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Computers & Smart Devices: Polarized on Mobility

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DQI Bureau
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FY12 brought in some cheer and heartburn as well. The vendors cheered with the growing adoption of notebooks, smartphones, and tablets and heartburn as desktop market growth remained in low single digits and many found the going getting tough.

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Clearly the term-consumer is king-manifested well and defined the market in FY12. The consumer business remained buoyant while the enterprise had its share of ups and downs and some quarters challenged the vendors to the core.

Many started on a good note and faced turbulent weather as the year progressed. Even big vendors with huge marketing muscle like HP faced rough weather and were caught in the recessionary headwinds at the later part of the year.

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So FY12 was all about go-to-market and grabbing whatever the opportunity and market share possible. In a way that sums up the overall mood of the PC industry which also saw path-breaking form factor innovations. According to Dataquest estimates, over FY12, in unit terms the overall desktop shipments stood at 5 mn units and notebooks managed to muster about 6 mn units.

Desktops Down-Blame it on Mobility

The growth was not at all impressive at low-single digits, even if vendors ventilated their angst by saying "we could have done better" but the more worrying trend for them was the buying sentiment. Many enterprises went slow on new PC purchase decisions. That said, many vendors harped on how best to innovate the desktops.

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In line with that a fundamental form factor shift happened in this space and as a reflection of this the bulk of consumer desktop buying is clearly polarized on All-in-Ones (AIOs) and one saw enterprise adoption as well. These integrated machines are cross overs and offered a unique computing experience.

In terms of conventional desktops, the traditional buying segments like IT/ITeS and BFSI, education were the ones that are still powering the volumes. Even though the demand was not like the mid-2005 times, but there is a certain amount of stable buying one saw from these verticals over the year.

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If you look at vendor strategies, clearly they invested in transitioning to an AIO based desktop strategy in addition to conventional ones.

Take the case of Lenovo, which during OND 2011 launched two powerful AIOs-The ThinkCentre Edge 71z and the ThinkCentre Edge 91z.

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Company sources say that the new range has been designed specifically keeping in mind the entrepreneurs and small businesses, who can take advantage of PC hardware and software innovations like faster processors, stability and security, that are most likely to make them more competitive.

With a good line-up of products for the SMB segment, Lenovo is evolving as a preferred partner in this category with both consumers as well as small businesses. Lenovo also says that it enjoys a leadership position in the AIO segment with market share close to 45%.

Meanwhile players like HP also upped their ante on the AIO space with leading products. It brought to market products like the HP Compaq Pro 4300 AIO for businesses with some innovative technologies on board. As we look at other vendors like Acer which saw good traction for verticals like education, BFSI and government.

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Companies like Dell also followed the innovation route on desktops and if we look at players like HCL, it had a tough year and it lost overall market share. HCL is a major desktop player in the country and clearly companies which had a good product mix of desktop and notebooks were able to successful cushion and take the impact of the slowdown in the desktop space.

Notebooks: The Happening Space

It has been one of the most innovative years for the notebooks and it was during FY12, Intel pioneered a new brand of notebooks called Ultrabook and laid out some fundamental design philosophies to guide the Ultrabook form factors.

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The Ultrabook as per Intel's vision is an ultra-sleek notebook weighing at sub 1.5 kg and yet able to provide mainstream computing experience with extended battery life of 5 plus hours.

Acer was the first of the vendors to jump into the Ultrabook bandwagon and followed by Asus and all other vendors. But in an Indian context, Ultrabooks are yet very nascent as vendors are still struggling to arrive at a price parity. Yet again, Ultrabook is benchmarked against Apple's Mac Book Air and hence its performance pales out as Apple Air many believe is a one-of-its-kind device and has no head-on competition for that product right now. So this comparison has led to Ultrabook as a low-cost Apple Mac Book Air, which it is not, as some of the Ultrabooks are more expensive and less functional.

 

Meanwhile as we look at mainstream notebooks the addressable market also expanded over FY12 with Tamil Nadu government announcing the free laptop scheme for students had clearly benefited players like Lenovo which considerable expanded its market share by clinching a 3.65 lakh deal with the Tamilnadu government for its free laptop.

Interestingly, Lenovo is said to have emerged as the lowest bidder and had offered at the Notebooks at sub `14K, much below the average selling price. However all vendors are gunning for the overall free laptop scheme of Tamilnadu government which envisages to give a total of 9.6 lakh laptops. So by end of FY13, this will considerably expand the India notebook market by about close to million additional units.

One of the bigger success stories last year was Dell, it also saw its significant spikes in its market share with AMJ and JAS 11 seeing great traction for its mobile offerings. In May last year Dell added the Vostro 3000 series, to its Vostro range of laptops followed by Vostro V131 in August. Dell also aggressively focused on tier-2 cities to capture mid-market clients for hardware, software and IT services.

