IT industry on recovery path

 MUMBAI: India's hardware industry is predicted to grow at over 15 per cent, thus crossing 1.9 million personal computer (PC) units in 2002-03.

The first-ever quarterly industry performance review for the quarter April-June of Financial Year (FY) 2002-03 undertaken by Manufacturers Association of Information Technology (MAIT) in association with IMRB (Indian Market Research Bureau) has revealed some startling results.

It shows that not only have resellers sought greater support from the industry but also that desktop PC market has grossed 5.08 lakh units,which is 63 per cent of that sold in the first-half of 2001-02. The market has shown signs of recovery, with sales in almost all product categories amounting to two-thirds of that sold in the last fiscal. FY 2001-02 had been marked with severe recessionary trend in the Indian economy, which had adversely impacted the hardware market.

With the buying sentiment in the market improving, PC sales in FY 2002-03 are expected to grow by 15 per cent crossing 19 lakh units. Fiscal 2001-02 had recorded 1.65 million units of PC sales.

Commenting on the findings of the study, MAIT ,executive director Vinnie Mehta said, "Though the entire country witnessed an economic slowdown last year, with signs of economic recovery this year, the IT market is expected to perform better. However, to ensure that IT reaches grass root levels in India, there is a pressing need to bring down the prices of IT products."

The bi-annual survey aims to address the hardware sector's efforts to manage the business environment, gauge the market potential and consumer trends. A new module in the study has now been introduced to monitor the industry performance every quarter, alternating with the half-yearly review, using the supply side estimation model involving data collection from the top IT vendors and leading channel players. The first round of the quarterly study (April-June) involved data collation from 6 major vendors and 367 resellers/vendors across 13 metros in India. The quarterly review covers the market size estimation for desktop PCs, notebooks, servers and peripherals - printers and UPS.

Being the first ever effort to map quarterly trends in the industry, year-on-year comparisons have not been possible. However, the findings lend themselves to identifying significant trends in buying and usage pattern.

In the first quarter of 2002-03, the desktop PCs, notebooks, dot matrix printers, laser printers have registered sales of close to two-third of their sales during the first half of 2001-02.In the PC market, among the business segment it was primarily the banks, educational institutes, government purchases, IT sector and IT related companies that have provided the recovery thrust to the hardware manufactures and vendors; while in the household segment, reduced prices coupled with increased selling efforts- schemes/ promotions/loans etc. have been instrumental in bringing in the recovery.

Replacement demand in PCs is also expected to enhance growth in this market. New technology and new features, application better suited to run on latest machines are likely to drive replacement market.

Notebook sales are still largely confined to business and establishment market and hence these segments would drive the current and future demand. The corporate office, IT companies and financial service sector institutes have emerged as the most sought after markets for notebooks. Households are yet to emerge as a major market. The cost of ownership of notebook versus desktop appears to be the major deterrent for this segment

The MAIT-IMRB study which attempted to understand the dynamics of this business and focused on issues being faced by the segment, came up with quite a few recommendations.

MAIT has recommended bringing down all local levies - excise duty and sales tax to this effect. According to Mehta, while there have been some admirable efforts in the industry in this direction, the government needs to facilitate and encourage this process by creating simple mechanisms for quick access to low-cost finance for product development and pilot production, with only the technology, materials, and components as security.

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