The Top 3 distributors-Tech Pacific, Redington and Ingram Micro-averaged good growth. For instance, Redington alone registered a 26% growth compared to the previous year. On the face of it, the growth might look modest, but it augurs well for the industry that was mired in so many regulatory norms and tax regimes.

Impact Printers: Going Strong
Some industry analysts, a few years ago, predicted that the impact printer segment would be phased out with the advent of new printing technologies like inkjets and lasers. That was the scenario in developed geographies, where the impact printer industry was overshadowed by new technologies. In India, the DMP is still on terra firma. A look at the performance of this segment during fiscal 2003-04 reveals the consolidation all vendors have made, with the key vendors, WeP, TVSE, Lipi, and Epson, retaining their respective market leadership. WeP Peripherals completed the fiscal with a growth of 8% in revenue terms, also TVSE, saw volumes increasing by 30% and value increasing by 22%. Meanwhile, Epson and Lipi had a good run, with both enjoying growth in volume and value terms.

BFSI and government continued to be big verticals for DMPs. For TVSE, these verticals constituted close to 33% of its total revenues while, WeP did a lot of product positioning and gained considerable mandates from various verticals. It phased out its old series of DMP products with a new series called DSI, and also introduced receipt printers aimed at receipt, ticket, and transaction printing. WeP also expanded its language repertoire on DMP, adding Chinese, Turkish, Thai, Arabic, and some European languages. It also became the first Indian printer company to receive approval and certification for sale in China from the Chinese government.

Epson too went aggressive in the DMP space and did various channel re-orientation exercises, further attacking the retail space with its 80 column and 40 column DMPs. Epson secured good volumes in the 9-pin and 24-pin DMP segments, with close to 40% of Epson's sales happening in SME and the retail space. Multi-functional copy printers (technically known as hybrid printers), which can print, scan and authenticate as well, also emerged as a niche market for DMP players. For instance, vendors like Epson expect good volumes of hybrid printers to be consumed by the BFSI segment in the ongoing fiscal. A typical application scenario would be an outstation cheque immediately getting credited, as through this device one can scan the cheque, authenticate the signature, and print the credit statement.

In terms of product innovation, companies like TVSE focused on low operational costs in running a DMP printer. As a result, TVSE launched its patented 10-million-character ribbon cassette in 2003, which the company claims will cut printing costs by 70% or 2 paise per page. This obviously shows the competitive nature of the DMP space and the aggressive roles being played by various vendors. In the year ahead, the DMP market is expected to maintain the current momentum, and industry analysts expect the government and BFSI demand to continue for a couple or more years due to massive automation initiatives currently happening on these verticals. That apart, the retail segment will also drive considerable demand.

Inkjets Give Way to the MFD
When inkjets made their entry a few years ago, an entry-level printer used to cost around Rs 6,500. Cut to 2004. A printer with 2,880 dpi vends today at about Rs 3,000, an amazing 100% decline in the end-user price. As a result, during 2003-04, upto 80% of the inkjets were consumed by the SOHO segment, which finds it more feasible to go in for the inkjet printer alongside of buying a PC, when the price of a couple of thousands more for another device looks far from prohibitive. Added to that, all the resellers provided attractive bundling options and hence buying a printer became default with a home PC. While that kept the inkjet market alive, the year, however, did show signs of the market reaching a saturation point. Inkjet leader HP consciously pushed AIO (all-in-one) devices, creating the AIO/MFD category, dominating it, and giving up half the inkjet market.

A major development that happened during this fiscal relates to the shake-up in the mid-segment inkjet market. This segment felt the pangs when Multi-Function Devices (MFDs) cannibalized the market-shares of inkjets priced at Rs 6,000 or above. Estimates pitch the MFDs inroads into the inkjet kitty at 30% for 2003-04. Meanwhile, the photo inkjets segment retained its preserve at the higher end of the spectrum, and many photo studios drove the demand here with digital cameras becoming popular during the fiscal. Looking at the current inkjet market dynamics, the mid-segment will continue to decline as MFDs gain. At the lower end, the price drop has reached the threshold point and analysts do not expect any more price cuts here. In the high-end segment, a marginal drop in end-user price is inevitable in the days ahead as it is the only way of creating a demand in that space. An entry level Photo inkjet, which is now in the sub-Rs 7,000 mark, is expected to slide to the sub-Rs 6,000 range in Q3 of 2004-05, since most of price cuts happen in Q3 because of the holiday season. Meanwhile, Lexmark also made its presence felt in the inkjet space. As per available market estimates, the company notched up a market share of 6.8% in Q1, 2004, and for the same period, the company garnered a 9% market share in the MFD segment. Companies like Canon also pushed inkjet volumes, but focus shifted to MFDs in which Canon sees a big business opportunity.

