Slower Than Expected

Suddenly the year 2003 doesn't look as exciting as it looked at the beginning of January. After two years of downward curve in sales due to the recession, the outlook for 2003 was very positive. Even market researcher IDC forecasted the new year to be a good one for the industry. And the indications from the first quarter (JFM) pointed to a recovery and a good year ahead.

But then a joker in the pack has appeared in the form of Saddam Hussain. The American government has already declared a war on Iraq and coupled with its allies is on the brink of starting one. If that becomes a reality--which increasingly looks a possibility--then goodbye to the feel good factor which has been generated in the recent times.

Even otherwise, IDC in its latest report has cut its PC sales outlook for 2003 citing the potential impact on worldwide sales of a larger-than-expected decline in public sector sales. In its earlier report, it had predicted that worldwide PC shipments would increase by 8.3 percent. But in its updated forecast, the market researcher is now predicting unit shipments to grow by 6.9 percent only.

Interestingly, sales to public sector including the government departments were very strong in calendar 2002. But IDC expects these sales to decrease more rapidly than it had previously anticipated. This, it says, is due to the falling tax revenues which has resulted in IT budgets getting squeezed.

Inspite of these hazards, worldwide PC shipments are expected to cross the 145 million mark in 2003 as compared to 136 million in the previous year. If no other calamity happens, the second half of the current year is expected to be pretty good. In fact, IDC expects the 2003 numbers to grow by nearly 11 percent in calendar 2004 and reach 161 million units.

What does that mean for the India IT market? Basically, we are on the recovery path, the year would be better than the previous one, and good times will certainly come slowly but surely. Year 2003 will certainly bring in some cheers for the market which wouldn't want to remember 2002 too fondly. Even if the recovery is slow, doesn't matter--at least the market is not going downhill. The trend is uphill--though at a slow pace. That itself should bring in some smiles for the IT market.