By Dhaval Valia, CRN, December 30, 2011, 1145 hrs
“We will invest millions of dollars in India”
Alexander Chachava, President of the Moscow-headquartered Leta Group, the holding company of ESS Distribution, was recently in India to meet customers and partners. He spoke to Dhaval Valia about Eset’s business in the country
Where does India fit into Eset’s overall global strategy?
Globally, Eset has emerged as the fastest-growing antivirus (AV) company. Our worldwide revenue stood at $300 million in 2010, up from a turnover of $50 million in 2005. The US, Japan and Russia are our biggest markets, contributing over 60 percent of our total business.
For us India is a strategic market for multiple reasons—it is one of the fastest-growing GDPs with 7-8 percent annual growth, it has a billion-plus population and it has a large SMB ecosystem.
From an end-point security perspective, it is a market that is highly under-penetrated. Globally, the SMB and consumer markets contribute 80 percent to our topline and hence India logically becomes a key growth market for us. That is why we established a subsidiary presence in India in 2007. Since then we have seen more than 100 percent growth.
Looking at this performance and the future potential we have decided to invest heavily in the Indian market over the next five years. While I cannot put an exact number to the investment, I can easily say that our investment in Eset India will be at least in the range of a couple of million, if not more.
On my current visit, along with my India team, I have finalized the expansion plan for India for 2012. This includes increasing the size of the technical pre-sales and support teams in every region, doubling our channel sales team, and opening offices in Delhi, Bengaluru or Hyderabad.
How big is the Indian AV market, and what is the market share you envisage for Eset?
Our estimate for the Indian AV market is around Rs 1,000 crore per year. Of this consumers and SOHOs contribute 25 percent while SMBs, corporates and the government contribute 75 percent.
This market has the potential to grow by at least 30 percent CAGR because the Indian end-point market is highly under-penetrated while awareness about the need for PC security is on the rise.
In India Eset has a large active installed base of close to 25 lakh nodes; this figure includes pirated software. In terms of licensed end-points, our share is in the range of 4-5 percent. The opportunity, and also the challenge, is to convert the pirated copies to licenses because many of these customers have been using our products for more than 5-6 years. The fact that they are actively using it and updating their Eset antivirus regularly proves that they are satisfied with our products.
Another interesting fact which endorses the quality and technology edge of our products is that our renewal ratio in India and globally is 85 percent—the highest in the AV segment.
I have set the India team the target of achieving 10 percent market share by the end of 2013.
So what are the growth priorities you have set for the India team?
SMBs will continue to be our focus in India. We are seeing more acceptance of the Eset brand in the SMB segment because of our focused approach to this market and because technology-wise we are ahead of our competition.
In the past couple of years we have signed many large deals of 500-1,000 nodes with mid-market organizations such as Southern Power Distribution Company, BITS Pilani, SA Engineering College, Global Academy of Technology, Kal Publications and Century Communications. The future funnel looks good as well.
With customer adoption of Eset increasing, we are also seeing more partners interested in selling our products.
The second priority for us is mobile security. With growing numbers of smartphones and tablets, India is ripe for mobile security products. We already have a product supporting the Windows Mobile, Symbian and Android platforms.
Does this mean you are not interested in the consumer market?
I wouldn’t say we aren’t targeting the consumer market, but to put it aptly I would say we are working to create awareness and mindshare in the consumer segment.
The problem with the consumer market in India is that it’s very fragmented and cut-throat. There are more than 20 AV players, with some selling their products at Rs 100.
Eset will never sell products at such prices because we believe we have cutting-edge AV products and we are proud of our R&D.
Right now our focus is on educating customers to differentiate between Rs 100 AV and our AV, and demonstrating to them how technologically-superior our product is. For instance, we recently conducted a 6-day road-show in Mumbai where we interacted with more than 10,000 people to educate them on why they should invest in the right AV.
We plan to work closely with Nasscom and DSCI, and conduct special programs on cyber security for children, government officers and law enforcement agencies.
We recently tied up with several R&D organizations in India which specialize in IT security, Internet frauds and cyber forensics. We’ll conduct research and studies on existing and potential cyber threats in India.
You are the head of the Leta Group which has, apart from Eset, several ventures in the IT and allied sectors. Are you looking at having a bigger presence for the group? Are you eying any acquisitions?
The Leta Group has several other companies for which India can be a strategic market. For instance, we have a company that specializes in providing cyber forensics; we are market leaders in this segment in Russia. Cyber forensics is one area that is going to be big because the nature of cyber threats has become more sophisticated and complex. After the recent cyber threats to Indian online assets, I am sure the Indian government and the defense sector are looking to beef up their cyber security.
Some of the Russian companies specializing in nanotechnology and solar energy are planning to build data centers in India. Moreover, Russian satellite navigation player NIS Glonass is about to start operations in Mumbai. We have collaborations with these companies in Russia, and are therefore discussing with them various areas for collaboration and investment in India. |