Boom Time Ahead

Circa 1995: A conference was going on in a leading hotel in Chennai.
One of the speakers asks a hotel employee to pick up his 'notebook' from the
dais after the presentation. The person returns with a 'scribbling pad'.

2005: Same hotel, same employee. A guest checks in, the employee
quips: 'Sir, we have 24/7 high speed Wireless Internet and I can configure
your portable for net connectivity..."

Thanks to the IT revolution in the last decade, once dreamed-of gizmos like
laptops have been converted to affordable gadgets. In time the laptops became
notebooks and then, sometime in between, they became 'portables'. This leads
to a fundamental question: Will the notebooks take on the mobile culture in the
country? Industry analysts and vendors surely hope so. For instance, in the
formative years of the cellular industry, in the mid 1990s, a mobile telephone
connection used to cost Rs 20,000 and call charges were exorbitant. Similarly, a
notebook, during the same time, was vending well above Rs 2 lakh-a pretty
upmarket equation. Somewhere in the late 1990s, the GSM happened in a big way,
sowing the seeds of affordable mobility in India. CDMA became a reality over the
last two years and the grassroots are now seeing streaming video out of R-World
on their mobiles. For the business executives, CDMA is panning out into a cheap
and simple alternative for connecting to the Internet. Users of mobile phones
now want to go one step ahead and, logically, heavy users of Internet and
company employees who have to travel frequently, are upgrading to notebooks.

The market up-close

The notebook prices going down has now become a pretty old story. What it
leads to now is whether all these aggressive vendor campaigns, each vying for a
greater market share, has increased the overall notebook penetration levels in
the country? According to Gartner, the Indian PC market grew 35% in the third
quarter of 2004, shipping more than 8.85 lakh units. India also showed one of
the highest growths in the Asia-Pacific region (excluding Japan). In India, the
small shipment base of mobile PCs, coupled with strong demand, propelled the
growth rates for notebook to over 100%. Says S Rajendran, general manager, sales
and marketing, Acer India, "The introduction of the newer value price bands
has expanded the market, especially for mid-level notebooks and enterprises are
now warming up to the idea of providing employees with notebooks instead of
desktops at a marginal 10—20% higher investment cost."

What is driving notebook demand is buying from two kinds of consumers-the first time buyers and the high-end wireless users” Sanjeev Menon, IBM India “Given that PCs are not retired too soon in the Indian context, the motivation for equipping the middle and lower echelons in the organization with notebooks is not so compelling” S Rajendran, Acer India “Desktops cannot be totally replaced with laptops. Both are positioned in different poles of an orbit and usage of both depends on the user profile” G Radhakrishna Pillai, Ranbaxy “The total number of PCs in Pfizer today is 575 desktops and 458 laptops. Over the next 12 months we expect the ratio to swing in favor of laptops" Arun O Gupta, Pfizer

According to Dataquest estimates, during fiscal 2003-04, India consumed
around 91,180 notebooks. This represents a volume growth of 75%. However, with
price wars escalating in the last two quarters of 2004, it has increased the
notebook volumes many fold and analysts are estimating that fiscal 2004-05 will
sign out with 2 lakh notebooks in unit terms, representing more than 100%
growth. Says Sanjeev Menon, brand manager mobile computing, IBM India, "In
the recent times, notebook volumes are seeing a quantum leap. An indicator to
that end is the kind of volumes we are seeing, for instance, in the first three
quarters of 2004, we have shipped close to 39,450 notebooks as against 16,036
the corresponding period previous year, representing a 146% growth. What is
driving the demand is buying from two kinds of consumers. First time notebook
buyers are going in for the low cost sub Rs 40,000 notebooks. While consumers
who already own notebooks are going for high-end wireless ones."

Notwithstanding the buoyancy, India's notebook penetration levels are very
low when we compare with other geographies. For instance, India has one of the
lowest rates of computer ownership in the world, at just about nine computers
per 1,000 people. The global average is 27 computers per 1,000 people, and in
the United States it exceeds 500.

