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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Disruptive Innovation
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In March'05, Xenitis group of companies, a Kolkata based manufacturer, has launched a personal computer 'Aapna PC' with all the necessary features and priced it aggressively at below Rs.10,000. This PC has all the basic features like a Celeron processor, 15-inch monitor, 20GB hard drive, 256MB RAM, CD drive, and a floppy drive. What else can a customer ask for in a computer priced as low as Rs.10,000? The company has even come up with Laptops that cost just Rs.15,000. The low-cost PC trend has begun and this has forced branded PC manufacturers to sell their computers at lower prices. But, some experts feel that in a bid to attract more number of customers to purchase their PCs, the manufacturers are compromising on the features of a computer, thus bringing down the price. Manufacturers like HP, IBM, HCL, Zenith, Acer etc. have been offering their PCs for sale at comparatively lesser prices. Adding to this, HCL Infosystems launched its brand of low-cost PC named HCL Ezeebee Pride, which is priced at just under Rs.13,000. But, these manufacturers cannot bank on their PCs for long time if the recently launched 'Aapna PC' gains customer confidence and satisfaction. |
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If it succeeds in gaining the loyalty factor, it is bound to give the branded players like HCL and HP a run for their money in the consumer market.
Global Outlook
An outlook at the performance of the PC manufacturers worldwide shows that there has been a pretty decent growth rate in the PC sales in 2004. According to an IDC report, PC market in 2004 has grown at the rate of 14.7% over the previous year, while the research firm Gartner reported that the global PC market grew at 11.8% over 2003. And coming to the PC market in the United States, IDC reported that the growth was 10.5% over 2003. Dell placed itself as the market leader in both the US and global PC markets. Dell garnered a worldwide market share of 17.9% with a growth rate of 23%. In the American market, Dell's business grew at 18.2% and it grabbed almost one-third of the market share. HP which was the market leader in 2003, slipped to the second position with decrease in its growth rate. (Exhibit III gives information about the positions occupied by the to PC manufacturers in the global and US markets.)
Analysts feel that while the global PC sales are on the rise owing to several factors which are pushing the sales in different regions, the growth in the US market has slowed down. In Europe, there is an increasing demand for PCs from businesses and consumer segment which is driving the growth, while the market has been growing in the developing markets like China, India, and Brazil. In United States, though the PC sales have been strong in the fourth quarter of 2004, analysts say that the market will slow down in the second quarter of 2005, but will bounce back later. On the whole, it is observed that the growth in the global PC market in 2004 has been quite impressive. But, this trend may not continue in 2005 also. Experts from IDC and Gartner feel that the growth in the PC market (both US & Global) is expected to slow down in 2005.
One thing which will cheer the PC manufacturers is that the number of PCs in use across the globe was more than 820mn in 2004 and according to Computer Industry Almanac (CIA), it is poised to surpass the 1bn mark by 2007. US topped the chart with a share of 27% in the usage of personal computers, while Japan and China occupied the second and third positions. India was placed at a distant 13th position. Experts feel that PC usage has been increasing rapidly in China and that by 2007 China will replace Japan.