MAM

PC sales up 20%, crosses 3.6 million in 04-05

MUMBAI: The Desktop PC market has grossed 3.63 million units in 2004-05, registering a growth of 20 per cent over the last fiscal.

The consumption in the first-half of 2004-05 was 1.71 million units, while in the second-half it was 1.91 million units. These were the findings of the Industry Performance Review conducted by MAIT.

The findings also projected that with sound macroeconomic condition and buoyant buying sentiment in the market, PC sales are expected to cross 4.25 million units in fiscal 2005-06.

 

The growth in PC sales, on the one hand, can be attributed to significant consumption by industry verticals such as telecom, banking and financial services, manufacturing, retail and BPO/IT-enabled services as well as major e-Governance initiatives of the Central and State governments. On the other hand, the drop in prices, especially at the entry-level saw the emergence of very strong households market.

 

 

The unparalleled growth of the IT market for the last two years at over 30 per cent decelerated due to a relatively stagnant second-half in 2004-05. However, the southward trend in pricing continued throughout the year due to technological and competitive reasons. Entry level prices of PCs dropped to Rs 13,000 - Rs 15,000 from Rs 20,000 - Rs 25,000 last year; for Notebooks to sub -Rs 40,000 and Servers to sub - Rs 100,000.

Price drops were also witnessed for peripherals such as Inkjet and Laser printers. Further, the trend of increased PC purchase in smaller towns and cities, as witnessed last year, continued undiminished.

 

 

MAIT's bi-annual Industry Performance Review - ITOPs - is conducted by IMRB (Indian Market Research Bureau) aims to address the hardware sector's efforts to manage the business environment, gauge the market potential and consumer trends.

Apart from the half-yearly review, a module has also been introduced to monitor the industry performance every quarter, alternating with the half-yearly review, using the supply side estimation model. This round of the study involved face-to-face interviews with over 30,000 respondents selected randomly from 22 cities in India.

The MAIT-IMRB study was initiated in 1996-97 and leading IT vendors subscribe to it. The study encompasses five broad product segments - computers, networking products, printers, other peripherals and Internet.

The proportion of the Assembled PCs - the smaller lesser known regional brands and unbranded systems, reduced from 53 per cent of the total PC sales in 2003-04 to 41 per cent in 2004-05, registering a decline in growth by 7 per cent. Aggressive pricing from the branded players cannibalised the market for the assembled PCs. Proportion of the Indian brands grew from 21 per cent in 2003-04 to 24 per cent, registering a growth of 37 per cent, while that of MNC brands increased from 26 per cent to 35 per cent for the same period. Sales of MNC brands grew by 61 per cent.

The MAIT-IMRB Review revealed that PC sales to the business segment improved by 11 per cent accounting for 72 per cent of the total PC consumption. Households, with sales growing by 48 per cent, accounted for 28 per cent of the market, thus becoming a dominant market segment. Within businesses, sales to the larger businesses (over 50 employees) grew by 9 per cent; to the medium business segments (between 10 and 50 employees) grew by 11 per cent and that to small enterprises by 17 per cent.

In terms of the Processor Configuration, PC sales in 2004-05 were dominated by P4, which accounted for 81 per cent of the market share, while alternative processors like AMD, Via, Cyrix etc. accounted for another 9 per cent. Consumption of PCs with alternative processors grew by 20 per cent in absolute terms. In the households, alternative processors accounted for 14 per cent of the market, a reflection of the higher price sensitivity in the home market.

In terms of Operating System on Desktops in establishments, 74 per cent of the establishments had Windows 95/98 while only 2 per cent had Linux. In case of servers, 4 per cent of the establishments had Linux while 3 per cent had other non-Windows based Operating system installed, 10 per cent operated on Windows NT; 40 per cent had Windows 95/98 and 25 per cent had Windows-2000. India has two million business establishments in the 22 cities studied.

The following is a synopsis of the findings of the MAIT-IMRB study:

The Top four metros accounted for 38 per cent of the total PCs purchased. Smaller towns had accounted for 45 per cent of the market in the last Fiscal of 2003-04.

