A long journey—16 years to be precise. A landmark  achievement—the five millionth PC to be exact. What started out in 1984 with the launch of Minicomp’s Neptune PC has grown to be a five million-strong installed base. From a PC shipment of 1,200 in 1984—the average PC then cost Rs 5 lakh—the industry saw the million mark in 1996 with shipments touching four lakh in that year. It took 12 years to reach the first million but the next four years saw a million PCs shipped annually. Comments Jyoti Satyanathan, business manager, personal systems group, IBM India, "From the figures perspective, it feels wonderful to touch the five million mark."

En route this journey, the industry has seen many companies and brands rising and falling. Erstwhile important market players like DCM DP, Usha, PCL and Sterling today only have history by their side. In 1986, HCL, DCM DP and Zenith accounted for 87% of the total PC market share. Today, they make up less than 15% with DCM DP being an insignificant player in the PC market. Among the other Indian players, HCL is still the market leader, followed by Wipro and Zenith in the top five club.

Also, in the swadeshi-videshi debate, the market is still very much in the hands of Indian players as the unbranded segments still make about 70–75% of the market. They have been giving the branded players a run for their money, and their market share.

Also, interesting case studies have been created with the foremost being of how a single wrong strategy can lead a company to its ruin. PCL’s aggressive strategy of late 1997—to bring the PC to the common man with its "dhamaka" offer of Rs 24,000—backfired badly as it could not successfully execute its promises. Today, PCL is known only for that mistake. Another interesting case study has been Intel’s successful promotion of the gray market with its genuine Intel dealer (GID) scheme. The chip giant supported gray market players through the scheme, providing respectability and dependability to them.

The best yet to come

That’s been the past; now a little about the future. Statistically, the advantage of a large population like India is that the per capita consumption remains low and when compared to other countries with higher per capita indicates a huge potential. In India’s case this seems to be true. Yet another case study would be the IT task force recommendation of converting STD/ISD PCOs into public teleinfo centers. The industry could see about 6 lakh PCs being mopped up by such centers. Also, various government departments are budgeting about 3% of the overall budget for IT, a major part of which is expected to be in hardware. No wonder, IDC projects a heady CAGR of about 47% till 2003-04, compared to China’s 25%. IDC expects shipments in India to jump to 7.5 million compared to just over a million today. Presently, all the top global vendors are in India with Dell joining recently with its international model.

What 5 million means to India?

Well, five million is certainly no big news when compared with other countries and even with the Asian neighbors. (See box: Where Does India Stand) Aditya Pant, research head, IDC India, says, "China’s annual shipment is higher than the installed base of India." Agrees Satyanathan, "No doubt five million is a big number but we needed to grow faster." Says KV Saichandrasekhar, head, product marketing, commercial PC group, Compaq India, "It would have been better if it had happened a couple of years back."

Nevertheless, the industry experts agree that with the five million installed base and the one million-plus annual shipment, India is definitely hot. In fact, these numbers would be the key reason for further growth and interest by vendors. The first example, Dell’s announcement of its direct selling model in India. Though Dell has been in India since the mid-nineties, interest remained low. Unlike India, Dell has a manufacturing base in China where annual shipments are over five million. Though Dell has no immediate plans to set up a manufacturing base in India, with the announcement of its direct business model, it will only be a matter of time before Dell takes up setting a base in the country. Also, MNCs like IBM and Compaq have already set up their assembling units in the country, and others are expected to follow soon. Unlike in the past, it will not be import duties but logistic necessities that will drive assembly or manufacturing units. Says Vinnie Mehta, director, MAIT, "With zero duties coming in by 2003, I don’t see why people should set up manufacturing units in India." Says Satyanathan, "The decision to set up assembly or manufacturing units in the country will be purely driven by logistics."

To take care of the potentially high growth, experts point out that the import model may not work very well with PC vendors. So, most of the players will have to set up assembly or manufacturing units with higher capacity. Also, the installed base will become a good opportunity in other related segments like peripherals to seriously think about setting up operations in the country. Adds Saichandrasekhar, "I think in the next couple of years few manufacturing centers will come up in India." Samsung has already taken the initiative with its intention of setting up a monitor plant in India. It has estimated a budget of $35 million over a five-year period to cater to the growing needs of the Indian market.

Page(s)   1  2  3