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A Penny for Your Laptop

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DQI Bureau
New Update

Is a price war looming in the laptop horizon? Acer recently unveiled the

TravelMate 212 TX notebook with a price tag below Rs 60,000 for the first time

in India. A few days later, domestic IT giant Wipro announced plans to launch

its branded notebook LittleGenius in the sub Rs 70,000 price segment. Is the

stage set for the rerun of the desktop segment and the continuous price barrier

breaches like the sub-Rs 30, 000 and now the sub Rs 20,000?

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lower

priceS:
Can Acer’s sub-Rs 60,000

notebook alter the leadership position?

Vendors are confident that notebook prices are not going the desktop way, at

least not now. Let’s first look at the key reasons for the breach of the sub-Rs.

60,000 barrier. According to S Rajendran, general manager-Marketing, Acer India,

"Falling prices of LCD (liquid crystal display) panels, Intel processors,

memory modules and improvements in technology leading to better manufacturing

yields are the key reasons for the availability of the sub 60,000 price

product."

Will it continue further? LCD panel prices have softened in recent times but

still continue to remain high and are not expected to come down sharply. Given

the increasing global demand for LCD and the continued manufacturing capacity

shortage of the same, prices are expected to firm up once the upturn happens.

Comments Ajay Mittal, brand manager, India-Personal Computing Division, IBM

India, "As long as LCD prices remains high, I don’t see notebook prices

coming down." Since an LCD panel constitutes about 30-40% of the total

notebook prices, any drop in LCD panel prices will have a direct impact on

notebook prices.

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Also, will increased demand bring in economies of scale and reduce price

levels? Not likely! Given the small base of notebooks in the overall pie, price

cuts due to economies of scale will not happen in the near future. Agrees

Rajendran, "Volumes and economies of scale do play a role here, but will

take some time to reach that level."

Secondly, are customers actually buying notebooks below the Rs 70,000 price

range? Comments Mittal, "We have had a product in the Rs. 65,000 range for

some time now but the number of customers buying the same have been very

low." Points out Ravi Swaminathan, director, Access Business Group, Compaq

India, "For Compaq, the sweet point is between the Rs 80,000 and Rs 1 lakh

price band."

Unlike desktop buyers, notebook buyers are on the higher end of the literacy

spectrum and, therefore, not too concerned about the price of the product.

Conversely, issues like price performance, features and brand play an important

role here. Most of the vendors agree that the cheaper Celeron based offerings do

not find many takers in the corporate setup and a major chunk of sales happen in

the Pentium based systems. The rationale behind this is, "If I am getting

the latest model for a few thousand rupees more, why not?" It will be very

difficult to crack this logic, so playing the price card alone will not work.

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There is no denying that there is a market for low-priced laptops. Realizing

the gains in productivity and increased mobile tool usage, large corporates are

equipping their front-end sales teams with Notebooks. The affordable price has

widened the market to include the small and medium enterprises (SME) and small

office home office (SOHO) space. Unlike the West, where students are among the

major users of low priced laptops, in India these are still the tools of the

corporate management cadre. Things could change here too. But it will take a

while before the prices come down.

According to vendors, the responsibility of bringing down the cost of laptops

rests with the government. If the high liquied crystal display panel duty

structure is done away with, this could lead to a drop in laptop prices. Or

else, a laptop will continue to remain a tool for the management segment only.

And in these times of mobile connectivity and access, that would be a sorry

portent indeed for the future.

Yograj Varma in New Delhi

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