ACKNOWLEDGMENTS

The contribution of Openmainframe.org and Indicus Analytics in instigating and shaping this

report is gratefully acknowledged. We thank Bibek Debroy, Jeff Gould, Laveesh Bhandari, Mahesh

Uppal, Payal Malik, Rajiv Kumar, Ramrao Mundhe and S.L. Rao for their comments and advice at

various stages of the study. To Anubhab Gupta who was an able colleague and willing worker

during the initial stages of the study, we owe a debt of gratitude. R V Anuradha and Jitesh Vohra

were both generous with their time and vast knowledge of the sector. The assistance of both

Tekplus in conducting the primary survey and Gartner for providing us with data and resolving

technical queries are deeply appreciated. We also thank all the organizations that never flinched

at our demand for data and interviews despite other exigencies. The report would not have

achieved its current form without the able and expert assistance of Anil Gupta. We are deeply

indebted to him. The usual disclaimer applies.

The Issues of Competition in Mainframe and Associated Services in India

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The Issues of Competition in Mainframe and Associated Services in India

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ADVISORY COMMITTEE MEMBERS

S L Rao

Bibek Debroy

Mahesh Uppal

Rajat Kathuria

Subhasis Bera

Shikha Gupta

Mamta

Raj Kumar Shahi

RESEARCH TEAM

The Issues of Competition in Mainframe and Associated Services in India

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CONTENTS

Acknowledgments................................................................................................................................................................................ i

Forewords .............................................................................................................................................................................................. ix

Abstract .................................................................................................................................................................................................. xi

Executive Summary.......................................................................................................................................................................... xiii

I. Introduction....................................................................................................................................................................................... 1

II. Developing a Framework for Analysis ....................................................................................................................................... 3

III. Coming to grips with the relevant market from the Supply and Demand Side........................................................... 6

IV. Indian Server Market: Prospects................................................................................................................................................. 8

V. Structure of the Server Market in India and APAC............................................................................................................... 11

VI. Primary Survey: Results .............................................................................................................................................................. 17

VII. Analysis of Competition in the High-end Server Market in India: Is it Adequate?.................................................. 24

VIII. Abuse of Dominance in the Presence of Network Effects and High Switching Costs ........................................... 27

IX. Conclusion: Future Market Development, Competition Policy and role of CCI....................................................... 32

Bibliography........................................................................................................................................................................................ 39

Annex I................................................................................................................................................................................................... 42

Annex II.................................................................................................................................................................................................. 43

Annex III................................................................................................................................................................................................. 44

Annex IV ................................................................................................................................................................................................ 45

Annex V ................................................................................................................................................................................................. 46

Annex VI ................................................................................................................................................................................................ 51

Annex VII ............................................................................................................................................................................................... 52

Annex VIII .............................................................................................................................................................................................. 54

Annex IX ................................................................................................................................................................................................ 56

Annex X ................................................................................................................................................................................................. 59

Annex XI ................................................................................................................................................................................................ 68

Annex XII ............................................................................................................................................................................................... 75

Annex XIII.............................................................................................................................................................................................. 76

Annex XIV ............................................................................................................................................................................................. 77

Annex XV............................................................................................................................................................................................... 79

Annex XVI ............................................................................................................................................................................................. 80

Annex XVII ............................................................................................................................................................................................ 81

Annex XVIII ........................................................................................................................................................................................... 82

Annex XIX ............................................................................................................................................................................................. 84

Annex XX............................................................................................................................................................................................... 86

Annex XXI ............................................................................................................................................................................................. 87

Annex XXII ........................................................................................................................................................................................... 88

The Issues of Competition in Mainframe and Associated Services in India

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LIST OF TABLES

Table 1: Taxonomy of the market based on selling Price ........................................................................................................... 6

Table 2: Total ICT Expenditure US $Million, Asia Pacific .......................................................................................................... 8

Table 3: Revenue and Shipment growth for Asia Pacific ........................................................................................................ 9

Table 4: Share of Mainframe in IBM's Total Revenue for India, China and APAC ......................................................... 12

Table 5: HHI for Asia Pacific (APAC) by Vendor Revenue ...................................................................................................... 12

Table 6: HHI for Asia Pacific (APAC) by Shipment.................................................................................................................... 12

Table 7: Percentage Share of Operating System by Vendor in the High-end Market by

Shipment ............................................................................................................................................................................. 16

Table 8: Extent of Competition in the three segments......................................................................................................... 18

Table 9: Intensity of competition in the submarkets............................................................................................................. 18

Table 10: Mainframe Clients added in 2008 in India ............................................................................................................. 20

Table 11: Vendors providing servers to the organization.................................................................................................... 21

Table 12: Main Uses of Server infrastructure............................................................................................................................ 21

Table 13: Predominant Server Architecture used by Organization................................................................................... 22

Table 14: Operating Systems running on the Servers........................................................................................................... 22

Table 15: Frequency of Upgrading / Replacement of Existing Server Infrastructure ................................................ 22

Table 16: Server Infrastructure used to Run Mission-Critical Data ................................................................................... 23

Table 17: Market Shares in the High-end Segment ............................................................................................................... 24

Table 18: R&D and Advertising for the Big Three.................................................................................................................... 25

Table 19: Sources of Market Power for Microsoft and IBM.................................................................................................. 29

Table 20: Sector-Specific Policy for FDI in India....................................................................................................................... 32

Table 21: Average Prices of Mainframes and Superdome in India and China................................................................34

The Issues of Competition in Mainframe and Associated Services in India

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