The distribution market for networking products, which was mainly worth Rs 687 crore during 2000-01, mainly comprised switches, structured cabling, modems, routers, NICs and hubs. Falling margins in computer hardware and peripheral business pushed many companies to look at distributing networking products apart from their traditional IT business. The competition among these companies was on two parameters—size and quality of channel network, and competencies like niche expertise and local manufacturing set-up.

Major Areas of Opportunity

• The financial sector is surely where one’s money ought to be firmly put. This conclusion is based on the previous year’s trend and some clear signs for the future. It was this sector that contributed more than a third of the networking industry’s sales during the last fiscal. And it is a fact that a large number of the projects that were implemented during the previous year are of an ongoing nature—many of which are to be extended this year. Also, this year’s budget has set the tone for this sector. It clearly spells out a decree to Indian banks to get their networking agendas and infrastructure in place.

• The government-owned BSNL is likely to spend huge amounts of money to expand its telecom network for more subscribers. In addition to this, it has been mandated to usher in a new set of services in both cities and towns. These services include wireless services like VPTs, WiLL, cellular and Internet. BSNL is also likely to upgrade the existing transmission links using new transmission technologies like DWDM and SDH. All this calls for huge investments.

• Private telecom companies are slowly rearing their heads. The year 2000-01 was the year of cabling. This year, one of lighting-up the fiber—the new network implementations are all set to happen this year. Though one cannot exactly predict the extent of deployment, the potential players are at least a handful. If this happens, there would certainly be a windfall in the service provider equipment segment.

• Government spending is another opportunity that companies need to watch out for. In light of the major slowdown in the overall economy, the government is under major pressure to spell out major infrastructure initiatives to reinvigorate the economy. Communications is likely to be a major thrust for the government.