Desktops & Notebooks: Fighting for the Last Piece of Cake

cakeRuchika Goel | dqindia

With increase in BYOD and touch technology, desktop market has witnessed a slow growth. Experts believe that soon tablets will be eating up PC’s share

The story of Indian PC market is not less than a roller coaster ride. In FY14, the industry went through a major transition. One can see the desktop market is getting trounced by notebook storm. Various research firms bet high on the future of desktops and notebooks in FY14. But during the year, the demand for consumer PCs remained suppressed against forecast expectations.

Goodbye PCs

There had been a rapid decline in the overall PC market owing to fluctuating technology habits driven by changing user needs, as the preference for devices which offer greater portability increased. Over the last year, the market has seen some instability in terms of some domestic brands exiting the PC business after struggling with a turbulent market scenario. The industry witnessed closed doors from big giants like Wipro and HCL. The sudden exit of these PC vendors shattered the whole industry. Even though these vendors were big in volume but they have to compete with many multinational giants like HP, Dell, and Lenovo in this space. After shutting down its PC business, HCL shifted its focus on distribution.

HCL is also shifting some of the employees from manufacturing division to other roles. In the last few years, most PC makers in the country have incurred losses due to the rupee’s fluctuation against other currencies, especially the US dollar. This has hurt the PC business in India as it is low-margin and almost 90-95% of the components are imported.

The PC business came under tremendous pressure. The main reason behind this slowdown was special education projects that got affected with the change in states governments like UP, Tamil Nadu, and Rajasthan. Last year the industry was hoping for a brighter day with the initiatives started by the state governments. But with discontinuation of these schemes, the marketshare of PC vendors was affected badly. A Lot of smaller companies are moving away from desktops and are buying laptops for their employees. Whereas in consumer front PC adoption continue to drown. All these factors have largely skewed the overall growth in this segment.

Windows 8: Kills PC Market Further

With the launch of Windows 8 desktop, industry had hoped that it would bolster sales—but instead, Microsoft’s new OS didn’t prove be a miracle for the PC future. It was observed that consumers chose tablet or smartphones over touch-based desktops. Various analysts report shows that PC sales shows a niche growth during the Windows 8 days. Similar view can be seen in semiconductor market where Intel, AMD, and other PC-oriented chip makers witnessed a huge downfall whereas mobile chip suppliers experienced huge growth.

Market Drivers

Notebook: Today the technology gain acceptance among consumers make life more convenient and productive. Recently, this productivity has been determined by the mobility a device can provide, with technology providers innovating to suit that need. “Today with cloud client computing, data storage is no longer a hurdle with hybrid devices. To this end, the uptake for notebooks and ultrabooks has been rampant on both the personal and professional front as customers increasingly look towards portable devices that help them stay connected, on-the-go,” says Indrajit Belgundi, Director & General Manager, End User Computng, Dell India .

Each year, companies around the world spend their IT budget in buying new computers in bulk. But after the concept of BYOD has taken pace among enterprises, companies are now allowing employees to bring their own products into the office and use them for corporate activities. This in turn helps companies to invest their budget in other technologies.

Desktop: The desktop category sees a more focused audience drawn towards it. There are still some sectors which are using desktop for their work. That work cannot be performed on notebooks. For example, a graphic designer has differing computing needs than a person from a manufacturing business. In this case, the enterprise, depending on the usage, is free to customize parts of the desktop to suit needs. The scope of customization specifications is greatly altered with notebooks. While it is true that mobile devices provide convenience, the definition of convenience itself may be different for different users. The market is poised such that, while portability and mobility becomes a popular trend and is widely accepted, there remains a unique and separate space for desktop.

However, there are some features that tablets and mobile devices can’t provide—such as storage capabilities for large amounts of data or high graphic performance for in-house design projects.

Vendor Dynamics

FY14 has given enough reasons for HP to celebrate. They were able to retain its top PC vendor title with a marketshare of 30% while Dell and Lenovo closed the year with 14% and 12% respectively. The kick start for HP was its execution of the largest education deal in the state government of UP which ensured them high volumes driving their marketshare to its peak. Other factors like pricing, widespread retail presence, and strong support from channel partners ensured their lead in the consumer market. Whereas Lenovo is strongly placed in the enterprise business and in the all-in one desktop category. They moved to the third spot with a marketshare of 12%. Also, they continue to remain focused in the consumer segment through partner programs, expanding coverage and price aggression. With the new line of business towards tablets and phones, Lenovo will be able to leverage their reach and grab more consumer mind share.

In Q12014, Dell was able to occupy 1st position among other PC vendors. According to industry experts, Dell is doing well in re-energizing their channel focus in both consumer and commercial business. Renewed approach in their go-to-market strategy, product refresh on their commercial portfolio, and deeper penetration in the upcountry markets have been their driving forces. The company is aggressively focusing on increasing penetration across all segments and is reaching out to the small business and commercial segments with products and solutions through its strong channel and distribution network. To sustain its position in top notch, Dell has been actively increasing its consumer retail presence.

Trends that will Rule

Experts believe that 2014 has seen a growth in technology trends which had been sparked off in the previous year. “Ultrabooks and all-in-ones were chosen as form factors by vendors to deliver a swift, compact, and convenient experience to users. Another rapidly adopted technology trend however, has been the inclination of PC vendors to shift towards touch technology,” added Belgundi.

Today, the technology which has changed the rules of the game in both enterprise and consumer space is touch technology. It has seen immense positive response from users in both the consumer and commercial categories in the past year. This change in form factor has been a result of rapidly evolving consumer trends. The new age consumer wants to make the most of what technology has to offer. According to IDC, by 2017, PCs will account for 17% of the smart connected device market—PCs, tablets, and smartphones—worldwide, but manufacturers are still expected to ship more than 380 mn computers that year.

Technology must keep reinventing itself in order to make end-user experience better each time. It is to suit this need that touch technology has extended beyond the mobile phone space and pervaded the PC segment. The end goal is to create a seamless user experience, with an increase in the productivity and performance a consumer can achieve with the use of innovative technology.

“As consumer-demand continues to push the boundaries of design, we will start to see the next generation of connected experiences powered by emerging technologies such as gesture control. Leap MotionTM technology, for example, can sense natural hand and finger movements in the air. Incorporating such technology to a notebook has allowed HP to deliver a more intuitive computing experience where our customers can now use their hands to make models and presentations” added Ketan Patel, Director, Computing Systems, PPS, HP India.

Apart from these technology trends, major PC brands will continue penetrating deeper into the Indian hinterlands either on their own or by leveraging the existing infrastructure of others. But overall it is difficult to say whether tablets and smartphones have eaten PC’s share.

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