“We will offer customized as well as special offers for the SMB market, while taking into account the needs and specific requirements in each segment”

As part of its SMB expansion initiative, IBM India would focus on increasing
its footprint in the non-metro cities of India. This move, according to Ramesh
Narasimhan, will help take IBM India into the shell of all the markets they
seek-be it systems, services, software or other businesses

IBM India seems to be on an expansion spree. tell us about your 14-city
expansion plans.

Recognizing the opportunity and in an effort to leverage this unexplored
potential of the Indian SMB market, we have chalked out a 14-city expansion
plan. Under this we have already opened up operating units in Chandigarh, Cochin
(Kochi) Goa and Coimbatore. Moving ahead we are looking at

10 more launches by the end of July-August 2007. These we believe would give us
a good spread across the country.

Your have recently entered Goa and Coimbatore. So is the upcountry-SMB
market your key focus area for expansion? What are the other market segments
that you are focusing on this year?

Having established our hold in the key cities in India, we are now headed
for the SMB-rich regions, which essentially are non-metros. Since these regions
have not been justifiably explored as yet, it gives us an incredible opportunity
to pioneer market standardizations. Therefore, the increased focus for us would
definitely be on the tier-II cities.

Given that you are growing geographically in India, would you say that you
have any particular industry verticals as key focus areas? If yes, which are
they?

Yes. In India we are focusing on a variety of vertical markets such as
government, healthcare, retail, manufacturing, textile, pharmaceuticals,
construction and process industries as will give us tremendous growth
opportunity. We are looking forward to maximize it.

RameshNarsimhan Director GSMB, IBM India/South Asia

Does your expansion program also include product line expansion? If so,
what new products can we expect this year? Which market segments would they be
targeted at?

IBM with the SMB expansion initiative will help take the entire length and
breath of IBM into all the markets we plan to expand into, be it our systems,
services, software and other businesses.

However, we will look to offer customized as well as special offers for the
SMB markets, which will take into account the needs and specific requirements in
every market.

In India the markets that we have chosen are dynamic and very different from
each other. In Goa, we would look to tap the tourism, healthcare and retail
business, while in Coimbatore we are planning to focus on textile, banking and
auto market.

Globally, as well as in India, the SMB sector is showing great promise.
What are your plans for the SMB?

The Indian SMB sector is finally opening up and is readily embracing IT to
transform its business growth. The change also comes around the time when the
Indian SMB players are increasing focus on doing business with the global
markets. These evolutions call for a sound IT infrastructure enabling them to
become globally competitive.

Therefore, we will continue to grow our business both in metros and
mini-metros, and we will look to offer the best solution for every possible
vertical which is gaining momentum today. Our 'One IBM' approach envisages a
globally integrated environment where we constantly look at bringing the best
value for every client success.

Given that you are a channel- driven company, how would you involve the
channel in your initiatives-both expansion as well as SMB?

Channels have always played a crucial role in taking us to the marketplace.
We understand our channel partners, our ISVs and SIs and we work very

closely to build a strong ecosystem. Stability is our biggest differentiator and
IBM reaches closer to partners using multiple contact points. At IBM we know and
believe that partners are in the business for profit. We need to and will
continue to work together to grow and be profitable.

Are you looking at new partner sign-ups as well? What criteria would you
follow for new sign-ups? Would partner sign-ups be in metros or upcountry or
both?

With our 14-city expansion plan in progress, we are looking at a series of
partner sign-ups, mostly in mini-metros. Our deciding parameters for partners
stay constant-local market under­standing and strong customer network-skill and
product knowledge is an important parameter too. However, we usually have to
compromise on that front due to the limited IT awareness in mini-metros. To
overcome this challenge, we conduct several training programs for ISVs and local
partner's current product understanding. Our programs enable our partners to
make a better choice for the end-customer, as their role today is more than just
selling or integrating.

Your comments on the India market; Also what are the opportunities for
the channel here? How do you hope to maximize on all of it? SMBs in India
will invest close to $500 million on servers and networking hardware this year,
with two-thirds of the spending going toward network-related hardware purchases
alone. SMBs see investments in servers and connectivity as critical in the tough
Indian market; and only 14 percent of PC-owning SMBs currently deploy a local
area network (LAN). This points to a significant untapped connectivity
opportunity among SMBs.

According to a recent survey of Indian SMBs conducted by New York-based
Access Markets International (AMI) Partners, small businesses

(1-99 employees) account for a relatively smaller portion of total networking
expenditure. However, their contribution to the overall SMB spend is set to rise
in the future as they try to catch up with their larger counterparts.

According to IDC India's 2007 market predictions:

• Disruption to set in for SMB focused go-to-market strategies.
• New delivery and usage models will evolve in 2007.
• The year 2007 will mark the beginning of an aggressive focus from all
  major vendors to broaden and deepen their coverage of the SMB sector. We have
  already witnessed the launch of SMB specific products and micro-verticalized
  solutions for SMBs with special delivery through specialized partners. SMB
  offerings will witness further micro vertical customization.

We plan to maximize on the indicated opportunities through our 14-city
expansion plan.