DESKTOPS AND NOTEBOOKS - A Million And Counting

he domestic PC market had reason to cheer during the year

that went by. Sales finally crossed the million mark, and if the fourth quarter

(January-March 2000) was anything to go by, we should be seeing not only some

interesting figures, but also some extremely aggressive market moves in the

coming year. More than anything else, it was the internet that drove PC sales,

particularly in the second half of the last fiscal year (October 1999-March

2000). And with more and more cities and towns getting access to the net, that

became the primary reason for growth of PC numbers in B and C-class cities.

HCL retained its position at the top of the list in terms of

number of boxes sold, while Zenith lost its number two position to Compaq, which

was number three last year. But the dark horse of the year turned out to be HP,

which, with some aggressive pricing and market push, was able to more than

double its numbers–from a paltry 27,000 last year to over 60,000 this year. It

came in third. More about that later, when we dissect the strategies of the

major players in detail. IBM, like in the previous years, promised much, but in

the end could not make it to the top three. Wipro did better than in the

previous year, but just failed to breach the 50,000 mark.

Five smaller brands–Minicomp, Vintron, PCS, Acer and

Visualan–were able to achieve significant numbers, and together fell just

short of a lakh machines. Visualan and Accel are new entrants to the top

performers list. Seventeen companies together contributed to 49% of the total

number of systems shipped.

This was Acer’s first year as an independent operation in

the country–its JV with Wipro wound up last year–and it refused to share any

figures. It is our estimate that it sold about 18,000 units.

Dell clocked 15,500 machines, most of them sold to its global

clients. We were able to track down only 1,835 machines sold through its local

effort. Definitely, Dell has a long way to go in its Indian operations. Similar

is the case with Siemens Nixdorf. It has logged 10,000 machines, but the bulk of

those seem to have come from one or two large orders. Otherwise, it is next to

invisible in the market, and needs to seriously reconsider where it wants to go.

Though Apple put up a show much more improved than in the

previous years, its numbers are still nowhere enough to make an impression.

Gateway, which does not have a direct presence in the country, did a couple of

thousand numbers, mostly in software technology parks.

Spiralling tech specs

A quick overview of the technology environment that existed

will help us better understand the way the market evolved during the year. Clock

speeds nearly doubled during the year, and sometime soon after the last fiscal

year ended, we had AMD machines with 1GHz processors making their appearance in

the country. Talking of AMD, it set up a direct presence in the country during

the year and also benefited from the shortages in Intel processors. But it

definitely needs to do much more, if it is to generate significant volumes in

the country, particularly for its high-end Athlon chips.

The advent of the Intel 810 chipset-based motherboards with

their built-in audio and video cards helped bring price points down, not only in

the entry-level segment, but also in the higher end of the market.

Video cards used on other motherboards came of their own,

with entry-level video RAM moving from 4MB to 8MB. But it is in hard disks that

we really saw dramatic changes. The entry level quickly moved from 2GB to 4GB

and then to 8GB during the year, even as price points remained constant or

actually moved southwards.

Minimum RAM moved up from 32MB to 64MB, and for home systems

even touched 128MB. RAM prices, which had seen a free fall during the earlier

part of the year, not only stabilized, but actually moved upwards during the

latter part. RDRAM or Rambus RAM did not make its appearance in the country.

PC peripherals also proliferated, thereby also contributing

to higher unit values, particularly in the home segment. Popular add-ons

included web cams, CD-rewriters, and digital versatile disk drives (DVDs).

Notebooks

With about a fifth of the volumes in the desktop market,

notebooks are stuck where the desktops were a few years back–vendors waiting

for more volumes, even as potential users are waiting for better prices! ACI

Computers did try to break the logjam with notebooks priced around Rs 70,000.

But significant improvement in volumes is yet to happen. Our guess is that a Rs

50,000 price point should make a big difference in volumes. Question is, will

some one do it? A lean notebook for Rs 50,000! Any vendor willing to sell some?

The pricing tri-band

Stratification of price points became even more noticeable

during the year with three distinct price points emerging. At the lowest end

there was the Rs 25,000 to Rs 35,000 segment, populated mostly by assembled

machines of the Celeron or the AMD K6 II variety. The next strata at around Rs

45,000 to Rs 50,000 had branded–or more specifically MNC branded–machines of

the same lineage and assembled machines using PIIIs and Athlons. The next

strata, starting at Rs 60,000, was occupied by branded PIIIs. AMD’s Athlons

were conspicuous by their absence in this market.

An even costlier strata of Rs 90,000 and upwards, consisting

of feature-rich super premium branded machines saw more action than in the

previous years, but not enough to warrant extra focus. It may be worthwhile to

note that, initially, many vendors had pinned significant hopes for their home

PC strategies on this strata. But that has since changed, to the benefit of both

the vendors and the buyers.

To sum up, HCL was not only the top vendor, but also the only

one to ship more than a lakh desktops. Compaq came second, but was far behind

HCL, with the difference being more than 20,000 machines. Together, the duo

shipped more than 30% of the total branded pieces.

That brings us to a closer look at the strategies employed by

the major players in the Indian PC market, which we will attempt to do in the

next section.