5 mln units' sale in '05-06; to
touch 6 mln in '06-07 Notebooks
and Servers post high growth

India's Roaring PC Revolution

MAIT, the apex body representing the hardware, training and R&D services sectors of the IT industry in the country has announced that the PC market, Desktops and Notebooks taken together, grossed 5.04 million (50.4 lakh) units registering a growth of 32 percent during the fiscal year 2005-06 (April-March).
Releasing the findings of its Industry Performance Review for the year MAIT said the Desktop sales crossed 4.6 million (46 lakh) units registering an annual growth of
27 percent while the Notebooks shipments exceeded 0.43 million (4.3 lakh) units growing 144 percent over 2004-05.
“With sound macroeconomic conditions and buoyant buying sentiment in the market, Desktop Sales are expected to cross 5.6 million (56 lakh) units in Fiscal 2006-07 while overall PC shipments would exceed 6 million units,” MAIT said. Following is the gist of the industry performance review.
The growth in PC sales, on the one hand, can be attributed to significant consumption by Industry verticals such as telecom, banking & 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 contributed to a strong Households market.
The southward trend in pricing continued during the year due to technological reasons and other initiatives of the industry, including the sub-Rs.10,000 PC. The year also witnessed aggressive market campaigns with celebrity endorsements for IT products. Significant consumption in the small and medium enterprises added to the industry numbers. Further, the trend of increased PC purchase in smaller towns and cities as witnessed in the previous years, continued undiminished.
MAIT's Industry Performance Review - ITOPs - conducted by the leading market research firm IMRB (Indian Market Research Bureau), is bi-annual and 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 25,000 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.

Assembled PCs
The proportion of the Assembled PCs the smaller lesser known regional brands and unbranded systems, reduced from 41 percent of the total PC sales in 2004-05 to 37 percent in 2005-06, however, in absolute terms they registered a growth of 14 percent. Aggressive pricing from the branded players cannibalized the market for the assembled PCs. Proportion of the Indian brands grew from 24 percent in 2004-05 to 28 percent, registering a growth of 48 percent. The market share of the MNC remained constant at 35 percent, however, they registered an annual growth of 27 percent.



Business Segment & Households
The MAIT-IMRB Review reveals that PC sales to the Business Segment improved by 33 percent accounting for 75 percent of the total PC consumption. Households, with sales growth of 12 percent, accounted for 25 percent of the market. Within businesses, sales to the larger businesses (over 50 employees) grew by 38 percent; to the medium business segments (between 10 and 50 employees) grew by 17 percent and that to small enterprises by 45 percent.
In terms of the Processor Configuration, PC sales in 2005-06 were dominated by P4, which accounted for 80 percent of the market share, while alternative processors like AMD, Via, Cyrix etc. accounted for another 17 percent. Consumption of PCs with alternative processors grew by 139 percent in absolute terms. In the households, alternative processors accounted for 26 percent of the market, a reflection of the higher price sensitivity in the home market.



Printer Segment
As per the study by MAIT IMRB, overall Printer sales grew by 28 percent over that in FY 2004-05. The sales of laser printers recorded a consumption of 0.32 million (3.2 lakh) units, growing 128 percent over the last year. The resurgence in the market for the Dot-matrix Printers as witnessed two years ago, continued undiminished in 2005-06. Sales of the Dot-matrix printer grew 18 percent over 2004-05. Sales of Inkjet printers grew by 13 percent led by consumption in households and smaller cities. The growth projection for FY 2006-07 for overall printer sales is 23 percent; sales are expected to cross 1.8 million (18 lakh) units.

