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“Free data card worth Rs 6,000 and three months subscription free”, screamed an advertisement for a leading brand notebook. It's sure a steal, as the total package including the data card was just about Rs 50K. And no wonder consumers are lured into a notebook purchase. This becomes more evident as we look at the notebook shipment numbers for 2005-06, in which the notebook segment of the PC market registered a whopping 168% growth and 588,592 unit shipments. Indeed an impressive growth compared to the previous year.

Ground Realities
The notebook market was once a high value low volumes game, but since the launch of new processors, specifically for mobile computing like Intel Centrino, a few years back, the scenario started changing for good. Says Manish Gupta, general manager, Notebooks, Lenovo India: “The Indian PC market has grown rapidly over the last few years. In parallel, consumers have become more technology conscious. Notebooks are mobile and also offer the latest technology features in computing, security and entertainment. This has made them very popular and has given a huge boost to notebook sales in the country.”

What's driving the notebook volumes to the pink? As we delve into history a bit, from a technology perspective, a serious shift towards a performance based notebook started with P2, which offered closest performance on par with a desktop, but still a notebook was never considered as a desktop replacement. So in the formative years, a notebook offered mobility without on the go connectivity. In 2003 all these changed with Intel coming out with Pentium M- Centrino technology with embedded wireless changed the very fabric of the notebook usage. And it also opened up a whole new market for wireless communication and jargons like 'on the go' became the mantra for the mobile age. As we take an India perspective, analysts believe that the notebook consumption patterns will be on the on the lines of mobile telephony. 

For instance, in the mid 1990s GSM was luxury. But from early 2000, GSM started ramping up so fast and today India is one of the biggest markets for GSM and we apply the similar analogy to notebooks, which is seen as the extension of GSM culture. Through mobile phones people have now used to mobility and today more and more consumers want to carry their work wherever they are going and thanks to the connectivity-every hotel from three star to up market ones offer Wi-Fi and many cafeterias like Baristas and public places like airports and railway stations have Wi-Fi hotspots. All these have created a mobile access ecosystem wherein the notebook plays a critical role.

Says R Manikandan, general manager, Sales and Marketing (IT division), LG Electronics India, “There is a paradigm shift happening in notebook buying worldwide. The first generation notebook consumers of the 80s were primarily looking for basic computing in a portable device. With the advancement of technology, the second-generation consumers of the 90s opted for better features in a compact form factor.”

Market Dynamics
With the escalation of notebooks in the PC charts, the gap between a notebook and desktop is narrowing down in terms of price points. While we compare actual numbers in shipments terms, the larger market is obviously the desktops. For instance India shipped 4,640,833 total PCs, and of the total PC pie, notebooks represent 13% in unit shipments terms. It means the market share for notebooks have doubled from last year's 6%. If we take the last one year in perspective, the underlying tone advanced by the processor vendors like Intel and AMD is 'performance per watt'. What it implies is, the new line of processors will consume less power, but brings to table more performance. This is huge consumer gain from a mobility point of view. For instance, the hallmark of new processors like Core Duo is extended battery life and multitasking.

In the last one year, one has seen the notebook processors getting more mature from technology stand point of view and it has expanded the consumer buying options to a great extent. For instance when we take the case of the AMD, it has been attacking the low end of the notebook segments through its Sempron line, but by and large Intel Pentuim M has dominated the popularity charts. But last year AMD pulled a surprise by launching a power processor called Turion 64, touted as the only 64-bit processor that can run Microsoft's up coming Vista OS. Major PC vendors like HP, Fujitsu, Asus launched Turion based notebooks and for instance HP launched a sub Rs 45K single core Turion based notebooks last year. Intel then launched Core Duo and followed with Core 2 Duo with 64 bit capabilities and AMD came out with its dual core 64-bit chips this May 06. These developments have made the notebook market extremely competitive and the market has segmented upon defined lines like low-mid-high end. 

The demand from large enterprises for notebooks has been growing consistently and most of the vendors have observed a steady adoption rate among home consumers as well. To offer products across the buying segments is the key strategy vendors adopt today. A look at the market segmentation reveals the three major price categories-the sub Rs 30K to Rs 50K, the notebooks for basic computing which is the entry level or budget category. The mid-end at the sub Rs 70 K, is the enterprise category wherein notebooks comes with enterprise class features like fingerprint authentication and enhanced security features. The sub Rs 80K, is the high-end notebooks, which comes in a thin and light form factor. The fourth category is the ultra portables.

If we look at vendor wise performance, HP tops the notebook market in India. HP shipped around 230,000 notebooks during 2005-06 and registered a whopping 207% growth in volume terms. HPs share in notebook space is close to 40% and its success is primarily due to the wide array of configuration across different buying segments. HP is also one of the major consumers of AMD processors and recently the company has launched its first dual core Turion 64 based notebook-Compaq nx6325, priced competitively at Rs 50k.

Lenovo, which is the number two notebook player in India, is pitching heavily on innovation. The company's strategy for the notebook segment is to comprehensively address specific requirements for each end-user category. To that end, it has realigned the business to address different segments of customers more efficiently. For instance its ThinkPad series is targeted at large enterprise users and its own branded Lenovo notebooks are more at mid-end segment.

Says Gupta, “The market is highly competitive today and innovation is becoming a very important differentiator. At Lenovo, we are incorporating innovative features that add value. For instance, Lenovo ThinkPads are equipped with ThinkVantage Technologies (TVTs), which offer unparalleled security, imaging and support features while the Lenovo 3000 series of notebooks showcase similar features called Lenovo Care and have high-end multimedia capabilities.”

Acer meanwhile is known for its aggressive pricing strategy. The company over the years has offered notebooks suited for the education sector with processors like AMD Sempron and Intel Celeron M and attractively priced it. In the mid to high end Acer has various models starting from Pentium M to Core Duo. Says S Rajendran, general manager, Sales and Marketing and Mobility, Acer India “Acer has been concentrating on the Home, SOHO and the SMB for the notebooks, which are the fastest growing segments in the market. Our product, pricing, special offers and go-to-market are based on this target segments.”

If we look at the larger notebook market, the biggest slice of the pie comes from the entry and mid end notebooks. This is the volumes space in notebook, which all the vendors target. Last year also saw the escalation of Indian players like HCL, Xenitis and Sahara, which offered their brand of notebooks. For instance, HCL launched its own brand of notebooks called 'Leaptops', which is available in different configurations. Says Rajendra Kumar, executive vice president, HCL Infosystems “Our aim with leaptops is to leap to the top in the notebook market with our offerings. Our notebooks are available through more than 800 existing channel base spread across the country and moreover we have got Ingram Micro as our national distributor.”

With all the PC vendors concentrating on notebooks augurs well for the buyers. Every vendor is trying to raise the performance bar, and offering great value adds to the buyers. For instance, Dell in the recent times is going aggressive in this space. In the last few months Dell has announced various notebooks, starting at sub Rs 40K to Rs 50K. All these developments signify that the Indian market was able to react to the latest notebook technology offerings and all vendors are fighting to gain more market share.

The outlook for the notebook market remains bullish, as Gupta points out, “Growth in the notebook market looks extremely promising and is expected to continue. However, desktops will remain attractive to the consumer and enterprise segments as they offer great value for money. Notebooks will be popular because of the mobility factor and falling prices.” Going by the current buoyancy, observers expect that India will clock close to nine lakh notebook units by the end of the ongoing fiscal.

Shrikanth G
shrikanthg@cybermedia.co.in

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