Bill Gates is one of the living legends I was fortunate enough to meet, thanks to HCL Infosystems’ strong relationships with global giants such as Microsoft, Intel and Apple. It also gave me the opportunity to work with and learn from some brilliant people. From 1997 onwards, Bill Gates became a regular visitor to India. Given the strength of our partnership, I had the opportunity to meet him several times. But I will never forget that first encounter, a quarter-century ago.
I could see why he is often described as an INTP-type personality—Introverted, iNtuitive, Thinking, Perceiving. He appears to be driven by logic, constantly asking why. This is not to say he comes across as coldly calculating; quite the reverse. He is warm and friendly, albeit compulsively inquisitive.
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It wasn’t hard to be charmed by Bill. Here was the world’s second-richest man (beaten to the top spot only by the Sultan of Brunei) and leading celebrity genius, sublimely unconscious of the prevailing Billmania, and endearingly nerdy. I found him courteous and easy-going, and of course, insatiably curious about India and its IT ecosystem.
He saw the potential of India, much like General Electric boss Jack Welch, who set the stage for the BPO revolution with the first in-house back office (GECIS, later Genpact). Gates observed that India had the capacity to ‘be a leader in the digital economy of the twenty-first century’ and a ‘software superpower’, with the right infrastructure. This was long before India had emerged as a leading software exporter.
HCL’s relationship with Microsoft went back a long way. Both companies had been launched at around the same time. Even as we were setting up HCL’s precursor, Microcomp, Bill Gates and Paul Allen had come up with their maiden product, the Altair BASIC interpreter.
In 1980, IBM contracted Microsoft to create an operating system (OS) for their open architecture-based PC. Microsoft had accepted the contract and while it did not have an OS in the works, it bought the 86-DOS from Seattle Computer Products and branded it as MS-DOS (IBM rebranded it as PC DOS, but it was licenced to other manufacturers as MS-DOS). The IBM PC became the industry standard, and Microsoft the leading OS vendor.
Meanwhile, HCL had launched its 8-bit microcomputer and set up Far East Computers in Singapore. In the early days, we designed everything from the ground up: hardware and software, including the OS and the interpreter and compiler (which translate programming language into machine code). We had no option, given the import curbs that were in place. Along came Rajiv Gandhi and liberalized the production and import of computers and other electronics.
This revolutionary step led us to Taiwan, where IBM lookalikes were manufactured on a large scale, bundled with MS-DOS.
An HCL team landed in Singapore with the mandate to procure a PC and launch it in India in three weeks. I was closely involved in facilitating a tie-up in Taiwan. The machines were reverse-engineered, manufactured and marketed under the Busybee brand, and were wildly successful. By 1986, HCL was the largest computer manufacturer in India, so Microsoft approached us in that year with a view to a partnership. It wanted to break into the Indian market, but realized that no one was actually paying for the OS. Nobody paid for software in those days. Unlike in the US, software piracy was an unheard-of concept; everyone copied. HCL led the effort with the Department of Electronics to collectively negotiate a price for the Indian market. By that time, the demand for a graphic user interface had led to Windows, similar to the Apple OS, which was in turn inspired by the Xerox Alto. The early versions were clunky, with endless updates, but improved over time.
HCL was, thus, Microsoft’s interface with the Indian IT industry. A turning point came when we were challenged by Pertech Computers (PCL), who outsold us in the PC segment by the simple expedient of pricing their products cheaper. To counter PCL with an even cheaper product, we created a team tasked with sourcing components from manufacturers at rates that would allow us to achieve the desired price point. After a month of intense bargaining, we pulled it off vis-à-vis the hardware. But we also needed Microsoft to licence its software to us at a lower price, even if that meant an older version. We explained our rationale. The Indian PC market was poised to grow, with prices of hardware falling progressively owing to increasing global volumes. But the penetration of legal OS in the home and SOHO (small office, home office) segment was virtually nil because of Microsoft’s high pricing. While anti-piracy measures may have been effective in the West, in India they were virtually unimplementable.
HCL’s strategy in this scenario was to work on a very thin margin to sharply increase PC penetration. We were ready to bundle Windows with every PC provided they dropped their prices by 30 per cent. We also told them that with the launch of a non-Intel CPU-based PC, we would achieve the desired price point.
‘No’ was the unequivocal response from Microsoft. After research, we determined that we could always opt for Linux. In 1991, Linus Torvalds had released the Linux kernel, and an OS could be built around it. Being open-source, it was free. I decided to give Microsoft a last chance. After all, a new OS was a risky proposition and besides, we valued our relationship with Microsoft. I invited a team over and gave them our number. Microsoft obviously had to respond. ‘We’ll have to talk to Redmond. We’ll try and find a solution,’ the team members said.
I was confident of my assessment, which was based on the fact that they had as much to gain from the deal as we did.
Microsoft came around, and gave us a solution. Sure enough, the deal turned out to be a win-win. We lowered our price to ₹19,990 and sold a lot more PCs, to our mutual advantage.
PCL had played on the strategy of taking full advance payment from customers at attractive pricing, offering them two to three months of delivery time. We took them head-on by not only beating their pricing, but providing a legal Microsoft operating system and ex-stock delivery. It pretty much decimated PCL’s business. Incidentally, in 2003, we became the first company to sell 100,000 PCs. HCL then went on to create a PC revolution in India.
I’m sure Bill Gates was aware of it, because his regular visits to India were typically preceded by meticulous research and second-by-second planning. We were Microsoft’s largest buyers, so HCL was his first stop in India. I enjoyed our chats over coffee, usually at the business centre at the Maurya Sheraton, where Microsoft—keeping the security of one of the world’s richest men in view—would hire a whole floor.
During one of our meetings, I joked that he owed HCL a debt, because a former employee of ours was heading a division at Microsoft. He took it in good spirit, being a great believer in India’s capacity to breed global talent.
Excerpted with permission of HarperCollins India from Just Aspire: Notes On Technology, Entrepreneurship And The Future, by Ajai Chowdhry, Harper Business.
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