Top Four Metros
The following is a synopsis of the findings of the MAIT-IMRB study:
• The Top Four metros accounted for 33 percent of the total PCs purchased. While the proportion of sales to Top 4 metros decreased, as against 38 percent in 2004-05, the sales in absolute terms increased by 10 percent. PC purchase in the 'Next 4 Cities' grew by 50 percent and accounted for 13 percent of the market. In other smaller towns, PC purchases increased by 35 percent to account for 54 percent of the total PCs purchased. Smaller towns had accounted for 51 percent of the market in the last Fiscal of 2004-05.
• In the Households segment, SEC A continued to dominate the market with 55 percent market share, followed by SEC B at 29 percent, recording a growth of 21 percent and 15 percent respectively in FY 2005-06. Sales in the SEC C segment declined by 13 percent to account for 16 percent of the market. The growth of IT consumption in the household segment is expected to remain steady, as the vendors have started positioning and promoting PC as an aid for education and entertainment. Further, steady drop in prices of branded PCs has resulted in shift of the household consumer away from the assembled non-branded PCs.
• Notebooks witnessed the highest growth amongst all product categories. In 2005-06, Notebook sales with 144 percent growth, more than doubled to 0.43 million (4.3 lakh) units. Households accounted for 13 percent of the market growing 115 percent. Consumption of notebooks in the small-sized enterprises grew by 248 percent, accounting for 31 percent of the sales to business segment. Compared to the last fiscal, sales to large enterprises grew by 124 percent accounting for 51 percent of the total sales in the business segment. Medium-sized businesses accounted for 22 percent of the sales registering a growth of 96 percent
• The Server market registered an impressive growth of 81 percent 89 K units of server shipments. Sales in the 'Top Four Cities' grew by 23 percent accounting for 37 percent of the total market. Sales in the 'Next 4 cities' increased by 199 percent while other smaller cities registered a growth of 138 percent. The 'Next 4 cities' and the other smaller towns accounted for 16 percent and 48 percent of the market respectively. Server sales grew by 51 percent in the larger businesses segment and by 188 percent in the Medium-sized businesses. Smaller Businesses witnessed an increase in consumption by 45 percent. Smaller Businesses accounted for 35 percent of the total Server Market, while Larger Businesses accounted for 26 percent and the Medium for another 39 percent.
• In the Networking market sales of Modems dropped by 23 percent. Sales of Network Interface Cards (NICs) grew by102 percent and that for Hubs by 27 percent. Consumption of Modems in the Households declined by 28 percent accounting for 58 percent of the total Modems Market. Consumption in Businesses segment declined by 15 percent accounting for the rest 42 percent.
• The UPS market grew by 27 percent over 2004-05. Consumption in Top Four Cities declined by 9.0 percent, however it grew in the 'Next Four Cities' by 69 percent and in other smaller towns by 55 percent. Households accounted for 51 percent of the UPS market registering a growth of 17 percent over fiscal 2004-05; while consumption in Businesses segment increased by 38 percent accounting for 49 percent of the market share.

• Consumption of Monitors surged to 4.63 million (46.3 lakh) units with a growth of 27 percent over the last financial year 2004-05. Consumption of 15” monitors grew by 45 percent accounting for 50 percent of the market; that of 17” by 41 percent accounting for 32 percent of the market. Sales of 20/21” monitors increased by 2.0 percent and they accounted for 4.0 percent of the total monitor market. Consumption of 14” monitors declined by 19 percent and their share came down to 14 percent of the overall market.



• The number of active Internet subscribers (entities) increased to 4.12 million in March 2006, while the figure was 3.12 million in March 2005. The penetration of Internet in the top 22 cities was 45 percent among businesses, while for households it was 12 percent. The businesses segment now contributes 37 percent of the total active Internet entities and households account for the remaining 63 percent. 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 54 percent in March 2005 to 38 percent in March 2006. The proportion of access through DSL/cable link increased from 29 percent to 37 percent during the same period.



Stressing on the need to boost the domestic IT market in India, Vinnie Mehta, Executive Director, MAIT, said, “The high growth of IT consumption in the country in the last fiscal is very encouraging, however the challenge of sustaining this impressive growth will have to be met by means beyond the price factor. The hardware industry's efforts in experiments such as low-cost PCs and rural PCs are truly laudable and going forward, factors such as relevant content, connectivity and other enablers such as easy finance should also be focused upon. While the government and the telecom industry are making significant efforts in broadband and other means of connectivity, development of content, applications and solutions for domestic usage remain a challenge and it is imperative to work towards finding viable solutions to these areas of concern.”



Commenting on the need to boost the Indian IT manufacturing industry, Rajendra Kumar, President, MAIT, said, “India is very high on the agenda of several leading global IT manufacturers today. The Government's keenness to promote IT/electronics manufacturing in India is evident by the fact that it will soon unveil policies on setting up Fabs as also to encourage other hardware manufacturing and consumption. This is indeed heartening. Speed will be of essence here and the IT/electronics manufacturing industry is keenly awaiting these policies that are long overdue. This will play a critical role not only for attracting high-capital intensive manufacturing activities like the semiconductors, LCDs, storage devices etc. but also for spreading the IT consumption in the country.”