S Kalyana Ramanathan / London November 03, 2009
For just about Rs 120 a month, you can now access the online version of Microsoft’s Office ’07. Thanks to ‘cloud computing’ company Nivio, it is now possible to rent MS Office for a fraction of its shelf cost and use it at the click of an icon without having the memory-guzzling software residing in your computer. And, it’s completely legal.
Nivio, a four-year-old Swiss technology company promoted by Sachin Duggal, 26, and his partner, Saurabh Dhoot, 25 (of the Videocon family), provides storage and rent-a-software service to over 2.5 million online customers around the world.
Duggal belives the potential for the rent-a-software business in India is enormous, given the rampant piracy in the country due to high cost of professional software and easy access to illegal copies. A typical Microsoft Office Suite, depending on its components and buyer profile could cost around Rs 14,000 for a single user licence, making it a prime target for pirates.
Duggal says most users in India do not relate the price of the software with its usage, leading to wide-scale piracy. Nivio finds a killing business proposition in this anomaly, in providing legal software at a price making piracy unprofitable. Duggal believes that with software companies’ never-ending war against piracy, his business model will bring incremental customers and revenues that have so far been left untapped.
Nivio also plans to take its rent-a-sofware business from its current online version to a complete offline format. It plans to provide a complete hardware suite for an upfront and one-time fee of Rs 3,000 and a monthly subscription of Rs 1,100, for which customers will get a set-top box (replacing a computer's CPU), an LCD screen, mouse and keyboard. This new offering will also come with a broadband connection. Duggal says a typical broadband connection in India anyway costs Rs 700 a month, thus bringing down the effective cost of his new product to just Rs 400 a month. The new hardware suiteNivio plans to offer is also expected to be super-energy efficient. “On a eight hours a day usage basis, a typical computer consumes energy worth Rs 220 a month. Our product will have a monthly energy bill of Rs 35 only,"Duggal contends. This Rs 185 a month saving on energy bill further brings down the monthly cost to Rs 215.
The company has so far raised $8 million in equity and plans to raise another $11.5 million in two tranches — $3.5 million soon and another $8 million in about 16 months. Duggal says the enterprise value (EV) of his company, based on the last stake sale, is $100 million and he hopes to make it a $1 billion EV in the next six years. The company is presently owned by 17 shareholders, of which the only institutional investor is Deutsche Bank Pension Scheme.