rs 60 crore Netweb Technologies started off in 1991 as a sub-distributor,
then about six ago ago it gave up distribution to set up a manufacturing plant for its high-end
server and storage solutions. With alliances with Super Micro, Intel, AMD, ScaleMP and others,
Netweb created a brand called Tyrone that boasts of clients like IISC, IIT-Kharagpur, IISCR and
TV9.

One of the biggest focuses of Netweb is on server clusters for high performance computing
(HPC). “We have the largest number of installations of HPCs in the country,” states Sandeep
Lodha, Director, Netweb.
Lodha also says that Netweb was the first vendor—ahead of even EMC, IBM and HP—to launch
a SAN box with InfiniBand Interconnect. “We also believe we were the earliest to offer a storage
product that had SAN, NAS and VTL in one box, and supported InfiniBand, FC, 10G and
Gigabit in any combination or AIO in a box that scales to 384TB.”

Netweb has invested close to Rs 20 crore in the business over the past six years, including a plant
at Parwanoo in Himachal Pradesh. “We have a product engineering group in Delhi consisting of
25 engineers. The software which runs our storage and HPC solutions is mostly developed in-
house,” informs Lodha.

New Era Technologies

Founded in 2001, the Rs 15 crore Mumbai-based New Era Technologies has been an Intel IPP
partner focused on server and storage solutions. Like Netweb, New Era has also forged strong
relationships with Super Micro to create unified storage solutions and blade servers.

“Today, we have a unified storage solution that’s almost 40-50 percent cheaper than comparable
products from a NetApp or an EMC. Apart from support from vendors such as Intel, we have
made considerable investments in R&D to build these products, and we have close to 15
engineers dedicated to building these products,” informs Dinesh Ochani, MD of New Era.

New Era also has also a partnership with Scalarc, a services vendor, and they have launched a
product called OpenFiler. “The box delivers more than 3Gbps of storage throughput to your
applications over NFS, CIFS, FTP, HTTP or even iSCSI. It’s a perfect foundation for your
VMware infrastructure, or as a massively reliable File Server within your network. It supports
point-in-time snapshots for easy restore too,” adds Ochani.

Also being offered is Megawall NX, a stateful packet inspection firewall with advanced key-
based OpenVPN (an open source VPN software) support for VPN users. “These solutions are
ready, and we’ll soon ship them. Megawall also supports Web caching and URL filtering to
ensure that your bandwidth is used effectively.”

Sai Infosystems

The Rs 440 crore Ahmedabad-based Sai Infosystems was the first vendor to strike a relationship
with leading thin client technology vendor NComputing to manufacture their microcontroller-
based thin clients under its brand. The company has also set up a plant at Kandla in Gujarat from
where it has been exporting servers and small form factor PCs. The vendor was also one of the
first to ship integrated AIO PCs for the enterprise market.

 
“Our plant in Kandla has been shipping products to the Middle East and Africa since the past
three quarters,” informs Vijay Mandora, Director, Sai.
Intel’s leading white-box partner, Sai has already assembled a wide range of server products
including blades. Sai also says it has exported in excess of Rs 40 crore worth of servers and PCs
over the past year.

Conclusion
There are several other partners, such as Delhi-based Spectra Technologies and Bengaluru-based
Digital Waves, which are trying to build what they describe as “productized solutions,” and are
looking forward to take their products to the market. Then there are vendors such as the Delhi-
based iProf Learning which has introduced a tablet PC at Rs 14,990 and targeted at the education
market. Yet another example is the Simputer, designed by the Bengaluru-based Simputer Trust,
and manufactured, among others, by PicoPeta Computers.

While most of these home-grown vendors are going direct, all of them would like help from the
rest of the channels to help them achieve their targets and grow the market. “The response from
the rest of the channels has not been exciting so far, but we hope they will soon change their
mindset,” says Lodha of Netweb.