Facing the onslaught of HCL and HP, Lenovos main focus last year was on channels and retail business. Lenovo shipped 335,557 desktops, which signifies an annual growth of 14.5%. As a follow-up on its partner alignment initiatives, Lenovo ramped up its transactional partnership in tier-2 and tier-3 cities, as a result increasing its channel partner base. Some of the significant desktop launches Lenovo did over the last year included the ThinkCentre A60the first ThinkCentre desktop featuring an AMD processor.

The biggest gainer in terms of market share was Dell. Dell built strong inroads into Indias growing IT-BPO industry and kept pace with the industry growth rate. This is one vertical that is a real volume buyer and Dell has been leveraging on its relationships. Dell also announced plans to set up its manufacturing facility in Chennai, which is scheduled to be operational in the latter part of the year. This facility will initially produce desktops, with an initial planned capacity of 400,000 units per year. Dells share of the Indian desktop market stood at 5.3% at the end of FY 07.

Acer meanwhile continued on its retail spree and made its presence felt in the market. With 32% growth in desktop volumes Acer made some significant inroads into certain segments. Its highly portable, the mini PC offered up to 40% increase in performance. To improve affordability, Acer announced a special collaboration with ICICI Bank to provide financing options for purchase of IT solutions.

LGs gameplan of selling desktops along with consumer electronics actually fell through. Its growth almost came to a grinding halt in FY 07. It grew marginally at 0.8%.

HP overtook HCL to take the top slot, thanks to its aggressive SMB focus and improved mindshare. But the biggest gainer in market share was Dell, which kept pace with industry growth

Different Strokes
Consumer desktops encroaching into the home entertainment system space, was among the key trends last fiscal. Consumers did not just look at processing power; they looked for several other features in their desktops that comprised TV tuner cards, DVD drives, surround sound and high-end graphic capabilities. Clearly with the launch of Core 2 Duo by Intel, the age of bare minimum desktop configurations has come to an end. Moreover Vista, and its multiple versions ranging from Basic to Ultimate, appears to be the preferred OS at this point. The combination of Core 2 Duo and Vista along with 64-bit personal computing trend brought about a high degree of hardware changes in the desktop environment. Ideally desktops running Vista should have either Intel or AMD processors equipped with a power ecosystem, apart from 1GB RAM, good graphics card and a minimum of 80 GB storage. This configuration could well be termed entry level for desktops now.

In the enterprise desktop market segment, a key development was the launch of vPro technology by Intel. vPro delivers hardware-based security that does not require a functional OS.

The key verticals that drove the demand for desktops on the commercial side were IT/ITeS, BFSI, manufacturing, government, education and telecom. As IT companies ramped up on staffing, the demand for desktops grew in tandem. On the BFSI front, expansions and branch automation drives led to good spend on IT hardware and consequently this vertical absorbed a significant number of desktops. Education as a segment also opened up. This was mainly in the form of self financed large engineering colleges, which generated a good deal of demand. Also, with every state jumping into the eGovernance bandwagon, the year that went by saw demand for desktops by the state governments. Several players, and particularly HCL, cashed in on the government opportunity.

Retail Push
FY 07 also saw a fair bit of experimentation in the retail space. Apart from vendors like Acer that already have good retail presence; others joining the fray were companies like Lenovo, HCL and Sahara. Lenovo significantly expanded its retail network; it more than doubled its Lenovo Exclusive Stores (LES), from 40 to 98, and more than tripled its multi-brand outlets (MBOs) from 148 to 564. HCL has over 30 Digilife retail stores all over the country, and expects retail to emerge as a major marketing opportunity to drive consumer PC sales in the future. Sahara in the meantime came out with multi brand IT product stores under its IT Junction brand initiative.

Other similar efforts in this direction were in the form of Pantaloons eZone and Big Bazaar. They are expected to ramp up the market for consumer PCs in the coming quarters. "IT retail outlets of vendors such as HP, HCL Infosystems and some others are already functional. The big Indian retail players are expected to quickly follow suit, trying to reposition their offerings to customers by segmentation and a competitive approach," according to Piyush Pushkal, manager, Computing Products Research, IDC India. "This year will see IT vendors try out many new approaches and go-to-market strategies for product retailing. These efforts will focus on wooing the SOHO and individual/home user audience to convert them into impromptu buyers," he adds. Experimentation will also be seen in retail formats, in-store and on-site promotions, product bundling, and alternate payment options.

Meanwhile bundling IT peripherals continued to be an effective way to push more desktops. Last year consumers got excellent deals on UPS, printers, thumb drives that were being offered along with PCs.

Shrikanth G
shrikanthg@cybermedia.co.in

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