As Notebooks Get Smaller, the Market Gets Bigger

By the looks of it, the bad times have started to end. The mood among the

notebook vendors and resellers is definitely upbeat. Not only have queries seen

a dramatic rise, the volumes have started to pick up too. According to the

latest estimates by IDC the notebook market grew by an impressive 30 % from the

previous quarter and by 19 % on a y-o-y basis. Says Saket Kapur of Computer

Vision, "We have seen a spurt in number of inquiries from once a month to a

year back to about four times a week today." And volumes have jumped too.

Says Raj Saraf, CMD, Zenith Computers, "We are close to doing 3,000 units

this year, as compared to 1,500 units that we did last year and expect a similar

growth pattern in the coming fiscal as well." Adds Sanjiv Krishen,

Chairman, Iris Computers, "We have grown from 4000 notebooks last year to

7000 notebooks this year."

Expanding market segments



According to the MAIT — IMRB study, notebook sales remained concentrated

in the top four metros in the first half of 2002-03, which accounted for 70 % of

the total notebook sales. The same figure stood at 77% for the corresponding

period of the previous year. MAIT further reported in January 2003 that in the

first half of 2002-03, notebook sales grew by 139 % in the smaller towns. And

this is a trend that HCL Infosystems caught on as early as last year when they

took the Toshiba mobiles to smaller towns through their Grand Computer Carnival.

HCL has now also kick started its Mobile PC Carnival, a roadshow designed on the

lines of its now regular Grand Computer Carnival.

Go for that one-off guy



Self-employed professionals seem to be the focus of many a player in the

mobile computing space. Says Deepanshu Sharma, Marketing Manager, Apple

Computer, "Self-employed professionals like doctors and lawyers are looking

at portables more seriously." Adds Karthik Ramaswamy, Brand Manager -

Mobile Computing, IBM India, "The individual user is growing big

time." The constantly dipping price points have made the laptop now quite

affordable for the small and medium enterprise also. That’s a segment that

holds a lot of potential, feel most players. Says Saket, "There is a rising

concern even within the SMB to constantly stay connected." And in such a

scenario the middle managers in the SMB space become a potential target

audience. Education is another segment that is poised for a quantum leap towards

the north. Last year saw some big orders coming in from top engineering and

management institutions like Indian School of Business, Hyderabad; SP Jain

Institute of Management, Mumbai and IILM, New Delhi. And many are currently

toying with the idea of buying notebooks that their students can carry with them

at the end of the course. Interestingly schools are not behind in catching up on

the trend and school lessons through a PowerPoint presentation are a reality

already. Says Krishen, "A number of Delhi Public Schools have purchased

laptops for their teachers from us." Another new buyer segment that is fast

emerging is the insurance sector.

Touch and feel



The comfort of being able to interact with a sales person puts a prospective

buyer at ease, feel many. Says Ramaswamy of IBM, "A notebook requires a

personal one-to-one interaction unlike desktop sales." Many in the trade

feel that to address the market for mobiles through retail might not be a good

idea. "You have to give the prospective customer a reason to walk-in,"

says a reseller. Even direct mailers, extending the logic, does not then sound

like a really good idea. The MNCs vendors have to change their mindset, says a

reseller. They are not geared to address the market being thrown open by the

one-off laptop deals that come their way from the professionals and the SMB

space.

Don’t forget the service



Needless to say that service infrastructure and network is a key variable

that an end-user considers before the acquisition of any IT asset. Says Saraf,

"Among major issues that a customer has while going for a notebook purchase

are: price, service support, weight and battery life, in that order." IBM

extends its service network by providing the first level support through

Redington service centers. And Zenith has 16 service centers in all major cities

of the country. An extensive service center network also does not make sense

because a large volume of the sales of laptops comes from the top few cities of

the country. And most vendors are adequately represented in those geographies.

"Support is a key issue and I agree no-one in the country has perfected the

same as yet," says Krishen. He further explains that it is not because of a

lack of commitment or willingness but because of the sheer number of models that

are in use today.

Growing the market



It is the oldest mantra in any marketing text, grow the market, and get new

customers in the fold. And that is precisely what most laptop vendors are now

doing. IBM has a Very Focussed Business initiative running. Most players in the

market feel that the Rs 50,000 price point will trigger growth. And it is

exactly this market that many are looking to capture. A number of organizations

in conjunction with the laptop vendors have started Employee Purchase Programs.

Organizations like LIC are leaders in this direction. While it becomes

uneconomical to give laptops to all top executives, EPP is a rational solution.

A number of large Indian corporate houses are also toying the idea.

Intel takes the lead



Intel’s Build-to-Order initiative, started a little over a year ago is a

step in this direction. Herein the partner will get an integrated chassis that

needs just a processor, hard drive and memory to have a laptop up and running.

Although Intel’s Build-to-order initiative for laptops did not gather too much

steam in the last year, the focus on it has come back after Thomas Kilroy’s

visit. Thomas Kilroy, Vice President, Sales and Marketing Group, Reseller

Channel Operation, Intel said, "On the agenda for the next year will be to

build and grow the whitebook market with GIDs." And many in the industry

feel it is one initiative that can get the volumes in the laptop albeit

assembled market roaring. The real issue however is not sales. To grow this

market the differential between an assembled notebook and a desktop has to be

small enough to upgrade the desktop customer. And on the other hand it has to be

large enough between an assembled and a branded notebook that the upgrade does

not happen to the branded one. More so the support issues must be addressed. And

the hiccups are acceptable as the very concept is in its infancy also because

there is no precedent or best practice anywhere in the world that can be

emulated.

Intel is looking a picking a few partners from its existing GID channel and

also adding new ones as notebook selling calls for special skills that may not

be mandatory in selling desktops. But branded notebook sellers see no immediate

threat. But there is unanimity that Intel will make a dent. In a nutshell,

whether branded or assembled, the activity levels on the notebook front are

expected to be high in the days ahead.

Mohit Chhabra



With inputs from Sunila Paul in Bangalore and Goldie in Mumbai