Chapter 1: Computer Market in India 1.1 Computer: Advantages of Computers
Chapter 1: Computer Market in India 1.1 Computer: Advantages of Computers
1.1 COMPUTER
The first electronic digital computer was called "ENIAC" built in 1945 in Philadelphia. It
used so much electricity that lights in the nearby town dimmed every time it was used!
What a long way we have come in a half-century, with personal computers in homes,
offices, and school rooms across the world.
After the arrival of the microprocessor, many different computer companies appeared
and began developing their own microprocessors and microcomputers. Companies
such as Apple, Compaq, and Commodore started during this period of confusion. At the
conclusion of the timeline is the first home personal computer or PC, by IBM in 1981.
Computers began to steadily and rapidly increase in speed and power while becoming
more compact and more user friendly from the early 1980's on. The progress, however
came in many small steps, rather than fewer major events like earlier years.
From the start of the decade to today, PCs in the home have become immensely
popular. Computers have increased their role from professional and business machines
to entertainment and educational tools. Telecommunications advancements such as the
Internet have shown themselves to be useful both in education and business.
The personal computer is a multi-functional device that consumers can use to work,
learn and play, most importantly it helps people to take full advantage of today’s
technological advances and prepare for tomorrow’s challenges.
Computers have become an integral part of our lives. Be it the desktop computers or
laptop computers, both have various advantages in our daily life. The landscape of
global communication has changed since computers have been introduced in our
society. Importance of computers can be attributed to the fact that almost every sphere
of our life is affected by computers. Information (IT) is a whole new industry that has
developed after the introduction of computers.
Almost every sphere of our life is affected by computers. Personal Computers are
widely used these days in office automation in Business / trade, Education, Industries,
Banks, Insurance Establishments, Hospitals, Hotels, Railway, Airlines and Transport
services etc.
I hope this summarized information about importance of computers must have given
some idea about how important this machine has become for the mankind. While the
debate on advantages and disadvantages of Internet or computers will always exist, it's
certainly a truth that computers have made our life totally different, progressive and
better.
What drives the Indian IT market? As is the case with most nations in the early stages
of the IT maturity curve, the Indian market is primarily hardware driven. The hardware
sector currently accounts for around 56 percent of total IT spending and is growing
faster than other sectors of this industry. Looking at the frenzy in the PCs marketplace,
it’s fairly obvious that PCs are fueling growth in the hardware market. PC shipments
crossed the million marks in the last fiscal and are likely to shoot beyond millions in the
next. That makes India the fastest growing PC market in the Asia Pacific region.
The market for personal computer is expanding day by day due to rapid
computerization. The computer industry in India has seen a phenomenal growth in the
last decade. After establishing itself as a global leader in software, India is now focusing
on developing its hardware industry and increasing personal computer (PC) penetration
in the country. Favorable government policies and buyer enthusiasm has led to a
splurge in PC sales, with the country recording impressive sales and growth figures.
The falling duties and taxes, resulting in the plummeting of computer prices together
with the internet revolution have led to an increasing sales and demand of PCs.
The PC market is on the upswing and that the PC is no longer restricted to a select
segment of consumers but has acquired a mass appeal across SECs and city tiers. The
overall PC market has grown significantly over the years and one of the greatest
contributors of this growth is the youth of India who clearly are the torch bearers for PC
adoption in India.
We have seen the green revolution, we have seen the white revolution and from the
findings of this study, we seem to be poised to witness a computer and digital revolution
from the Hinterland of India.
Indian PC market is one of the largest in the Asia-Pacific region with China, South
Korea and Australia. Experts foresee a great business potential for computer
manufacturers in India. As a matter of fact, the hardware business in India never really
took off. During the late nineties, much was being talked about software development
and every company was looking towards software business. Analysts feel that the
hardware industry would have been in an even better position had the software industry
not overshadowed the entire market. Even the government, stock markets, and
businessmen were more inclined towards software instead of concentrating on the
hardware business. But things have changed, as the boom in the Information
Technology sector is back and there is a rising demand for jobs in that sector. Also,
computerization has become a highly essential task for every organization irrespective
of its size and nature. Increasing use of PCs in software companies and outsourcing
companies, developments in telecom and banking sectors and their foray into rural
markets has further prompted the increase in sales of PCs. In addition to all these,
computer literacy has become an essential part of education. The demand for PCs has
been rising from every corner of the market; particularly, there is an increasing demand
from the consumer segment. More so, even, the demand for Notebook computers has
increased.