In the Households segment, SEC A continued to dominate the market with 51 per cent marketshare, followed by SEC B at 28 per cent, recording a growth of 64 per cent and 22 per cent respectively in FY 2004-05. Sales in the SEC C segment surged by 55 per cent to account for 21 per cent of the market.

Notebooks witnessed the highest growth amongst all product categories. In 2004-05, Notebook sales doubled to 0.17 million units. Consumption in the small-sized enterprises grew by 227 per cent, accounting for 21 per cent of the business segment. Compared to the last fiscal, sales to large enterprises grew by 169 per cent and the proportion increased from 40 per cent to 52 per cent of the total sales in the business segment. Notebook sales in medium-sized businesses grew 27 per cent accounting for 27 per cent of the market.

The Server market registered a negative growth of 8 per cent over the last fiscal as sales declined in the 'Top four cities' by 16 per cent and in the 'Next four cities' by 59 per cent. The Top four metros accounted for 54 per cent of the total server sales, while the 'Next four' for 9 per cent. However, smaller towns witnessed a growth of 73 per cent. Server sales slumped by 14 per cent in the larger businesses segment and by 50 per cent in the Medium-sized businesses; however, Smaller Businesses witnessed an increase in consumption by 91 per cent. Smaller Businesses accounted for 44 per cent of the total Server Market, while Larger Businesses accounted for 32 per cent and the Medium for another 24 per cent.

In the Networking market sales of Modems improved by 17 per cent, however it declined by 9 per cent in case of NICs and by 70 per cent in case of Hubs. Consumption of Modems in the Households grew by 11 per cent accounting for 62 per cent of the total Modems Market. Consumption in Businesses segment grew 27 per cent accounting for the rest 38 per cent.

The UPS market grew by 48 per cent over 2003-04. Consumption in Top four cities grew by 70 per cent, in 'Next four Cities' by 2 per cent and that in other smaller towns by 42 per cent. Households accounted for 55 per cent of the UPS market registering an impressive growth of 53 per cent over fiscal 2003-04; while consumption in Businesses segment increased by 42 per cent accounting for 45 per cent of the market share.

Consumption of Monitors surged to 3.64 million units with a growth of 31 per cent over the last financial year 2003-04. Consumption of 20"/21" monitors doubled to account for 5 per cent of the market and that of 17" monitors grew by 27 per cent accounting for 29 per cent of the market. Sales of 14" and 15" monitors, declined by 30 per cent each.

The number of active Internet subscribers (entities) increased to 2.92 million in March 2005, while the figure was 2.36 million in March 2004. The penetration of Internet in the top 22 cities was 48 per cent among businesses, while for households it was 13 per cent. The businesses segment now contributes 44 per cent of the total active Internet entities and households account for the remaining 56 per cent. Dial-up remains the most commonly used means of accessing the Internet among businesses, although the proportion of Businesses using dial-up has dropped from 60 per cent in March 2004 to 54 per cent in March 2005. The proportion of access through cable link increased from 16 per cent to 23 per cent during the same period, while that of DSL increased from 2 per cent to 6 per cent.

Stressing on the need to boost the domestic IT market in India, MAIT executive director Vinnie Mehta said, "The recent study by the Ministry of Communications and IT on 'Improving PC penetration in the country' envisages a seven-fold growth in the domestic IT market by 2008 with Annual PC sales at 28 million. The report recommends achievement of the said target through implementation of IT in a mission-mode in education, healthcare and rural economy and stresses on the need for easy consumer finance for purchase of PCs, innovative models of PC deployments such as on rental through Internet Service Providers etc. It is critical that the recommendations of the report be implemented at a fast pace to help India emerge into a global IT market. The growing Indian IT market is already becoming attractive to manufacturing investors; larger market volumes will give it a further boost."

Commenting on the need to boost the Indian IT manufacturing industry, MAIT president Rajendra Kumar said, "India is very high on the agenda of several leading global IT manufacturers today. However, large capital investments involve significant risks, and the government needs to proactively set in place concrete measures that would help in mitigating such risks, thereby making India an attractive destination for global investments. These measures should include addressing and providing assurance on infrastructure and utility concerns; incentivising IT manufacturing in India that is competitive with other locations; and enacting policies and measures that will significantly enhance PC and Internet penetration in the country."

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