Sweet and sour year

Makers of personal computers (PCs) have reasons to feel both happy and sad about their sales in the last fiscal year (2001-02). Happy, because, according to the much-awaited Dataquest's Top 20 annual survey, PC sales inched past the psychological barrier of 2 million units for the first time. Yet, the growth rate was a piffling 7 percent against the previous year's hefty 67 percent.

And in value terms, the year that went by was a disaster. Inspite of selling over 2 million units, the net value realized declined by 5 percent. This is the first time in recent years that the industry, used to amazing growth rates in high 30s and 40s, showed a negative growth rate in value terms.

The Dataquest has brought out another key indicator of the industry. The gray market and the local assemblers improved their share by 5 percent to account for 65 percent of the units sold last year. Of the total sale of 2 million units, the gray market and local assemblers sold some 1.13 million units. The national and global brands had to restrict their share to just 35 percent.

Among the big players, only three - IBM, HCL and PCS, showed positive growth in numbers. All others had negative growth. According to Dataquest, most vendors continued to focus on the metros and 'A' class cities, leaving the rest of the wide field open to local brands and assemblers.

Apart from the assemblers, the other winner in this game last year was the channels. Almost 85 percent of sales happened through the channels. Mumbai-based PCS gained 25 percent sales last years, mainly thanks to the increase in reseller outlets from 280 to 400. Its attractively prices PC too added to the PCS kitty.

The year has given the PC vendors some food for thought. A PC has become commoditized and almost all the players are targeting the same customer segment in the big cities. So branding will play a greater role than ever in influencing customer choice. 

Also, the assemblers have a vice-like grip on the home segment due to their proximity, competitive pricing and ability to offer customized choices. So the vendors of computer equipment have to keep the resellers happy all the time as they are the key influencers of customer choice.