In all the Notebook space over FY12 was a tightly fought game between HP, Dell, Acer, and Lenovo. The second-in-line vendors beyond the Top 5 also made their say and the vendors to look out here is Toshiba, Sony, and Samsung. These vendors demonstrated big gains over the last year but recently Fujitsu is also making aggressive forays in the Indian market with its offerings.

Samsung, of late, had launched some very innovative thin and light notebooks that are fast catching up. Interestingly HCL is the only Indian company in the fray with comparable market share and it really needs to counter this big MNC aggression during FY13.

Smartphones: What Goes up Stays up for Now

The smartphones market is growing at high double digits both in terms of value and units. But it saw vendor realignment over last 6 quarters and clearly polarized towards Android in India. As per estimates a total of 11.5 mn smartphones were shipped in India during FY12 with Samsung emerging as a leader in the last two quarters.

According to CyberMedia Research Mobile Handsets Tracker 2011, smartphones contributed to 6.2%, multi-SIM handsets over 57% of total shipments in CY11. The report further states that the overall India mobile handsets market recorded sales (unit shipments) of 183 mn units in CY11.

 

In the overall India mobile handsets market, Nokia retained leadership position with 31% share, followed by Samsung at #2 with 15% and Micromax at #3 with 5%, in terms of sales (unit shipments) during CY11.

The biggest shift in the smartphone as a segment one saw over FY12 was the 4.2-inch large display becoming the norm with the exception of the iPhone. Players like Samsung and HTC clearly thrived on the large-screen HD display. The smartphone market is divided into 4 worlds.

The enterprise world in India still remained loyal to RIM's BlackBerry while the mass market adopted Android in a big way. The Apple world is just about growing in India and Windows mass market adoption is yet to be seen. The iPhone still remains as an object of exclusivity in India and the higher price is a big deterrent for iPhones here in India.

Vendors like RIM adopted a two-pronged strategy-enterprise and consumer. BlackBerry predominantly an enterprise centric vendor up till now made aggressive forays on the consumer side over FY12 and made all attempts to create a balance through a well-spread out product portfolio.

On the enterprise side BlackBerry went aggressive on trends like BYOD and the entire wave of consumerization of IT according to RIM sources, this trend augurs well for its growth here in India as its phones are most secured and more apt for BYOD.

With Android adoption on the rise, it had fostered quite a bit of regional vendors started attacking the lower end of the spectrum with low-cost smartphones. However if one looks at the OS dynamics from an Android perspective, the bulk of the devices out in India were still stuck with Android 2.3.

And, while players like Samsung and HTC had announced and rolled out upgrade roadmaps for older Android phones to Android 4.0, but it has not been a smooth rollout. For instance, HTC garnered much of customer ire for not giving Android 4.0 update to its flagship Smartphone Desire HD, citing compatibility issues with its Sense UI.

Right now Android 4.0 smartphones are in the higher end of the price point, and vendors rolling out newer generation Android OS phones quickly at affordable prices is the need of the hour.

Overall smartphone outlook for FY13 is expected to grow at a healthy pace with players like Nokia firmly putting Windows Phone and its latest versions in the market in addition to vendors like Samsung and HTC going aggressive on Android.

 

The Tablet Market: Growing up

With just about estimated half a million units for FY12, the Tablet market is taking nimble steps in India. Yet again industry estimates point out that Apple holds a significant slice of the tablet space followed by Samsung. The market has a plethora of low-cost sub `10K tablets and this market though has a good potential to grow, one is yet to see the big push.

Even a player like RIM took on the value-for-money strategy and significantly slashed the prices of its tablet, Playbook. Globally, as we look at the recent data released by iSuppli's (IHS iSuppli Display Materials & Systems Service report) shows that Apple iPad saw a phenomenal growth of 44.1% during Q2, 2012 and shipped 17 mn iPads and garnered a whopping 70% market share over Q2 globally. During the quarter the total number of tablets shipped (all vendors) stood at 24.4 mn.

In the last one year, Apple had significantly upped its ante in India thanks to distributors like Redington which is driving Apple's growth here in India. Apple iPad 2 saw a big spurt post iPad 2 sales and post its new iPad (aka iPad 3) launch, it slashed the prices of the iPad 2 significantly thus leading to larger adoption.

However players like HCL say that India is the value-for-money market and the market for sub `10K tablets are on the rise. HCL in the last one year went aggressive on the tablet space and competes head-on with players like Micromax, Karbonn, iBall among others.

But again, with Apple's 7-inch iPad mini-all set for launch in the coming quarter-might change the low-cost tablet market as well, given that Apple gets the India pricing right and puts the mini pricing at sub `15K will totally alter the personality of the India tablet market in 2013.

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