Fiscal 2003-04 ushered in the much-needed relief for all the peripheral segments, with all product categories recording good growth. As we take a closer look, the Indian peripherals industry demonstrated a high degree of maturity leading to adoption of newer technologies like USB 2.0, TFT monitors and MFDs. While we saw these trends the previous year, this fiscal found these high-end products more affordable and, as a result, hastened overall adoption.

Impacting the Market
On the Impact printer segment, apart from the traditional demand from BFSI and government, retail is emerging as a major growth driver. So with unique demands from across various verticals, the DMP vendors during the fiscal indulged in strategic positioning of their products. For instance, in the retail segment most of the vendors pitched heavily on their 9-pin, 80-column printers. This is a significant shift from the earlier days, where the common 9-pin wide was the most popular model. Today the 9-pin narrow has gone over to the retail side, while the 9-pin wide has become a general category DMP printer. Meanwhile, BFSI consumed 24-pin 80-column and 136-column printers. A major shift over the year occurred in the government sector, which went in for 24-pin models as against its earlier preference for 9-pin technology.

TFT/LCD panel prices remain high, thanks to demand outstripping supply. In India, front-office apps, retail and parts of BPO are driving the modest sales

Mid-life Crisis
Inkjets have been the volumes segment all these years and this trend continues. But one of the biggest gyrations that this segment witnessed across the world was the growing stature of the Multi Functional Peripheral device(MFD) tightening its noose on the midrange Inkjet space. As an IDC research report suggests, during 2003 around 2.48 million MFDs were consumed in the Asia–Pacific region. This remarkable growth is mainly due to the cannibalization of single-function inkjet printers by MFDs. This is as a result of the faster-than-expected decline in the retail price of MFDs. With the cannibalization effect escalating through 2003, 18% of inkjet printers shipped in 2003 in the Asia–Pacific region were multifunctional, as against 8% in 2002. Given the big business opportunity in the MFD space, all the vendors are investing their energies in order to gain more market share. Currently, there is intense competition between HP, Epson, and Canon in the MFD space, but over the last one year Lexmark has emerged as a dominant player in the MFD space, while Japanese electronics major Brother International launched a slew of MFDs in the first quarter of 2004 in India, priced between Rs 8,000 and Rs 41,000. With an attractive pricing model, Brother intends to become at least the No. 2 player in the MFD space in India two years down the line. These developments signal a good growth in the MFD sector in FY 2004-05 in India, as established vendors like HP and new companies emerging in this space will indulge in price wars. In the bargain, two segments-single function inkjets and entry-level scanners-will witness significant price cuts.

Where each single MFD product used to cost three times more than a single-function inkjet printer in 2002, prices have declined significantly in 2003, and are now on par with a mid-to end-segment inkjet. According to IDC, around 66% of inkjet MFDs shipped in the Asia–Pacific region during 2003 were priced-below $200. This shows the cutthroat competition that is currently reigning in this segment, and further price downslides are inevitable if vendors want to retain their market share.

Consumer devices like Apple's iPod and Sony's new Walkman are consuming millions of HDDs

The Big Picture
VGA, SVGA, and now LCD/TFT: the Indian Monitor space has seen them all. While the thin, flat panel display trend got entrenched a few years ago in advanced geographies, it was only from 2003 that India started to show some visible signs of taking to LCD monitors. According to IDC, the Asia–Pacific PC Monitor market grew by 18%, with 30 million units sold in 2003. During the same period, LCD monitors accounted for 27.8% with OND 2003 showing the highest growth of 31%. It is estimated that in the Asia– Pacific region for 2004, LCD monitors are expected to grow at about 38.5%. Samsung is the leader in the monitor space in the region followed by LG in second place.

IDC, in the recently released Worldwide TFT–LCD Demand and Supply 2004-2007 forecast, says that the 17-inch flat panel size will become most popular on the desktop side, and will account for 60% of the total PC LCD monitor demand. 14.1 and 15-inch LCD screen dimensions will, however, be the forte of notebooks. IDC also predicts that by 2007, LCD monitor prices will see price erosions due to oversupply. The TFT–LCD market, which includes LCD-TV panels, notebook LCD panels, and desktop monitor LCD panels, will grow by a CAGR of 15% from $24 billion in 2003 to reach $42 billion in 2007.

Storage: HDD
As per Gartner estimates, the HDD market has grown by 19% globally in 2003. This augurs well for the HDD industry, which was going through a lull period over the last few years with single-digit growth rates. The 2003 growth rates offer clear pointers of revival in the HDD market as a result of overall growth in the PC market during the last one-year. Globally 3.5 inch HDDs constituted around 80% of the shipments, while the adoption of 2.5 inch HDD products is on the rise on the portable computer side. While Seagate has the leadership globally, with multiple vendors like Quantum, Maxtor, Western Digital, and Hitachi, the HDD space has become extremely competitive with each eyeing greater market shares. 2004 will also see lots of technology enhancements that will become the key selling point. Globally, the 7,200 rpm is the default for entry-level disks, even in an emerging geography like India, with disk vendors seeing demand for higher rotational speeds in recent times.

Since early 2000, most of the HDD vendors have had mandates in the consumer electronics space, which is emerging as a secondary market. For instance, storage is inbuilt in most new-age consumer devices like digital camcorders, audio players and video game consoles among others. While the PC industry is expected to drive the dominant HDD market, the integration of the same with consumer gadgets and appliances is bound to increase the overall value and size of the HDD market globally.

Overall, peripheral devices are increasingly taking the convergence route, and what were once standalone devices are now seamlessly talking with each other as a result of rapid strides in PC interface. Hastening this process is the adoption of USB 2.0, which has streamlined to the point of simplicity data transfers between a peripheral device and the PC. In the Indian context, the ongoing fiscal is set to see good adoption of USB 2.0-based external storage devices like zip drives and digital cameras.

Shrikanth G in Chennai