Laptop sales in India are at an all time high, due to the recent growth of a new breed of
technology conscious IT users. There has been a drastic shift in working environments
coupled with a lifestyle which is always ‘on the move.’ Besides the work-related market,
various other segments are capitalizing on these handy portable computers. A large
number of households and students are using these portable PCs for entertainment and
study purposes respectively.
Laptops are popularly used in India more for their portability rather than mobility.
Portability has become the number one factor as to why more Indians are buying these
portable PCs. With the work scenario changing and offices getting paperless, more and
more computers have been installed in companies. Infect a sizable amount of every fast
growing organization is invested in computers. The growth is so tremendous that
computer institutions are thriving on individuals who want to learn the technology
whether they are fresher’s or on the job.
Also as the work scenario is getting profound with working hours, more and more
people are working from home. So either the organization invests in laptops, so that
their employees are contactable at any point of time or employees themselves invest in
laptops so that they can continue work even from home.
Perhaps the single largest contributor to this impressive growth is the burgeoning home
segment. Today, more than a third of all PCs shipped in a year make their way to the
home segment; and the way things are moving, this share will only improve in future.
This obviously means that no vendor can afford to neglect this segment. The winners of
the future will be the ones who have in place a focused consumer strategy to address
the home segment..
The world's top line PC makers have been in the Indian market for quite sometime now,
but they have started to taste success only recently. The Indian Desktop market which
is estimated to be worth Rs.10,452 crore, is divided into Commercial market and
Consumer market and the Commercial market accounts for 67% of the total sales. All
these branded PC manufacturers al were in the past selling to corporate, government,
business professionals and to some extent the eminent educational institutions. But,
recently these companies have started targeting the individual consumers too in order
to improve their market shares. Not so long ago, assembled PCs were considered to be
the best, value-for-money PCs as against the branded PCs as the branded ones were
high priced. But, in the recent past, the demand for assembled PCs has come down
drastically in comparison with the branded ones. Though more than half (53%) of the
Indian PC market is occupied by the unorganized sector (assembled and non-branded
PCs), there has not been a considerable improvement in their sales. The major reason
for this change in customer preference is that the present day customer is no more
looking for low-priced products.
Experts also agree the fact that India is no longer a price-sensitive market it used be,
say, a decade ago. This change, coupled with the increasing number of local branded
PCs, has led the assembled PC market to grow at a slower pace.
India’s PC market sales (unit shipments) for the first three quarters of calendar year
2010 at 7.4 million pieces leading to a year-on-year growth of 31 per cent.
Within overall PC sales, desktop sales were placed at 4.68 million units, a 19 per cent
increase. The notebook PC sales recorded a growth of 60 per cent to report 2.72 million
units.
For the calendar 2010, IDC expects overall PC sales to record YoY growth of 31% to
touch sales of nearly 10 million PCs as per IDC's India Quarterly PC Tracker, 3Q 2010,
November 2010 release.
From the commercial segment, Government and Education segment performed well in
terms of PC shipments, apart from the SMB enterprise segment. Two major verticals
that did well were BFSI and ITeS.
Commenting on the future of $35 PC and similar other initiatives Sumanta states,
"Media tablets in their present form and currently prevailing price points are unlikely to
excite the large majority of consumers, though different products are expected to be
launched at various price brackets in 2011. These would remain devices used largely
for content consumption, as the virtual keyboard is likely to present a problem for users
who are used to creating content."
