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Dell Computer Corporation, the world's third largest computer company, is setting up a 100 per cent subsidiary in India.

The US based, $18.2 billion direct marketing firm, which sells custom built computers, is ranked third in the world after Compaq and IBM with a worldwide market share of over 8.8 per cent.

Dell's Ron Goh, vice-president, Asia, had been quoted as saying that the formalities of setting up the subsidiary would be completed by the end of the year.

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Initial investment in the subsidiary is expected to be about $8 million to $10 million, he added.

"We have decided to take the Indian market seriously and focus on tapping this one of the largest growing markets in the world. Our performance and visibility has not been satisfactory in the past and we plan to improve that with our direct presence here in the near future," Goh has said.

At present, the company only has a liaison office in Bangalore. It sells its products through a network of 10 distributors in India.

Despite the proposal to set up a 100 per cent subsidiary, Dell has decided to continue its partnership with existing distributors, which includes Tata Infotech, for after-sales services.

"At present, we have a mixed operation where every distributor, packaging services with the hardware we provide, is targeting all markets and undertaking after-sales jobs for every segment. In future, each distributor would target a niche market only. For example, Tata Infotech would be undertaking after-sales service," Goh has said.

Dell also plans to sell products directly in India, but will target a separate market segment for its products. The company has engaged Bian & Company of US to undertake a marketing study to assess products, pricing and market segmentations to launch products.

The Indian subsidiary will be Dell's tenth subsidiary in Asia after Singapore, Malaysia, Thailand, China, Korea, Taiwan, New Zealand, Hong Kong and Australia.

Dell started selling its products in India through a tieup with PCL in 1992, but the alliance ran into trouble soon thereafter.

Ninety per cent of the company's revenues worldwide come from sales to corporations. The balance is largely because of second-time buyers or experienced buyers.

"The same model would be applicable in India and initially there would be no focus on first-time buyers. However, we are not averse to developing new strategies to tap the market to the fullest," said Goh.

The Dell official, however, has ruled out any possibility of setting up a manufacturing facility in the country or shifting its configurations to non-Intel platforms in near future.

- Compiled from the Indian media

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