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Circa 1995: A conference was going on in a leading hotel in Chennai. One of the speakers asks a hotel employee to pick up his 'notebook' from the dais after the presentation. The person returns with a 'scribbling pad'.

2005: Same hotel, same employee. A guest checks in, the employee quips: 'Sir, we have 24/7 high speed Wireless Internet and I can configure your portable for net connectivity..."

Thanks to the IT revolution in the last decade, once dreamed-of gizmos like laptops have been converted to affordable gadgets. In time the laptops became notebooks and then, sometime in between, they became 'portables'. This leads to a fundamental question: Will the notebooks take on the mobile culture in the country? Industry analysts and vendors surely hope so. For instance, in the formative years of the cellular industry, in the mid 1990s, a mobile telephone connection used to cost Rs 20,000 and call charges were exorbitant. Similarly, a notebook, during the same time, was vending well above Rs 2 lakh-a pretty upmarket equation. Somewhere in the late 1990s, the GSM happened in a big way, sowing the seeds of affordable mobility in India. CDMA became a reality over the last two years and the grassroots are now seeing streaming video out of R-World on their mobiles. For the business executives, CDMA is panning out into a cheap and simple alternative for connecting to the Internet. Users of mobile phones now want to go one step ahead and, logically, heavy users of Internet and company employees who have to travel frequently, are upgrading to notebooks.

The market up-close
The notebook prices going down has now become a pretty old story. What it leads to now is whether all these aggressive vendor campaigns, each vying for a greater market share, has increased the overall notebook penetration levels in the country? According to Gartner, the Indian PC market grew 35% in the third quarter of 2004, shipping more than 8.85 lakh units. India also showed one of the highest growths in the Asia-Pacific region (excluding Japan). In India, the small shipment base of mobile PCs, coupled with strong demand, propelled the growth rates for notebook to over 100%. Says S Rajendran, general manager, sales and marketing, Acer India, "The introduction of the newer value price bands has expanded the market, especially for mid-level notebooks and enterprises are now warming up to the idea of providing employees with notebooks instead of desktops at a marginal 10–20% higher investment cost."

What is driving notebook demand is buying from two kinds of consumers-the first time buyers and the high-end wireless users” Sanjeev Menon, IBM India “Given that PCs are not retired too soon in the Indian context, the motivation for equipping the middle and lower echelons in the organization with notebooks is not so compelling” S Rajendran, Acer India “Desktops cannot be totally replaced with laptops. Both are positioned in different poles of an orbit and usage of both depends on the user profile” G Radhakrishna Pillai, Ranbaxy “The total number of PCs in Pfizer today is 575 desktops and 458 laptops. Over the next 12 months we expect the ratio to swing in favor of laptops" Arun O Gupta, Pfizer

According to Dataquest estimates, during fiscal 2003-04, India consumed around 91,180 notebooks. This represents a volume growth of 75%. However, with price wars escalating in the last two quarters of 2004, it has increased the notebook volumes many fold and analysts are estimating that fiscal 2004-05 will sign out with 2 lakh notebooks in unit terms, representing more than 100% growth. Says Sanjeev Menon, brand manager mobile computing, IBM India, "In the recent times, notebook volumes are seeing a quantum leap. An indicator to that end is the kind of volumes we are seeing, for instance, in the first three quarters of 2004, we have shipped close to 39,450 notebooks as against 16,036 the corresponding period previous year, representing a 146% growth. What is driving the demand is buying from two kinds of consumers. First time notebook buyers are going in for the low cost sub Rs 40,000 notebooks. While consumers who already own notebooks are going for high-end wireless ones."

Notwithstanding the buoyancy, India's notebook penetration levels are very low when we compare with other geographies. For instance, India has one of the lowest rates of computer ownership in the world, at just about nine computers per 1,000 people. The global average is 27 computers per 1,000 people, and in the United States it exceeds 500.

Reflecting on that Rajendran says, "Today, the price slides in the industry have definitely played a part in the increase in notebook penetration levels. We have recently introduced an AMD Sempron-based notebook: Acer Aspire 1362, at a price point of Rs 35, 999-it is a huge success within the educational community."

View from enterprise
Any buyer today, whether individual or enterprise, has the luxury of multiple choices, but a comparison only favours the notebooks.

Pfizer in the last six months has procured close to 90% laptops and 10% desktops. The total number of PCs in Pfizer today is 575 Desktops and 458 Laptops. Over the next 12 months, the company expects the ratio to swing in favour of laptops. This is a picture every notebook vendor wants to see. But Pfizer's case is indeed an exceptional one; in many other enterprises in India the ratio might not be that rosy. Says Gupta, "I believe that the inhibiting factors towards notebook adoption are primarily in the realm of useful life of the machine and maintenance costs. For instance, a desktop has a higher probability of upgrades to increase its life with lower maintenance costs, whereas the notebook has limited upgrade options and a high cost of maintenance-if the monitor of your PC goes down, the repair cost is minimal, whereas the cost of repair and replacement of the notebook screen is extremely high." 

Says G Radhakrishna Pillai, head-IT-SRL Ranbaxy, "Desktops cannot be totally replaced with laptops. Both are positioned in different poles of an orbit and usage of both depends on the user profile. Even though laptops allow more mobility, they invite more physical security related issues compared to desktops. In terms of notebook adoption, the top layer of the current desktop users will be converted to notebook users. We have already upgraded our department heads and senior executives with laptops. The bottom layer will remain with desktops and the middle layer will be 50-50. Moreover, we have now started giving laptop to even field staff."

The usage of notebooks in the enterprise space, barring some exceptions, is still relegated to the top management. The working style and functional necessity are probably an underlying reason. Also, in the middle and lower rungs of the organization, investments in IT hardware have already been made. Says Rajendran, "We should bear in mind that enterprises were among the early adopters and users of PCs. And given that PCs are not retired too soon in the Indian context, the motivation for equipping the middle and lower echelons in the organization with notebooks is not so compelling. Despite that, we think in the next few years when PCs would go in for massive refreshes, the uptake for notebooks in the enterprise space would increase rapidly."

With that refresh cycle imminent, vendors like Acer, HP, Zenith, Dell and Toshiba are going all out for capturing the nascent Indian notebook market. Most vendors believe that 2005 will be a volumes year for the notebooks and estimates put the units at around three lakh. This makes notebooks one of the thriving markets to watch for in the days ahead.

Shrikanth G in Chennai

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