Reflecting on that Rajendran says, "Today, the price slides in the
industry have definitely played a part in the increase in notebook penetration
levels. We have recently introduced an AMD Sempron-based notebook: Acer Aspire
1362, at a price point of Rs 35, 999-it is a huge success within the
educational community."

View from enterprise

Any buyer today, whether individual or enterprise, has the luxury of
multiple choices, but a comparison only favours the notebooks.

Pfizer in the last six months has procured close to 90% laptops and 10%
desktops. The total number of PCs in Pfizer today is 575 Desktops and 458
Laptops. Over the next 12 months, the company expects the ratio to swing in
favour of laptops. This is a picture every notebook vendor wants to see. But
Pfizer's case is indeed an exceptional one; in many other enterprises in India
the ratio might not be that rosy. Says Gupta, "I believe that the
inhibiting factors towards notebook adoption are primarily in the realm of
useful life of the machine and maintenance costs. For instance, a desktop has a
higher probability of upgrades to increase its life with lower maintenance
costs, whereas the notebook has limited upgrade options and a high cost of
maintenance-if the monitor of your PC goes down, the repair cost is minimal,
whereas the cost of repair and replacement of the notebook screen is extremely
high." 

Says G Radhakrishna Pillai, head-IT-SRL Ranbaxy, "Desktops cannot be
totally replaced with laptops. Both are positioned in different poles of an
orbit and usage of both depends on the user profile. Even though laptops allow
more mobility, they invite more physical security related issues compared to
desktops. In terms of notebook adoption, the top layer of the current desktop
users will be converted to notebook users. We have already upgraded our
department heads and senior executives with laptops. The bottom layer will
remain with desktops and the middle layer will be 50-50. Moreover, we have now
started giving laptop to even field staff."

The usage of notebooks in the enterprise space, barring some exceptions, is
still relegated to the top management. The working style and functional
necessity are probably an underlying reason. Also, in the middle and lower rungs
of the organization, investments in IT hardware have already been made. Says
Rajendran, "We should bear in mind that enterprises were among the early
adopters and users of PCs. And given that PCs are not retired too soon in the
Indian context, the motivation for equipping the middle and lower echelons in
the organization with notebooks is not so compelling. Despite that, we think in
the next few years when PCs would go in for massive refreshes, the uptake for
notebooks in the enterprise space would increase rapidly."

With that refresh cycle imminent, vendors like Acer, HP, Zenith, Dell and
Toshiba are going all out for capturing the nascent Indian notebook market. Most
vendors believe that 2005 will be a volumes year for the notebooks and estimates
put the units at around three lakh. This makes notebooks one of the thriving
markets to watch for in the days ahead.

Shrikanth G in
Chennai

CIO Wish List

We spoke to some of the enterprise CIOs. This is what they expect from a
notebook:

• A good processor with minimum of 256 MB memory, 40 GB HDD and CD-RW/DVD
• To weigh less than 2.5 kg and have a battery life of 3 hours
• Windows-based OS instead of Linux
• Comprehensive global warranty programmes
• Good security with anti virus and spam ware programs pre-installed
• Low cost and high performance
• Carry case part of the end user price

CIO Speak

Suresh R Shenoy

Suresh R Shenoy, VP, IT, Wockhardt

With Notebook prices going down, will you be going in for notebooks,
instead of desktops?

Even though the prices of Laptops are crashing, the baseline laptop still
costs two to three times more than a desktop of equal performance. We would
consider laptops only for mobile users.

What is prohibiting enterprise notebook adoption?

The notebook has limited expandability especially, when compared it to a
desktop. You cannot upgrade the video card or processor at all. You cannot
upgrade the speakers, the monitor or add extra drives that do not fit into the
drive bay, without losing some portability of the laptop. Moreover, the laptop's
bus speed is slower (66 or 100 MHz) than some desktops. A few budget desktops
can run a bus speed up 133MHz. The bus speed may be a moot point to the average
user; however, most differences would not show until a high-powered program is
used.