Impact Printers Inkjet Printers Laser Printers The Key Drivers: A Mixed Bag of Tricks
	Impact printers, the mainstay in the peripherals space, saw sales slip—325,467 units against 338,639 last year, ringing in Rs 432 cr in revenues, up just Rs 1 cr
	WeP Peripherals, the leader in the dot matrix printer space, sold 119,285 units valued at Rs 143 cr. It was followed by TVSE (Rs 133 cr) and Epson (Rs 85 cr)
	Inkjets emerged as a high-volume segment, managing to match laser speeds

We have tried everything… bundling, discounts, gifts and what not, but still managing our in- ventory becomes an uphill task,” lamented a ma- jor reseller of IT peripherals. He was not alone—numerous mid-sized distribution companies and small resellers across the country found the going difficult in the IT peripherals space. As the IT peripheral industry pulls through another year, the performance is neither spectacular, nor very bad. To put it in a nutshell, fiscal 2002-03 can be called the Year of Strategy, Innovation and Competition.

For one, all major peripheral vendors went in for a lot of brand positioning and took a segmented approach, with SMB topping the agenda. With urban markets reaching a point of saturation, vendors went deep into the upcountry markets and organized road shows and custom campaigns to tap the market potential. In the end, the top three—Tech Pacific, Redington and Ingram Micro—drove the peripherals industry at large. For second-tier distributors and resellers, the going was tough because of lack of best practices. They struggled to manage multi-vendor product and credit lines, resulting in unethical practices abounding and some resellers closing shop, leaving distributors in a fix. Vendors, meanwhile, fought the pixel and price war, with resolution levels going up to 5760 dpi on the inkjet printer side. New products, technologies, aesthetics and styling were in as peripheral devices like printers, scanners and monitors became sleek and thin. Above all, the year gone by also drove home what convergence is all about—multi-function devices (MFDs) became a reality, with all vendors offering integrated all-in-one devices that could print, scan, copy and fax.

DMPs: Making a sustained impact
Despite being big and noisy, dot matrix printers (DMP) have come a long way. Vendors made innovations, making DMPs a value proposition to the BFSI and government sector, which have traditionally driven DMP sales. Fiscal 2002-03 was yet another routine year for the impact-printing segment, with total number of units going down to 325,467, compared to 338,639 units in the previous year—representing a decline of 3.8% in unit terms. In terms of value, the segment remained flat at Rs 432 crore, an addition of Rs 1 crore over the previous tally of Rs 431 crore.

The DMP market in India is divided between three leading players—WeP Peripherals, TVSE and Epson. As was wont, WeP led the pack in 2002-03 with 119,285 units valued at Rs 143 crore. Competing head on with WeP is TVSE, which made Rs 133 crore out of 110,614 units. Meanwhile Epson, the only MNC brand in the DMP space in the country, sold 91,505 units that translated into Rs 85 crore in revenues. In the high-end DMP segment, Lipi is the undisputed king. The company registered 6% growth in unit terms, but revenues declined to Rs 72 crore from Rs 79 crore in the previous year—mainly due to crashing end-user price points. Looking at the performance of the DMP segment during 2002-03, there’re clear indications that it will no longer remain bi-polar. To a large extent, the impact-printing segment was alternating between WeP and TVSE over the years.

However, the stable performance of Epson and Lipi signify a multi-polar market and the traditional customer base that each company has acquired. On the technology front, a significant development was the indigenization of DMP technology. TVSE, for the first time in the country, launched its Proton range of DMP printers—fully built in India. It also signed up Tech Pacific as its distributor. With most government departments still rooted in manual processes, DMP vendors were bullish that they would consume a good number of printers in the current year. However, analysts view the government’s IT spending potential with guarded optimism. This is because state governments are saddled with fiscal deficits that greatly hamper e-governance initiatives. Given that, the biggest challenge for vendors is to enlist new clientele from emerging up-country markets—which is where a lot of action is expected to be seen in the current year.

Inkjets: High volumes, low value
Going by the number of inkjets sold in 2002-03, the going looks rosy. For instance, an audit at the end of the fiscal revealed that a total of 686,629 inkjet printers were sold in the market, compared to 436,500 the previous year, representing 57% growth. But a cursory look at the value generated drives home a point—inkjets are at the threshold of becoming a consumer commodity. For instance, in value terms, the segment moved up marginally by 10% compared to 57% unit growth. The main point was that despite double-digit volume growth, the segment was not able to grow in revenue terms. The hypothesis is clear—the inkjet printer business has become a high volumes, low value segment. In the ongoing fiscal, vendors will focus more on all-in-one MFDs that are fast becoming a value segment for all vendors.

Canon, in India, has set an ambitious revenue target of Rs 500 crore by 2005. And the company firmly believes that around 30% of its revenues will come from MFDs. The company also needs special mention for its performance in the inkjet space in 2002-03—selling an estimated 60,000 printers, a growth of 200% in volumes. Meanwhile, HP is the leader in the inkjet space, and saw unit shipments growing 50% to touch 493,896. But values grew by only 5%, the reason being the fall in entry-level DeskJets—which today sell at as low as around Rs 2,600.