The growth of notebook PCs in 2011 will accelerate to 42 per cent leading to an overall
growth of 22 per cent in terms of unit sales year-on-year. Desktop PCs will slow to
about 9 per cent annually.
Sumanta Mukherjee, Lead PC Analyst, IDC India believes that the India PC market in
2011 will be redefined by the introduction of 3G services and bundling with existing and
new PC form factors, increase in functionalities in mini noteboook PCs and wider
adoption of IT/ PC in the Education sector.
Mukherjee attributes the relatively slower PC sales growth expected in 2011 to the
effect of a larger base. Government, Education, ITeS and Telecom verticals are
expected to continue to invest in / refresh their PCs. PC purchases by BFSI, Retail and
Healthcare verticals are expected to pick up in 2011.
Adoption of a notebook PC as the first PC is likely to show growth in 2011, but overall
notebook PC shipments are likely to stay lower than desktop PC shipments.
IDC India expects the overall average selling price (ASP) of desktop PCs to drop in
2011 by about 13 per cent and notebook PC prices to drop by about 5 per cent.
Though a small market in comparison to the huge PC industry, over the years the
market demand for computer peripheral goods is increasing day by day and the industry
for these goods is said to be growing at the rate of 20 % every year.
1.5.1 BACKBONE OF THE PC WORLD
Ever wondered what would happen if you were not able to get new parts for your
computer instead of your old obsolete parts. If so there would have been only two
options left, either one had to buy a whole new computer, which would definitely be a
costly affair whole together or would stop using the computer, which again in this
technological era is definitely not possible. So in the recent years a huge industry for
these parts have emerged into two segments called the computer peripherals industry
and the computer stationery market. Both are known to serve with accessories related
to the main computer industry.
The estimated total size of the current peripheral market is said to be fluctuating
between Rs.1,500 - 2,000 crore a year. Though a small market in comparison to the
huge PC industry, over the years the market demand for these goods is increasing day
by day and the industry for these goods is said to be growing at the rate of 20 % every
year. As companies, banks and government offices go for more computers and
networking and when more houses buy PCs and access the Internet, the market for
these products gets the natural fillip. Computer peripherals and computer stationery
sector is in for a revolution of sorts in the country. According to industry estimates PC
sales in India will reach 22 million units by 2010. When the PC market is poised to reach
such a size, it is but natural that peripherals too will clock similar growth rates and no
company can afford to ignore such a market.
With the growing demand more and more manufacturers and suppliers are born in this
industry everyday resulting into tough competition. India is slowly becoming the biggest
marketplace for computer peripherals and stationery. The industry is characterized by
rapidly changing environment with new models appearing in a very short span of time.
The market is made up of a blend of Indian and foreign brands.
The hardware industry in future is expected to grow more with increased penetration of
IT across India and once this transpires the industry is sure to flourish further. The IT
enabled service sector is expected to surpass the noteworthy performance of the Indian
software sector, and has being growing at a dizzy pace. With the opening of the
insurance sector for foreign investment many world majors have entered the market and
have serious IT peripheral requirements. The other industry sectors that are generating
maximum demand for peripherals are banking & finance, insurance, telecom, education,
manufacturing, and retail. The retail sector has witnessed the springing up of large malls
major cities across India. Major e-governance and digital divide initiatives of the federal
and state governments are also driving IT and peripherals consumption in the country.
Big distributors and vendors are looking at consumer durable channels to increase
sales. Using the consumer durable channels offers certain advantages. To begin with,
this route would ensure a higher footfall compared to conventional IT retail outlets. This
puts consumer-IT companies like LG and Samsung at a greater advantage compared to
IT-only vendors. Another retail strategy is the sale of IT consumables at stationery
stores.
If one is looking at sales ratio, customer choices and needs also controls the sales.
Customer purchase decisions are influenced by factors such as initial cost versus
recurring cost, For example: Products like Inkjets have a low initial cost but higher
recurring cost. The average cost of an inkjet printer's refill cartridge is much higher than
that of the refill cartridge for a dot matrix printer. But Inkjets deliver a much higher
quality printing and offers color printing advantage. Also Lasers have a high initial cost.
