The Home PC Invasion

Enter the consumer PC

The PC in the

urban household is fast approaching the status of a consumer product. Out of a

random sampling of 872 households with monthly household income (Mhi) exceeding

Rs10,000, 21.2% of the households were found to have purchased a PC. From the

installed base of PCs in the home, the city of Mumbai was found to have maximum

penetration, followed by Delhi, Bangalore, Chennai and Calcutta.

Households with intention to

purchase a PC amounted to 19.2%. This indicates an increase in the penetration

of the home PC from 21.2% to 40.4% of the households. From the sample, the city

with the highest number of households indicating a future intention to purchase

a home PC was New Delhi, followed by Bangalore, Calcutta, Chennai and Mumbai.

From the installed base of home PCs in the sample, approximately 8% of the

households indicated their intention to purchase a second home PC.

From the installed base of home PCs in the random

sample, internet penetration was found in 41.1% of the households. Across the

complete 872 households, internet penetration was found to be 8.7% in comparison

to a PC penetration of 21.2%. From the installed base of home PCs in the sample,

Calcutta had the highest internet penetration followed by Bangalore, Chennai,

Mumbai and New Delhi.

PC most prevalent in

Rs30-40,000 Mhi

The highest penetration of the PC

was found in urban households with an Mhi (monthly household income) between

Rs30,000 and Rs40,000. The penetration was also found to increase in households

with higher Mhi. But since the number of such households decreases rapidly with

increasing Mhi, the statistical accuracy and market opportunity dynamics also

reduce significantly. The home PC is virtually absent with an Mhi below

Rs10,000.

Printer, the next most

ubiquitous device

While internet

penetration was found to be 41.1%, printer penetration was found to be 56.2% of

the PC owning households. In other words, more than half the households with a

PC in the random sample had purchased a printer. Also, the penetration of modems

and internet connections were at par. Other office productivity devices like fax

machines, scanners, photocopies and handhelds were found to have a low

penetration of below 2% of the households.

Looking at future intention to purchase, internet

penetration is expected to increase from 41.1% of the installed base of home PCs

to 65.8%. From the other devices, demand levels for fax, photocopier and scanner

are expected to remain static or reduce. However, the demand and interest levels

for handheld devices are clearly on the upswing.

Highest intention to purchase

in Rs30,000-40,000 Mhi

The highest percentage of

households with a future intention to buy a PC, lie between Rs30-40,000 Mhi.

With increasing Mhi, there is a relative reduction in the percentage of

households with future intention to buy a PC. This could be because of two

reasons. First, since households with higher Mhi were early adopters of the PC,

they would also tend to get saturated earlier. Second, with the PC changing from

a novelty product to a career enhancement device, households with relatively

lower Mhi but higher mobility and aspirational levels would exhibit enhanced

purchase intentions. Vendors should also not ignore households in the

Rs20,000-30,000 Mhi segment, with increasing PC purchase intentions being

indicated.

Notebooks are not for the home

A portable PC is not the

preferred type of household device. Less than 1% of the households surveyed

indicated that they would purchase either a portable PC or a palmtop. In other

words, for households making a PC purchase decision, the portable variety are

low-down on their wish list. What is right on top is the multimedia PC.

Road shows, brochures,

outlets, weakest for decision making

Amongst the information sources

with the weakest influence on decision making were road shows, exhibitions and

brochures from vendors and recommendations at retail outlets. The primary

information source for decision makers in households appears to be PC computer

magazines and general newspapers. PC computer magazines include publications

like Computers@Home, PC Quest, PC World, Chip and others. However, word of mouth

was also found to be a strong enabler for decision making.

No snappy buyers here

Amongst the households with

intention to purchase, the most prevalent time period is between 6 and 12

months. Thus indicating that decision makers in households are still in the

process of understanding the benefits, usage and cost implications of the home

PC. The number of households with intention to purchase in less than three

months is less than 10%.

Wipro, top in aided brand

recall

The respondents were aided with a

card, listing PC vendor names. In this aided recall, Wipro was again the most

frequently recalled PC brand. HCL, Compaq, Hewlett Packard, IBM and Zenith were

other brands recalled with decreasing frequency.

Wipro, top-of-mind and most

recalled brand

The PC brands with the highest

top-of-mind recall was Wipro. IBM, HCL Zenith, Hewlett Packard and Compaq were

the other brands. Household respondents were also asked to list all brands that

they could recall. In order of frequency the most recalled PC brands were Wipro,

HCL, Compaq, IBM, Hewlett Packard and Zenith. Both these results were from

unaided recall. In the last six months, Wipro, HCL and Compaq have been active

in print, electronic and road show promotions, leading to higher recall rates.

Hewlett Packard has been active in building retail branding and strong product

associations and it has resulted in improving its top-of-mind consumer recall.

Other PC brands recalled, with statistically low frequency were Vintron,

Toshiba, PCL, Acer.

Compaq, most preferred PC

brand

When household respondents were

asked which PC brand they would prefer to purchase, if they were considering a

branded PC, Compaq was their first preference. This was followed by Zenith, IBM,

HCL, Wipro and Hewlett Packard. While Wipro is the most recalled PC brand it

does not appear to be the most preferred. Zenith appears to have a relatively

high preference since it has an association with low cost PCs. HCL and Hewlett

Packard have a low preference since they are associated with relatively higher

cost PCs.