Epson towed HP with 112,733 printers and registered a healthy volume growth of 83%. In value terms, Epson’s revenues appreciated by 31%. HP was able to sustain its volumes and retain its leadership position partly due to its retail initiative.

Today, HP printers are available in 400 retail outlets across the country. The company also started a program called the Geographic Expansion Initiative, targeted at expanding the channel base and creating visibility for its products. To top it, HP celebrated the shipment of its 200 millionth printer in June 2003, making it the undisputed leader in the inkjet space. This leadership position was also due to the proactive performance of its two major distributors—Tech Pacific and Redington, which together moved 60-65% of HP’s offerings. Epson, meanwhile, increased its marketshare and launched Stylus Photo 900, an economically-priced photo inkjet printer for tech-savvy users. A key feature of this printer is that it can print directly on CDR/DVD-R disks.

Laser printers: Going strong
Large enterprises and SMBs were the key growth drivers for the laser printer segment, which registered growth of 55%. An estimated 130,920 units were sold at a value of around Rs 288 crore, which made for an increase of 20% compared to the previous year’sRs 239 crore. A look at vendors in the fray reveals the command HP has in this segment. For one, HP registered a 47% growth from 64,546 units, translating into Rs 236 crore in revenues. Following HP at a safe distance was Samsung, which had a great year on the laser printer front—with both volume and values going up by 150% and 106%, respectively.

The biggest losers were Epson and Xerox, which saw revenues sliding. Wipro, meanwhile, managed to garner Rs 6 crore from 4,268 units. Looking at the buying trends in the laser printer segment, vendors saw a certain shift from high-end inkjets to lasers, signifying the maturity of the market and the adoption of laser technology. Growth should also be attributed to aggressive pricing that influenced SMBs to adopt laser printers. Color lasers also made an entry into the market. HP gained significant marketshare by introducing new color LaserJets at attractive prices.

HDDs: Size doesn’t matter
Since Year 2000, the capacities of hard disk drives (HDD) have steadily increased. Today, it has reached a stage where 20-40 GB is the default entry-level real estate every PC sports. For a typical home-user, a disk drive capacity of this magnitude rarely makes any difference or influences buying decisions. Also, many market surveys indicate that a home-user doesn’t run space-hungry applications and, hence, 40 GB is most likely to remain as the entry level for some time.

On the enterprise side, back-up demands drove the HDD market. An interesting trend here was that while large enterprises talked about concepts like storage virtualization and SAN, the small and medium segment took advantage of higher-capacity disk drives and created their own standalone storage spaces. The SMB space is one segment all HDD vendors are looking at as a potential goldmine. Major vendors in the HDD circuit include Seagate, Samsung, Maxtor and Quantum. Seagate still retains its leadership position with more than 60% marketshare. However, Maxtor is gaining ground and will challenge Seagate in the entry-level segment. However, Seagate’s revolutionary Barracuda and Cheetah drives have carved a niche in the market and challenging them would be an uphill task. On the technology front, Seagate’s new 2.5-inch enterprise disk drive platform is poised for big times ahead. The HDD market in India is expected to grow at a CAGR of 42.4%. This, according to MAIT, is a good number, given the global CAGR of 16.5%. Despite this growth potential, a big challenge for HDD vendors is the wafer-thin margins they derive. Analysts feel that if HDD vendors choose the direct sales model, they can average better margins.

UPS: Surging ahead?
In all likelihood, the UPS market should have come of age by now. In a country like India, power problems are rampant and the only panacea is putting in place a UPS. But the market hasn’t grown along expected lines. As per available statistics, the UPS market registered a negative growth of 6% in 2001-02, with fiscal 2002-03 proving to be as difficult for UPS vendors.

There was a significant reduction in both volumes and value. According to industry estimates, the UPS market was pegged at Rs 1,250 crore.

Apart from established players like Emerson, APC, Invensys, DB Power, Numeric, TVSE and WeP Peripherals, the market is cluttered with hundreds of small players who constitute the unorganized sector. The unorganized sector constitutes 60% of the UPS market. The equation until last year was such that Emerson led the pack, followed by APC and Numeric. But this is in for a change, with the Invensys Powerware and WeP Emerge range of UPS’ making good gains through aggressive marketing campaigns.

Optical disk drives
The ODD market will see the gradual phasing out of CD-ROM drives. Instead, CD-R/RW drives will become a default feature in PCs. Big vendors like HP have already launched PCs with CD writer drives. The popularity of CD writers comes from the fact that they can read, re-write and store up to 750 MB. While it is too early to write off CD-ROM drives, the next two years should see their adoption in a big way. DVD-ROMs, meanwhile, are still in a nascent stage and make up a value segment, with little volume growth.

On the technology front, it was Samsung that launched CD-ROM drives with the dynamic vibration absorber technology that enables error-free continuous reading. In terms of other peripheral devices like modems, zip drives, keyboards and mouse, it was rather a flat year as a result of decline in home PC buying. However, with the awareness level on USB 2.0 on the rise, zip drives and other USB-enabled devices like Webcams are becoming preferred mobile storage and video-conferencing devices.

SHRIKANTH G