Other factors influencing the sales in the market are brand preference, technology, and
after sales service. Over the last five years sales of Hard Disk Drives with a higher
storage capacity has been seen to increase. CD-ROM drives are being gradually
phased out of the Optical Disk Drives market and being replaced with CD-R/RW drives.
These days, the demand for CD Writers has increased and CD-ROMs are a default
feature in most big brand PCs. DVD-ROM drives though are gaining popularity, these
are still in the up market category. Also Monitors, another important peripheral, is
another major growth area. South Korean rivals, LG and Samsung, are aggressively
fighting it out in this space, leveraging on their brand equity as leading consumer
electronics companies in India.
No doubt the industry is flourishing with new products but with the invention and advent
of every new product there is a new dealer or supplier immerging with it which
eventually increases the competition further in the industry resulting into thinner profit
margins. With such kind of growing competition among existing suppliers today there is
not much space for any player to open retail showroom unless they can withstand high
gestation periods. But experts of this field predict that the following year will offer more
hope and stability for both the PC as well as the peripherals industry. The factors, which
will help the industry to boost further, are a redefinition of strategy, innovation, and
strong competition. One significant development to affect the fortunes of the hardware
and peripherals segment will also be of long-standing efforts by all players and the
government to perk up the market in smaller cities and towns. More than half of India is
rural and it is this part of the end-user segments that is expected to jumpstart major
sales. Both, the Indian federal government and local state governments have adopted a
wide range of programs to increase the reach of IT across India. Through incentives -
ranging from tax holidays to government monetary assistance - the process of pushing
IT to the masses has started a few years ago, and is expected to reach fruition by 2008-
10. The consumption in these cities is expected to double. Though this still would be a
small absolute number, it would be enough to alter the strategies of vendors in the
peripherals segment.
The change in information availability, the change in the supply chain management
structure, cost-effectiveness, process efficiency, the increasing number of virtual stores
and e-tailing will additionally contribute to make selling different in this industry. Like
earlier, the home customer would typically go to the nearest dealer, put forward his
requirement and check out on the pricing. Today, the customer visits various dealer's
Website from the luxury of his home, figures out the technical specifications that match
his requirement, locates the dealer nearest to his home, touches and feels the product
along with his family and brings it home. Besides cost savings, promotional campaigns
focused on actual benefits instead of technical jargon makes the pitch more palatable
and increases interest even in those not well versed with technology. The future for this
industry is definitely bright if taken about in a systematic and rationalized manner.
1.6 SALES IN INDIA
The overall India PC market sales touched 23.7 lakh units during the April-June 2010
quarter recording a 34% year-on-year (2Q 2010 over 2Q 2009) and a 5.8% quarter-on-
quarter (2Q 2010 over 1Q 2010) increase. Desktop PC sales accounted for nearly two-
thirds of total PC sales at 15.6 lakh units, representing a 24% increase year-on-year
(2Q 2010 over 2Q 2009). The sales of Notebook computers grew at 61% year-on-year
(2Q 2010 over 2Q 2009), recording 8.05 lakh shipments.
Table 1: India PC Shipments (in thousands of units) by Form Factor* and Growth
Trends: Apr-Jun 2010 vs. Jan-Mar 2010 and Apr-Jun 2010 vs. Apr-Jun 2009
Figure 1: India Overall PC Sales (Shipments) and Growth (%): H1 2010 vs.
H2 2009 vs. H1 2009*
"An exciting product portfolio, strong channel support and an effective after sales
service network are becoming increasingly important to sustain growth in this
competitive market", stated Sumanta Mukherjee, Lead PC Analyst, IDC India.
"Timely rollout of 3G services in the country will influence the overall PC market fortunes
in the first half of 2011, especially in the mini-notebook PC and notebook PC segments",
Sumanta further added.
The following list is a compilation of brands that have gained a good level of reputation
in the market. The sales, products, goodwill and popularity of such brands say it all.