Large PC budget span,

Rs25-45,000

Close to 80% of the households

surveyed are ready to spend between Rs25,000 and Rs45,000 to acquire a home PC.

Out of this, 37.7% of the households indicated that they would spend between

Rs25-35,000 and 40.4% indicated that they would spend between Rs35-45,000. A

remaining 20% indicated that they would be ready to spend above Rs45,000. Since

the price-point of a souped-up home PC or a branded PC lies above Rs45,000,

there is very clear need to get below this price point and address almost double

the market size. The respondents also indicated that they were not flexible in

their PC spend budgets with only 5%-10% as acceptable variation.

Assembled rules over branded

Household respondents were asked

to rate their likelihood to purchase an assembled PC versus a branded PC on a

five-point scale. The likelihood to purchase an assembled PC was rated at 4.1

versus 3.2 for a branded, on a scale of 0 to 5. In other words, households first

consider an assembled or unbranded PC for purchase before a branded PC.

Branded PC, household income

in inverse relationship

An obvious relationship

appears to exist between Mhi and the intention to purchase either of two

categories of PCs–branded or assembled. The intention to purchase an assembled

PC was highest in the lowest category of Rs10-20,000 Mhi. To recall, this

category has the lowest intention to purchase and the highest number of members.

This Mhi category primarily purchases assembled PCs. The intention to

purchase an assembled PC decreases with increasing Mhi. For a branded PC, the

intention to purchase was highest in the above Rs40,000 Mhi category and lowest

in the Rs10-20,000 Mhi category. To recall, the intention to purchase and the

number of members decreases in higher Mhi categories. The main demand segments

for both assembled and branded PCs therefore lie in the Rs20-40,000 Mhi

categories.

Chennai, best for branded PCs

The intention to purchase a

branded PC was highest in Chennai and lowest in Mumbai. Conversely, the

intention to buy an assembled PC was highest in Mumbai and lowest in Chennai.

Out of the five metros, Delhi and Calcutta appeared to have the lowest purchase

intentions for either of these two categories of PCs. Bangalore had the best

balanced purchase intentions between these two categories of PCs.

Shoe string, Come easy,

Dynamite PCs

What is the

typical home PC configuration? Most households with an intention to purchase a

PC are quite clear about their specifications. And a number of home PC

configurations emerge–the Shoe String budget PC, the Come-Easy PC and the

Dynamite PC.

Shoe string PC:

Intel Celeron, 16MB RAM, 1.2GB and below HDD, Monochrome monitor, Win 95 or

MSDOS.

Come Easy PC:

PII or PMMX, 32MB RAM, 2.3-4.3GB HDD, 14" color monitor, Win 98.

Dynamite PCs:

PIII or Power PC, 64MB RAM and higher, 8GB and higher HDD, 15" or 17"

color monitor, Win 98 and other OS.

While the primary demand lies for the Come-Easy

PC, sufficient demand exists for the Shoe-String and the Dynamite PC to make

vendors consider these market segments with some interest.

Bundled software expected by

majority

Will the home PC consumer pay for

software? Probably not. 50% of the respondents with an intention to purchase a

PC indicated that they expect software to be bundled with their PC. Above 40% of

the respondents indicated that they would pay for the operating system and the

office suite applications. Above 25% of the respondents indicated that they

would pay for computer games.

Multimedia, internet, printer

add-ons

What else goes into the

home PC? 82% of the households with an intention to purchase a PC

indicated that a CD-ROM would be part of their configuration. 60%-70% of the

same respondents indicated that a complete multimedia add-on would be part of

their configuration. 45% of the households with an intention to purchase a PC

indicated that an internet connection would be part of their configuration. A

printing device also appeared to be a high priority, with close to 30%

indicating preference for a mono inkjet printer.

At the heart of PC purchases

What is driving the home PC

consumer? The primary reason driving the intention to purchase a PC is the

realization that it is a necessary device for the home. The need to understand

and learn how to use a PC extends from the wage earners to the children of the

household. Amongst the expected users of the PC at home are the primary wage

earner, college going children, children in other stages of life and the

secondary wage earner. From this we can generally rank members of the household

in terms of expected usage as the male head of household, children and the

female head of household. In terms of involvement in decision making for PC

purchase it is the main wage earner and college going children followed by the

secondary wage earner. In terms of frequency, the primary wage earner will be

the PC decision maker in 65% of the households surveyed. In 24% of the

households, the secondary wage earner will be the decision maker. Generalizing

this further, the female head of household, will be the decision maker in one

out of three PC purchase decisions.

Home PC, not for business or

work at home apps

Households will

not dominantly use the PC for any business or work at home applications. 77% of

the households with an intention to purchase a PC indicated that they would not

use any business application. Financial applications would be used by 21% of the

households intending to purchase a PC. Similarly, 88% of the households

indicated that the home PC would not be used for any work at home applications.

Another significant fact is that less than 3% of the households with an

intention to purchase a PC would use it in professional areas like medicine,

chartered accountancy and legal applications.

The home PC would be extensively used by

households for word processing, spreadsheets and other office suite application

areas. Email and web browsing were indicated by less than 20% of the households.

Other areas where the home PC is likely to be used extensively is in

edutainment, including children education, games, music and movies.