Laser Printers: HP Rules
Once a high-value low-volume segment, laser printers have steadily declined in price points. The major vendors in the fray include HP, Samsung, Xerox, WeP, and Epson. HP has, over the years, carved out a dominant position in the laser printer segment. The mono-laser segment grew by around 40% during the fiscal, with HP's market share being 74%. In the color laser segment, HP garnered a whopping 94% of the market share. However, in recent times, Samsung and Xerox have started attacking the market aggressively with a slew of models, making the extremely competitive over the year with all the vendors bent on breaking the price-performance barrier. Xerox increased its visibility and focused on its Phaser range of laser printers, even as HP upped the ante by launching the LaserJet 3500 and 3700 series. These HP machines, priced between Rs 60,000 to Rs 98,000, are targeted at the mid-size enterprise customer, while, for the large enterprise, HP leveraged laser printer solutions priced at upwards of one lakh rupees. Typically, segments like BPO, financial institutions and FMCG companies went for the high-end laser printers. A distant vision somewhere in the MNC haze is WeP, which has a sustained but small presence in the laser space. Compared to the previous year, WeP Laser printers this time round declined in value by 38%, while volumes appreciated by 3%. Epson is yet another vendor who must be mentioned here, but since Epson focused more on the Impact, Inkjet, and MFD segments, its performance in this space was not very marked during the fiscal.

HDD: Ramping Up
The disk drive market is one of the obscure segments in the peripheral space, mainly because it is not a visible device and is hidden somewhere in the desktop or the server. Most vendors have agreements with OEMs, which go for particular types and brands of drives. At the other end of the spectrum is the PC assembler segment, which buys HDDs on a stand alone basis. This is a huge spillover market for the HDD vendors, with big volumes being consumed here for the entry-level 40 GB capacity drives. According to industry estimates, the size of the Indian HDD market during 2003-04 was pegged at 2.5 million units, of which the desktop segments constituted more than 85%. At the higher end, SCSI drives, with big storage capacities, represent a different market altogether, one that is dominated by MNCs. However, most HDD vendors' fates are linked with those of the OEMs and the USP for sustenance is quality. For instance, a disk drive manufacturing plant is extremely complicated to set up, and every HDD has to pass stringent quality norms. If an OEM PC gets rejected for a faulty HDD, the drive vendor will be eased out of the market. An example was JTS, which shut down operations a few years ago in India due to quality issues and rejection of its drives in thousands by major PC manufacturers. Over the years, the HDD market has gone through turbulent times, with smaller players dropping out of the fray.

The major vendors in the HDD market include Seagate, Samsung, Hitachi, Maxtor, and Western Digital. Seagate clearly has the lead due to its sustained presence and the various technology innovations it has made all the while. Samsung's distinct presence was also felt in the market. However, for these vendors, the year that went by also had its share of issues, mainly on the warranty and replacement front. But Seagate, for instance, effectively countered these by augmenting its SeaCare Centers, which are now a presence in 32 Indian cities. Seagate also has 700 premier partners in India, making it a clear leader. But a look at the horizon also reveals Hitachi's growing stature. The company's Deskstar, Travelstar, and Ultrastar have been, in varying capacities, gaining market acceptance in recent times. Western Digital, which was in silent mode for some time, is now making concerted efforts to secure a market share in the HDD segment in India. In the Indian context, the trend during the fiscal was SOHO users going for 40 to 60GB HDDs, a large proportion of which have rotational speeds of 5400 RPM, but with the emergence of a recent shift towards 7200 RPM in the SMB segment.

