The Indian PC Market on the Rise
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Authors
Authors: S Ramakrishna,
Research Associate
ICMR (IBS Center for Management Research).
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Branded vs. Assembled
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Hewlett-Packard, Dell and IBM, three of the world's top line PC makers, have been in the Indian market for quite sometime now, but they have started to taste success only recently. The Indian Desktop market which is estimated to be worth Rs.10,452 crore, is divided into Commercial market and Consumer market and the Commercial market accounts for 67% of the total sales. All these branded PC manufacturers along with HCL Infosystems, were in the past selling to corporates, government, business professionals and to some extent the eminent educational institutions. But, recently these companies have started targeting the individual consumers too in order to improve their market shares. Not so long ago, assembled PCs were considered to be the best, value-for-money PCs as against the branded PCs as the branded ones were high priced. But, in the recent past, the demand for assembled PCs has come down drastically in comparison with the branded ones. Though more than half (53%) of the Indian PC market is occupied by the unorganized sector (assembled and non-branded PCs), there has not been a considerable improvement in their sales. The major reason for this change in customer preference is that the present day customer is no more looking for low-priced products. |
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Experts also agree the fact that India is no longer a price-sensitive market it used be, say, a decade ago. This change, coupled with the increasing number of local branded PCs, has led the assembled PC market to grow at a slower pace. Yash Bharadwaj, Senior Vice-president (mktg.), PCS Technology, says, "The concept of value-for-money pricing is becoming popular among consumers rather than the concept of low pricing." According to R. Manikandan, General Manager (Sales & marketing), IT Products, LG Electronics, "The reduction in the prices and the increased consumer awareness backed with aggressive marketing are driving the growth of PCs."
A survey conducted by IDC India shows that Hindustan Computers Limited (HCL) has placed itself at the No.1 position in 2004 topping the sales chart of laptops, surpassing Hewlett-Packard (HP) and IBM, two of the world's largest companies. HP was the leader in laptop sales the previous year. HCL stands first among the list of branded players with market share of 13.6%, recording an outstanding growth of 91.4% in total number of desktops sold in comparison with those sold in 2003. HP and IBM stood next to HCL with market shares of 11.9% and 6.2% respectively. These two companies also showed an impressive growth of 73% (HP) and 50% (IBM) in the sales of their desktops over the previous year's sales. According to Vinod Nair, Analyst (Computing Systems), Gartner India, "Peaking business confidence based on strong economic growth catalyzed PC purchases in both consumer and corporate segments through 2004." There lies a great opportunity for these branded players to grow further in the Indian market by eating into the market share of local assembled PCs. Starting this year, these branded players can be hopeful of further rise in demand for their PCs and thus improve their profits. A look at Exhibits I and II gives an idea of the Indian PC market as a whole and also the amount of variation branded PCs have managed to bring about in their market shares. In the current financial year, PC sales are expected to cross the four million mark.