Who killed the PC?

Be it parameters like ease-of-use, porta-­bility, mobility, etc or just the
cool factor, laptops are giving tough competition to PCs in every aspect.
Realizing this shift in customer preference when it comes to compu­ting devices,
vendors too are concentrating on ways and means to cash in on this opportunity.
Said George Paul, Executive VP, HCL Infosystems, “While sales of desktop PCs
have gone up marginally, it is expected to reach 55.5 lakh units by 2008-end.
But it's notebook category that's really pushing the market according to a MAIT
study on IT Hardware Industry.”

George Van Der Merwe, COO, Sahara Computers asserted that as prices of
laptops are falling, it is a fact that today users, even the first time buyers
are opting for laptops more as compared to desktops. He added that the mobility
and portability of laptops are few of the reasons that are driving the growth of
laptops.

Echoing a similar view Naresh Kumar Bothra, Director, Computer Exchange,
Kolkata said, “As per the ongoing PC buying trend, which is visible for the last
couple of years, demand for desktops has been declining while that of laptops is
increasing. As the world is getting more dynamic, people need to be more
flexible and mobile. And laptop is a perfect answer to the said work culture.”
While the diminishing price gap between laptop and PC has done wonders for the
demand for laptops there are some vendors who feel that this is not the sole
reason behind decrease in PC demand.

Some of the first time laptop buyers are opting for low-end machines as the
price difference between laptops and desktops have narrowed down to a great
extent. But in the home space, people who need a multimedia center still opt for
desktop.

Siddharth Patel, Sales Manager-North, Dell India agreed to Merwe's view. He
said, “It depends upon the class of people but majority are the PC buyers.
People feel desktop PC is more rugged in design and appropriate, as it is to be
used by different class of people at home from children to elders.”

By popular demanded

Apparently, the demand in both the categories is increasing as both have
their own set of customers. For example, traditional industry verticals such as
telecom, BPO, manufac­turing and government segments still prefer buying
desktops or thin clients for their employees. Similarly people with need for
high-end graphics and CAD/CAM applications and designers find PC as a perfect
solution to their requirements. On the other hand, large corporate and BFSI are
two of the most important enterprise segments that are driving the growth of
laptops in India.

Praveen Puglia, Director, Computer Gallery in Kolkata opined that students
pursuing higher education, business class and young executives prefer laptops to
desktops because of the mobility factor, even if they are first time users.
“Home users and the large quantity requirement segment prefers desktops and the
mobile office users and the top class prefers laptops,” he noted.

Factors driving demand

According to latest IDC figures, the share of notebooks in overall sales of
computing devices has gone up rapidly in the last few months. Notebook sales in
India grew by 81 percent YoY, while the growth in desktop sales was about seven
percent YoY.

Paul said that in context of the IT hardware industry, 2007 has been the year
of the notebook with a spectacular growth seen in shipments of all categories.
Fall in notebook prices, and the resultant closing of price gap between a
desktop and notebook PC, coupled with increasing focus on portability along with
increased availability of Wi-Fi and wireless-Internet connectivity; have spurred
customers across segments to prefer notebooks to desktops.

Speaking on the features that drive the demand for a PC or a laptop Merwe
said, “Laptops have already outshined desktops in terms of style, comfort,
design and handling. Apart from this, features like wide/large screens, one
touch management; enhanced security features, Wi-Fi cards are driving the growth
of laptops and the sales are going through the roof.”

Informing about the current buying trend, Paul said, “The notebook PC
shipments touching 1.8 million units (as against 0.98 million in CY 2006),
reinforces the increasing acceptance of laptops as the preferred choice for a
large number of first time PC buyers. This trend shows that the market is
accepting laptops as a mainstream product even for home users. In fact, the
consumer PC category which constitutes the first time users is transitioning
from a desktop-centric to a notebook-centric phase of growth.”

PC, battling hard

With any technology, there is a need to upgrade continuously to match up to
buyer expectation. Similarly, while laptop vendors are on a constant endeavor to
have a dominating position in the market, beating both the competition and the
PC; vendors manufacturing PCs have geared up to double the efforts not just to
gain a larger share of the pie, but also to combat stiff pressure from laptops.
This has lead to further innovations happening on the PC front, especially with
regard to the memory and comfort.

Talking about the innovative features being added to the PCs, Merwe quipped,
“Faster processor, increased RAM, LCD monitors, cordless keyboard and mike are
some of the innovations that vendors are bringing in to make desktops more
user-friendly with higher graphics and larger storage. There is a lot of
oppor­tunity for desktop PCs in the gaming space.”

Also, availability of wider screens with screen sizes available up to
22-inch, have given PC's a certain edge over laptops. PC consumption now is
being driven by the household sector. In fact, consumption in the business
sector declined by almost 17 percent while that of the household sector went up
by 72 percent, according to this MAIT study.

However, sectors like telecom, ITeS, education, continue to remain buoyant.
As e-governance programs get finalized, desktop sales may pick-up felt.

The future ahead

As per MAIT, the consumption of laptops by the business segment grew by 41
percent and the demand by household segment grew five-fold. However, desktop
will continue to have a moderate growth because of certain applications and
verticals,” predicted Merwe.

While Puglia opined that sensing the decline in desktop buying, some vendors
are finding ways to beat the competition from laptops by making the desktops
more compact and stylish, Paul added that as per IDC, the desktop PC shipment in
India will grow to 5,146,539 units in 2008 from 4,728,038 units in 2007 and
portable PCs will grow to 3,037,384 units in 2008 from 1,770,329 units in 2007.

Vendor companies dealing in this space foresee an upward move as far as
market growth is concerned. One among such was Patel of Dell, who said that
India will be number two in the world in the consumption in the next 10 years;
while both the markets-desktops and laptops will stay, but at a different
ratios.

Informing further Merwe said, “As per MAIT's prediction by the end of fiscal
2007-08, the PC sales will touch eight million units. This is because of large
demand from different industry segments.” One of the most significant trends is
the IT adoption by the SMB space, which will further fuel the PC growth.

A buoyant home market will be yet another growth driver. It is also expected
that there will be stronger growth in the commercial PC segment as compared to
the consumer PC segment. However, on the desktop side, machines with Media
Center editions will see a good growth, as home users will increasingly look at
the entertainment value of the desktops they are buying.

Lata Singh

latas@cybermedia.co.in