Monitors: 15" Landscape
Samsung and LG have been alternating as the leaders of this segment for the fiscal. Other players in the fray include the likes of Philipsand View Sonic. The 15" monitor is still the default entry level CRT, while the prices of 17" monitors, which used to be in the sub-Rs 15,000-segment until a couple of years ago, have crashed by 100% over the year. For instance, a 17" monitor presently sells at Rs 6,200 for a conventional CRT, with the flat screen version coming for Rs 8,000. In comparison, a 15" monitor costs Rs 4,400. Despite the crash in price points, 17" monitors constituted 22% of the monitor sales during 2003-04, while the 15" monitor segment came in for about 60%. Here too, the home and SMB segments drove the demand, though most of the corporates also opted for the 15", because it occupies less table space. A strong new trend in 2003-04 was the emergence of TFT monitors in a big way, with leading vendors like Samsung, LG, Acer, HCL and a host of other companies launching aggressive marketing campaigns to promote TFTs. However, TFTs are still oriented towards the large enterprise segment, as even an entry level TFT costs around Rs 20,000 and Rs 35,000 for a 15" and a 17" version respectively. Overall, the key drivers of growth in the monitor market have been the BPO and BFSI segments, who were active buyers. Besides these, the PC assembler segment also accounted for a jump in sales of standalone monitors in the home and SMB segments.

UPS: Power Path
This segment was pegged at Rs 1,400 crore last year. The home and SOHO segments accounted for Rs 745 crore, while the enterprise segments made up the remaining Rs 650 crore. During the year, the UPS vendors took a segmented approach, and launched defined strategies to garner a greater market share from the Home and SOHO, SMB and high-end enterprise segments. However, the biggest opportunity was the sub 1kVA segment power backup solutions which make up 60% of the UPS market, with the remaining 40% coming from the medium and large enterprise segments. The entry-level UPS segment is dominated by hundreds of small vendors who typically offer UPSs in the capacity range of 500 kVA to 1kVA. This makes the role played by branded MNC vendors in this segment rather diffuse. However, vendors like APC, which pioneered the standalone power backup devices for PCs, do have a considerable mandate from the lower end of the segment, in addition to large enterprise deployments. Meanwhile, vendors like GE Digital Energy and Emerson Network Power predominantly concentrate on the power backup solutions for the mid- to high-end enterprise segment, whose demands ranged anywhere from 60kVA to 30,00kVA. Other major vendors in the UPS market include names like TVSE, Numeric Power Systems, DB Power, WeP Peripherals, and Powerware to name a few.

Scanners: Down But Not Out
The standalone scanner market in the West was almost phased out and replaced by MFDs. But in India, the scanner market seems to be going strong and vendors do not see immediate erosion of volumes. Reflecting on this, industry experts assert that the scanner market will continue to go strong. While the entry level scanner market is likely to see a marginal dip in the next one year, due to aggression on the part of MFDs, the mid- and high-end markets will grow, with demand originating from publishing and media companies, and the government and the banking segments. UMAX, which used to dominate the scanner market till a few years ago, has yielded its place to the competition, with HP emerging as the market leader in the scanner market, with close to 59% of the market share. HP also has the distinction of launching the 4,800 dpi flatbed scanner. Other vendors like BenQ, Canon, and UMAX also attacked the market with various models cutting from the low- to the high-end segments. The scanner market can be expected to be driven, in the days ahead, by technology that will enable not only faster scanning, but also better image quality, while supporting at the same time a wide range of images and texts such as slides, negatives and documents.

IT peripherals have come a long way. The peripheral market, which began with DMPs, pioneered by companies like TVSE and WeP, today includes a wide array of products. Apart from the ones above, the other volume segments in the peripheral space include products like keyboards, optical disk drives, and removable media like CDRs and Zip drives. In the emerging peripheral products space, digital cameras made a foray into the home segment, with entry-level quality going up to three mega-pixels. Leading vendors like Nikon and Kodak launched new competitively priced models, which lead, subsequently, to an increase in overall digital camera volumes. Fiscal 2003-04 also saw the adoption of USB 2.0 in a big way, and as a result, vendors like Sony and Panasonic launched digital video cameras with PC interface at prices starting from Rs 35,000. The new year promises to herald more new technologies in each of the respective segments, and obviously, have users smiling all the way to their desktops, for they will now pay less for more.

PERIPHERALS: Past, Present and Future

MONITORS: LCD Shortage Keeps CRT Ahead

Shrikanth G in Chennai