First half PC sales grow by 26 percent: MAIT

In its mid-year review for the year 2000-01, MAIT, the industry's leading body in hardware, training and services sector in the country said that the desktop PC market crossed 8.3 lakh units registering a growth of 26 percent during the period. However this is 19 percent lesser than the growth that was experienced in the comparative period in the preceding year when it registered a growth of 45 percent over 1998-99. 

PC sales clocked a growth of 37 percent in the year 1999-2000 over that of 1998-99. With less than the expected sales of PCs especially in the second quarter, the projection for the annual sales for 2000-01 have been revised from 1.9 million units to 1.75 million units.

The slowdown in the sale of PC is a general indication of the slowdown of the economy and the instability of the dollar-rupee exchange. The impact has mostly been seen in the SME spending pattern where spending has been withheld. In fact, in both the segments the growth registered during the comparative period of the previous year were more. The spending by large corporates continued to increase. 

This pattern is also reflected in the decline of market share by Indian PC brands, which stood at 17 percent against 21 percent during H1 1999-00. Meanwhile, the SME segment is price-sensitive and would be the major customer for Indian PC brands. The increase of market share of MNC PC brands from 22 percent to 24 percent could be attributed to the increased spending by large corporates where price is not really an issue. The market share of lesser known regional brands and unbranded systems accounted for 59 percent of the PC sales during the first half of 2000-01. This figure has been consistent over the last four years. The business segment grew by 19 percent while in households, it grew by 53 percent as compared to the sales in the first half of the previous year. The business segment continued to form the major chunk of the market at 76 percent. 

MAIT's Industry Performance Review, conducted by IMRB is a bi-annual aimed at gauging the market potential and consumer trends. The first mid-year report evaluates the industry's performance between April-September and the second between October-March.

The study reveals that, in terms of processor configuration, PC sales in H1/ 2000-01 were marked by the shift from Celeron and PII to PIII. Sales of PIII based systems increased from 37.7 percent in H1/1999-00 to 66.1 percent in H1/2000-01. This reflects the increased need for faster processing speeds for Internet and its applications. Sales of PII based systems witnessed a fall in the market share from 26.5 percent in H1/1999-00 to 14.3 percent in H1/2000-01.

The networking market also experienced growth with over 4.4 lakh NIC (Network Interface Cards), over 80,000 hubs and 3.23 lakh modems sold in H1/2000-01 registering a growth of 26 percent, 36 percent and 51 percent respectively over the same period in 1999-2000. 

Interestingly, the household segment accounted for 43 percent of the modem market in 1999-2000. The high rate of growth in the modems can be attributed to the fast growing Internet penetration in the country.

According to MAIT-IMRB estimates, printer sales registered a 31 percent growth over the H1 last year.

Sales of dot-matrix grew by 31 percent; laser printers by 12 percent and inkjet printers by 35. SME establishments accounted for a significant proportion of the printer sales. This could be due to lower penetration of printers among these segments, as compared to the large establishments. Dot-matrix printers accounted for 46 percent of the market share, inkjet printers for 44 percent and laser printers for 10 percent. The laser printers registered a negative growth over the second half of 1999-2000.

This is for the first time that the study attempts to gauge the future potential of the household market. It is estimated that the household market would account for over 50 percent of the total PC sales by 2004 up from current little over 20 percent. The study also attempts to estimate the demand potential for low cost Internet access devices in the household segment. The rate of growth of Internet connections in the higher spectrum of the home market is 200 percent, while that of PC penetration is close to 50 percent. The slow pace of PC penetration in this sector compared to that of the Internet penetration could eventually stymie the rate of growth of Internet. Therefore, there exists a need for alternate Internet access devices. Estimates from the study conducted in top 16 cities revealed that SEC (Socio Economic Classification) A and SEC B alone have a demand of close to 1 million Internet access devices. This, when extrapolated for the entire urban Indian market could well surpass 1.5 million units. According to Vinay Deshpande, President, MAIT, "The slowdown in the market is of concern to the industry.

However there is no reason to panic. Pramod Mahajan, Hon'ble Minister of Information Technology, has assured us that the government is very keen on developing India into a hardware manufacturing destination and pushing reforms to further develop market. This will help bring the manufacturing industry back on track. We are very hopeful that the forthcoming Union Budget and the EXIM Policy will be very conducive to the hardware Industry."