The IT market is still moving at a snail's pace

Six months have passed in the current financial year but still there is no

enthusiasm; no feel-good factor is visible amongst the resellers. The market

gives the impression that the cold it caught a few months back, has still not

left it.

According to Saket Kapoor, Director, Computer Vision, the SMB segment is

witnessing a lot of self-employment, otherwise not visible in other sectors.

"IT market which had nose dived will again see a take off. But, this is

only for the SMB sector and not corporate or enterprise sector." He further

added, "We should not expect the same resonance that was witnessed during

the IT boom to happen again."

Shyam Modi, Director, Modi Peripherals, was not at all convinced that the

market has improved. "The market is still witnessing a bad phase. There has

not been much improvement in the situation. If we see in terms of the topline,

it has definitely increased but when it comes to bottomline, there has been a

fall." He further lamented that big IT vendors have started focussing more

on B and C class cities, which has made a dent on their share. He gave the

example of the recent news published by the DQ Week on HP India to increase

retail outlets. There was not much difference in last two quarters for Modi.

Kapil Wadhwa, Director, Champion, said that IT has fared well but in the next

breath added, "Margins have gone down and sales have increased. Not only

this, the competition has also seen a rise as well as undercutting. All the

quarters for us saw the same growth. There was not much of difference."

The last two quarters have been a sort of mixed bag for the resellers. For

some, the AMJ quarter went off quiet well and for others it was the JAS quarter

which was better. And yet for some there was not much difference at all, like

Modi and Wadhwa. For Ashish Aggarwal, Director, Trifin Technologies, "Both

the quarters went off very bad. The overall period has been very lean and IT

market too has not shown any sign of improvement. Somehow we have been able to

maintain our growth."

Giving more insights into the movements of the market, Aggarwal shared,

"Large corporates have been delaying buying, the main reason being the

liquid-money problems. This in turn has led to slashing of the budgets, which

has affected the business."

He further added, "The margins in the hardware segment has been more or

less fixed but as far as the software market is concerned the margins have

shrunk tremendously. An artificial demand has been created in the market because

of which there is over distribution. And, the principles are mainly responsible

for such a trend."

Said Dinesh Gupta, Director, Digitronics, "Since March things have

started to look up after witnessing a lean period for the whole of last year,

especially post 9/11 incident." He too lamented on the same fact that

"the margins have gone down but the sales have increased to almost

double."

Sanjeev Bhatia, MD, Adcom, has been quiet optimistic about the whole

situation. "IT market has no doubt improved and is much better than what it

was a few months back," he commented, adding, "easy financing, the

slashing of the price of products has made it more affordable to people in the B

and C class cities. There may not be much growth in A class cities, but B and C

class cities are definitely witnessing a growth."

For quite some time now the market has witnessed a move by the big IT

corporates to B and C class cities. "Big corporates who have forayed into B

and C class cities have slashed their prices to such ridiculous rates that it

has eaten upon our profits," pointed out RK Malhotra, Director, OA

Compserve. "In the government sector competition has increased, which has

lowered down the margins as well as the amount of orders available."

According to Sandeep Aurora, Regional Channel Manager, Intel, "Though

the growth of IT market has not been that good but as compared to last years it

is still better."

Ranbir Singh, GM (North), Wipro ePeripherals, said, "As far as the

peripherals are concerned it did good business. AMJ was not a very good time

whereas JAS saw some good business. This year we had introduced a host of new

products in the market which are doing consistent business."

The major buying this season, according to the resellers, was done by the

SOHO segment, which emerged as the most consistent customer. "The

corporates did the least amount of buying this season. It was the end-users, who

ruled the market," said Somesh Narang, Director, Elcom.

Bhatia was of the viewpoint that it was the SOHO that formed the major

buyers, especially in the B and C class cities.

Similarly, according to Modi, buying by the home segment would improve in the

coming weeks, because of the festive season. "SOHO is the only segment that

is alive," added Wadhwa.

Most of the resellers are quite optimistic about the coming quarter. They

hope to see an increase in buying by the home segment. According to market

analysts, this quarter always witnesses a good time because of major buying done

by the home segment. This is because of the festivals that fall in these months.

Most people do their buying during the festival time. But, until Shradh is over

they will have to wait because during that period no buying is done.

But, in view of Singh, "Home segment may do a brisk business but as we

are more into SMEs, the coming quarter does not hold much enthusiasm."

One may also recall the situations that the country went through which more

or less aggravated the situation. Especially the clouds of war and the drought

situation also contributed in some way to the current situation.

The lean market has also brought in a whole lot of problems with it. The

number of scams that the market has witnessed in the past few months, itself

says a lot about how the market has been. Bouncing checks and payment defaulters

have added more to the woes of the already ailing market.

According to an IDC report, the Indian IT industry would grow at a CAGR of 30

percent by 2006, driven primarily by the growth of software services, ITES and

hardware. With newer areas emerging such as mobile and wireless, new computing

architecture and security, IDC expects the worldwide IT spending to grow

stronger and more robust in the coming months.

Even though there has been mixed responses amongst the channel community

about the growth of IT market for the half yearly, but it all boils down to the

fact that the market still has not picked up. IT is moving at a snail's pace and

it will take much more time before we see a stable IT growth. Until then, we can

just keep our fingers crossed and wait patiently.

Karma Negi