The PC industry in India pulled through another year, and a closer look at the year gone by reveals that the customer has indeed become the king. If the desktop performance growth was good at 21%, one look at the notebook landscape says it all. It's been a glorious year for the notebooks with the volumes soaring. Notebooks registered a growth of around 168% in unit terms. According to IDC India, the overall desktop market grew 4% in value terms to clock revenues of Rs 10,929 crore, as against Rs 10,506 crore in FY 2004-05. The overall notebooks segment posted a massive 93% growth to close books with Rs 3,550 crore versus Rs 1,838 crore in FY 2004-05

Over the last two years, it's been a tight ropewalk for the vendors on the desktop side with margins getting tighter by the day. Hence, more the volumes, the merrier, that's what exactly happened during the year, with vendors trying out all options and lured the customers with offers such as bundling TFT screens to MFDs with their desktop PCs. Volume pushing approach, culminated with HCL launching a sub Rs 10K desktop, followed by other players such as Xenitis. The sub 10K PC despite its lukewarm response, on the other hand, accelerated the thought-PC as commodity on the minds of potential buyers.

Desktops: Staying Power
Desktop PC business continues to be characterized by the cut-throat competition with numerous vendors (branded and un-branded) constituting this space. HCL and HP continue to dominate the desktop PC business, and HCL has retained its number one position this year, also with a market share of 15%. It was a year in which HCL grabbed media attention with its  sub 10K PC in 2H 05 opened up a new market, which even assemblers had ignored till now.  HCL Infosystems continues to lead the Indian PC industry in terms of total annual shipments of desktop PCs. The company posted an impressive 33% growth in unit terms, as compared to the previous year. According to the vendors in the fray, the key growth drivers during the year came from verticals such as telecom, banking, retail, and ITeS. Meanwhile on the sub Rs 10K PC, HCL did not divulge the total shipment; instead termed the response so far  as “very encouraging.”

Over the years, it's been a big fight between HCL and HP in the desktop PC arena. This time around, it's a  neck to neck battle, and HP sold 608,899 desktop units. Its Pavilion and Presario range of desktops saw good growth over the year with home users driving the sales. Meanwhile, HP also upped its ante by launching Pavilion Media Center desktops, targeted at the high-end home consumers, who view PC as a form of  entertainment.

With this trend in the back drop, the desktop purchasing decisions in the home segment took a two-pronged route. One, the first time desktop buyers looked at desktops that had multimedia and a modem powered by processors like P4 HT. Typically these consumers went in for desktops in the sub Rs 20 K range that appealed to them. Meanwhile, users who looked at additional features like DVD drive, 17-inch monitor etc went in for high end systems priced at Rs 25 K and above.  Clearly over the year the market segmented across three definite lines-low, mid and high end. While this segmentation was there, it got more defined over the year.

Acer, one of the companies ramping up fast in the systems space did very well by registering a growth of 39% in desktops in unit terms. Over 2005-2006, Acer saw a huge growth in its retail initiative. The number of Acer retail stores grew to over 225 outlets in over 96 locations in India. Acer also made major inroads to the B and C class cities. It also undertook corporate restructuring in early 2006 to align it more closely with its business goals. 

Giving tough competition to Acer is Zenith, which has become one of the leading Indian systems players in the country. The company, over the year, has made significant initiatives that have strengthened its overall PC business. A look at the other players in the desktop business during the year shows good traction for vendors such as PCS and LG. When LG forayed into the desktop business, many doubted its success, but the company registered massive growth in the desktop space. Meanwhile, Dell attacked the desktop segment with its OptiPlex range, with configurations ranging from P4 HT to Pentium D. On the high-end models, Dell also offered flat panel displays. Dell's OptiPlex range was characterized by very small form factor that made it ideal for segments such as BPO and ITeS.

If we look at the leading trends in the desktop space last year, it shows the burgeoning home market. The home segment growth was very impressive. This growth has encouraged some of the vendors to take a closer look and work towards increasing their visibility and share of the pie in the home market. Meanwhile, the price difference between branded and un-branded PCs narrowed substantially. Along with the lure of EMI options, more home consumers went in for branded PCs. The home segment is further expected to react positively to desktops with good entertainment features. To lure the home consumers, the vendors roped in Bollywood celebrities to promote their offerings. For instance, players such as Lenovo resorted to this route.

Page(s)   1  2