Have a look…
Apple: The brand of Steve Jobs and the brand that maintains quality. Apple computers
are known for their quality control, research and development and also their willingness
to maintain a specific procedure of manufacture. Apple has successfully launched a
wide range of computers that includes both laptops and desktops. The best laptop
computer brand on the market is of course Apple, due to its wide range of laptops that
includes, MacBook, iMac and Mac Mini. A remarkable desktop computer that was
released by Apple is the Mac Pro. Apart from the quality, speed and smooth running,
Apple also caters to the style quotient. For personal use, this brand is the best laptop
brand.
Dell: Another name that is known for efficiency is Dell. The company was started to
make successful computers and that is exactly what it is successfully doing today.
Michel Dell indeed has seen dreams turn to reality, as today Dell is one of the biggest
producers of Laptops and Notebook computers, not to mention the enormous line of
desktops. The basic motive of Dell is to make computers for every person and every
place. Dell manufactures computers and laptops for students, consumers, businessmen
and corporates. It makes computers for homes, schools, offices and even public places.
IBM: International Business Machines is a giant that churns out computers for every
possible person on the face of this earth. IBM makes small, big, fast, slow computers.
The product directory of this company is so big, that you will have computers working at
every possible speed in it. The basic memorandum of the company is to supply
computers to every working person. You will find countless companies using the IBM
brand. The company was founded to supply the corporate world and that is exactly what
it does. As we talk, a dozen new products might have been churned out by the
company.
Here in this article, I have made an unbiased survey on the best laptop brands ruling the
market. These laptop brand names shall help you find out the laptop of your choice.
Read more on best laptop deals - how to find best deals on laptops.
Hewlitt Packard (HP): is very user friendly, has a good support system and easy to use
products. HP has different note book models with different screen size. The first laptop
manufactured by HP was HP Multimedia PC Model Numbers 6100, 6140S and 6170S.
Today HP manufactures eight notebook models that are customizable in the US only.
HP Pavilion, 4 under HP Mini, 2 under HDX, 2 under G series, 1 under TouchSmart and
1 under Compaq Presario.
Compaq: was founded in 1982 and it marketed portable computers. In 2001 Compaq
merged with HP. Today most of the Compaq products are rebranded as HP. Some
computer orientated products still remained, in the name of Compaq Presario. The
budget models are priced right according to features. The prices are affordable as an
entry level laptop.
Dell: is one of the best laptop brands ruling the market. It is also one of the most popular
companies in the world, known for its longevity, durability and robustness. The price is
labeled from economical to premium depending on its features. It is reliable and gives
high performance. It also has impressive styling and makes a worth investment.
Acer: is improving constantly and has a potential to stand top in the laptop brands list. It
has a very decent budget model and is economically priced. Since it's a new brand, it's
yet to face a tough competition in the market.
Apple: laptops are built with a good sound system along with other premium features.
When judged by compatibility parameters, Apple laptops get knocked down. Users want
friendly configurations and installation on their operating systems. Although Apple has
some complications, it one of the best laptop brands in the market.
Samsung: is a reputed brand for years and has a good market reputation. It is also
known as a premium brand. They have high end models with impressive features. The
price also increases according to its premium features.
Gateway: share relatively large portion in the market economy, though their reliability
had been questioned many a times. Support system of Gateway laptops are not in par
with the laptop brands list. When related to customer support and after sales issues,
Gateway laptops bear a bad reputation.
Asus: is also gaining momentum in the market. It's improving the quality of products and
making a good reputation in the market. They are capitalizing on the netbook market
that is seeing impressive sales and profits.
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1.8 MARKET SHARE
3 Lenovo 7.0 Acer 8.9 Acer 11.1 Dell 12.2 Dell 11.5
4 Acer 5.8 Lenovo 7.4 Lenovo 7.2 Lenovo 8.1 Lenovo 8.7
5 Toshiba 3.8 Toshiba 4.0 Toshiba 4.5 Toshiba 5.1 Toshiba 5.3
Others 51.6 47.1 44.5 42.3 41.1