We had mentioned last year that HCL needed to watch out for flanking attacks from erstwhile partner H-P and new aggressive Compaq. And that’s is exactly what happened. Though Compaq out-raced HCL for the number one rank, yet HCL managed to catalogue a higher growth in units as compared to previous fiscal. From just a 10% growth in 1999-00 to over 47% in 2000-01 is certainly a good achievement for the company. In terms of value too, the company improved upon its last year’s growth of 15% to post a 23% gain.

In terms of strategy, HCL continued its focus on the home market with the help of its strong network of over 1,000 dealers and its tactical marketing with road shows and carnivals. Also, the company’s achievements included aggressively making inroads in the financial segment and winning major gains in education and government. The company presently has a manufacturing capacity of about 2.5 lakh units per annum and has plans to hike it to about 4 lakh PCs per annum. But since more and more top vendors are attempting a similar exercise, it remains to be seen whether this will give the company any benefits over its competitors.

While the company is well positioned to exploit the booming home market with its huge channel network, it will increasingly face competition with cash-rich MNCs with high spending on brand-building and domestic vendors with price as their sole advantage. So far, HCL seems to have continued its branding activities like traditional carnivals and road-show activities, which could help the company jump back to the number one slot.

HP

Since the commissioning of its assembly unit in Bangalore in 1999, there has been no looking back for HP. With its objective of shipping out PCs as cheap as the local brands, HP has firmly entrenched itself in the market. Its aggressive pricing strategy—especially in the commercial desktop range with products like HP Brio—has paid rich dividends. It was first among the MNCs to launch its desktops under the Rs 50,000 pricing. Last year, the company had decided to beef up the channel act. Today, HP’s desktops are available in over 107 cities across the country including in unheard-of cities like Alappuzha to VV Nagar. Very clearly, HP is focussed to cover more cities to gain marketshare. And to add to its reach, HP has gained a huge advantage by bundling its varied range of printers and scanners. This strategy has been used very effectively to increase its marketshare and post a 45% growth, retaining its number three spot. On the commercial side, HP with its Brio has also forced other vendors to launch cheaper products. Interestingly, Brio has also seen a lot of cross sales to the home segment. While the strategy and channels are firmly in place, in the last fiscal, Compaq clearly took the lead leaving HP far behind. Can HP outpace its global rival this year and counter IBM, who is moving aggressively into the desktop domain with a firm home and commercial strategy? Time to wait and watch. Interesting times ahead.

IBM

Quite like last year, in 2000-01 IBM seemed still confused about its focus and its target segment. It had the option of launching brands for the home segment or of continuing its focus on the commercial segment. Unlike other players who normally have a combination of home and commercial sales, IBM only targets the commercial segment. Last year, its key focus areas were the SME and SOHO segments. The focus was clearly on servers and the company went in for promotional offers like bundling low-end servers with a couple of desktops and offering ThinkPads at attractive discounts.

Even in the current year, it is only now that the company has launched a home PC under its commercial desktop brand—NetVista. These desktops were introduced in the Rs 38,000 upward range. This is unlike the strategies of other MNCs of introducing different brands for these markets. However, finally with a product for the home segment, at least now IBM can enter into the home segment either via its home PC NetVista or through Brio—with cross sales of its commercial desktops into the home market.

IBM intends to continue communicating its marketing efforts to the SME and SOHO segment and plans to introduce fresh products and marketing strategies to address this space. Only time will tell whether it will succeed like HP or the current leader Compaq.