K7 Computing is a leading provider of information security solutions that protect individuals and organizations from IT threats like viruses, malware and hacker attacks. The company, which builds world-class products and competes with global market leaders like McAfee and Symantec, first achieved major success in a foreign market like Japan, where it has a near 28% market share. The Chennai-based firm has now shifted focus to India and is poised to repeat its triumph in the domestic market.
Founded in 1991 by Jayaraman Kesavardhanan, K7 Computing has come a long way. Today, its products are installed on more than 11 million systems across the world. It has set up a sophisticated ‘Threat Control and Prevention Lab’ that monitors and identifies threats and helps improve product development.The company’s strategy is simple: not compromising on customer needs and sharing maximum profits with partners.
In an interview with ProductNation, Kesavardhanan talks about the challenges facing India’s product ecosystem, the lessons he has learned and how he hopes to make K7 Computing a global product company out of India.
How did you get into building security systems?
When I passed out of class x in 1984-85, I joined a computer programming course during my summer vacation. It was an occurrence that changed my life. I enjoyed programming so much that I decided this is what I wanted to do. System level assembly languages are what interested me most. While both software and hardware were equally exciting, I decided to get into antivirus solutions – more as a challenge to help people facing virus attacks.
Inspired by McAfee and Norton, I decided to develop a security product as nobody in those days was focusing on developing an indigenous antivirus solution. So in 1991, we founded K7 Computing to develop an antivirus product from India.
How has the company evolved over the years to its present state?
We faced a lot of challenges in our early days. First, we lacked the experience or marketing skills to make the company grow. Our mindset was only to help others by creating and sharing solutions for latest virus signatures. We did not really understand the commercial aspects of business or taking products to bigger markets. We were just good at building products. We decided to move from antivirus solution to offering security suite – this included having separate solution for firewalls and making our product to a better one.
In year 1991, we launched our first product VX2000, said to be the first-ever DOS-based antivirus software. The solution was a great success and got us firmly established in the antivirus software arena.
In 2003, we got our first major break in the overseas market with an attractive partnership with a Japanese software firm SourceNext to promote our suite of K7 security systems in Japan. Our foray into the Japanese market proved to be a great success as people appreciated our products and customer support. Even today, we have a strong relationship with our sales partner in Japan. We are now also working in USA, APAC and the Middle East markets.
Like every other company, K7 too also faced stagnant growth. For instance from 2007 onwards, our turnover failed to grow significantly for five years (2007-2012). This was largely due to slow growth in India as well as flat sales in Japan. However, a revamped sales strategy helped the firm make a quick turnaround and enabled us to record Rs 50 crore in FY13. This year we hope to achieve a significant rise in revenues.
To what reasons would you attribute your dominant position in the Japanese market?
It was in 2002 when our product K7 Total Security was getting completed that we met one of the biggest publishers in Japan called SourceNext. They were looking at new products. As the channel partner had worked with McAfee before, they got greatly interested in seeing our passion and creativity and decided to support our product.
Our partnership with SourceNext was the real turning point for our company and realization of a dream. The new opportunity meant getting entry into a big market and competing with established players like MacAfee, Norton etc. in a market which has been traditionally difficult for Indian products to crack. We started focusing heavily on the product and enhancing its quality to stay competitive.
Thanks to our amazing channel partner, we started doing very well in Japan. We were eventually able to garner 28% of the Japanese market share.
How optimistic were you about making an impact in the Indian market after achieving success in a foreign market?
In 2008, when after making good profitability from the Japanese market, we decided to shift the focus to India. We had a success story behind us and we were confident we would do well in the home market. We set up a team, moved to a bigger office and got sales and marketing strategy in place. But we faced tremendous problems here.
What challenges did you face in the Indian market?
India is a very difficult market to penetrate. You need to learn a lot about the market before you can establish yourself. Users are still using old hardware and there is piracy going on. One thing we realized is that India never had a good distribution system for software products. So we tied up with a few software distributors. What we later learnt was that the distributors work more like logistics partner and do not push sales. They just ship products from one place to another without understanding the concept of packaging, or collecting user feedback. Therefore, this makes the customer acquisition pace slow. Also we don’t have the concept of publishers here, unlike Japan.
We realized that if we wanted to succeed, we would have to step up our focus on marketing. We started becoming a marketing company. We established the entire channel network that took us 2-3 years. Another major shift was to focus on customer service and bring in end-to-end enterprise products.
Today, an antivirus solution is like a commodity product. We decided to sell our products through a typical IT distribution channel just as any other FMCG product. We set up a strong sales team with 120 sales guys promoting our products. Our radical change in marketing approach resulted in 500% growth and we started doing well.
In this highly cut-throat market, what efforts do you take to stay competitive?
We strongly believe in technology and building a product from the start. Some companies are building a solution on top of other services. We start from ground up and then build end to end products which are efficient and superior. We don’t scare users with technology, we believe in educating them about the product and then selling our product.
What is the company’s vision?
The vision is getting bigger. We want touch Rs 500 crore revenue in the next 3 years. We are determined to remain a globally top rated product firm in scanning and performance benchmarks by independent labs like AV Comparatives, AV-TEST, CheckMark Platinum, VB100 award or SoftDisk Magazine. When we can lead in other markets, why not in our own country? The domestic market is growing really fast and we are also hearing about the government’s focus on cyber security and stronger security regulation for corporates. Besides, we already have a good market share in the enterprise section.
We are also expanding our product portfolio from antivirus to other domains of enterprise security. We have been investing heavily in product research and development over the last 3 years.
What has inspired you to get this far?
It is very important to stay focused and have patience. Besides, products take time to mature and you have to continuously improve upon it. Indian market has been growing thanks to IT & ITES, Indian companies have started adopting new technologies, we don’t find technology gaps between India & USA any more, and so it is worth to focus on India all the more.We strongly believe that there is no real leader in enterprise security space from this part of the world, and our aim now is to attain that leadership position.
What changes would you like to see in India’s eco-system for product development?
We would like to see government stepping in with initiatives to promote indigenous software product companies that can incubate from India, scale and compete in the global marketplace through tax incentives like they had earlier given to IT service providers through STPIs, SEZs, etc. We would also like to have legal issues around service tax resolved at the earliest,
iSPIRT can play a significant role in consolidating the voice of product industry and communicating with government. I wish them good luck in this endeavor.