Laptop Special: Notable Performance

“Free data card worth Rs 6,000 and three months subscription free”,
screamed an advertisement for a leading brand notebook. It's sure a steal, as
the total package including the data card was just about Rs 50K. And no wonder
consumers are lured into a notebook purchase. This becomes more evident as we
look at the notebook shipment numbers for 2005-06, in which the notebook segment
of the PC market registered a whopping 168% growth and 588,592 unit shipments.
Indeed an impressive growth compared to the previous year.

Ground Realities

The notebook market was once a high value low volumes game, but since the
launch of new processors, specifically for mobile computing like Intel Centrino,
a few years back, the scenario started changing for good. Says Manish Gupta,
general manager, Notebooks, Lenovo India: “The Indian PC market has grown
rapidly over the last few years. In parallel, consumers have become more
technology conscious. Notebooks are mobile and also offer the latest technology
features in computing, security and entertainment. This has made them very
popular and has given a huge boost to notebook sales in the country.”

What's driving the notebook volumes to the pink? As we delve into history a
bit, from a technology perspective, a serious shift towards a performance based
notebook started with P2, which offered closest performance on par with a
desktop, but still a notebook was never considered as a desktop replacement. So
in the formative years, a notebook offered mobility without on the go
connectivity. In 2003 all these changed with Intel coming out with Pentium M-
Centrino technology with embedded wireless changed the very fabric of the
notebook usage. And it also opened up a whole new market for wireless
communication and jargons like 'on the go' became the mantra for the mobile
age. As we take an India perspective, analysts believe that the notebook
consumption patterns will be on the on the lines of mobile telephony. 

For instance, in the mid 1990s GSM was luxury. But from early 2000, GSM
started ramping up so fast and today India is one of the biggest markets for GSM
and we apply the similar analogy to notebooks, which is seen as the extension of
GSM culture. Through mobile phones people have now used to mobility and today
more and more consumers want to carry their work wherever they are going and
thanks to the connectivity-every hotel from three star to up market ones offer
Wi-Fi and many cafeterias like Baristas and public places like airports and
railway stations have Wi-Fi hotspots. All these have created a mobile access
ecosystem wherein the notebook plays a critical role.

Says R Manikandan, general manager, Sales and Marketing (IT division), LG
Electronics India, “There is a paradigm shift happening in notebook buying
worldwide. The first generation notebook consumers of the 80s were primarily
looking for basic computing in a portable device. With the advancement of
technology, the second-generation consumers of the 90s opted for better features
in a compact form factor.”

Market Dynamics

With the escalation of notebooks in the PC charts, the gap between a
notebook and desktop is narrowing down in terms of price points. While we
compare actual numbers in shipments terms, the larger market is obviously the
desktops. For instance India shipped 4,640,833 total PCs, and of the total PC
pie, notebooks represent 13% in unit shipments terms. It means the market share
for notebooks have doubled from last year's 6%. If we take the last one year
in perspective, the underlying tone advanced by the processor vendors like Intel
and AMD is 'performance per watt'. What it implies is, the new line of
processors will consume less power, but brings to table more performance. This
is huge consumer gain from a mobility point of view. For instance, the hallmark
of new processors like Core Duo is extended battery life and multitasking.

In the last one year, one has seen the notebook processors getting more
mature from technology stand point of view and it has expanded the consumer
buying options to a great extent. For instance when we take the case of the AMD,
it has been attacking the low end of the notebook segments through its Sempron
line, but by and large Intel Pentuim M has dominated the popularity charts. But
last year AMD pulled a surprise by launching a power processor called Turion 64,
touted as the only 64-bit processor that can run Microsoft's up coming Vista
OS. Major PC vendors like HP, Fujitsu, Asus launched Turion based notebooks and
for instance HP launched a sub Rs 45K single core Turion based notebooks last
year. Intel then launched Core Duo and followed with Core 2 Duo with 64 bit
capabilities and AMD came out with its dual core 64-bit chips this May 06. These
developments have made the notebook market extremely competitive and the market
has segmented upon defined lines like low-mid-high end. 

The demand from large enterprises for notebooks has been growing consistently
and most of the vendors have observed a steady adoption rate among home
consumers as well. To offer products across the buying segments is the key
strategy vendors adopt today. A look at the market segmentation reveals the
three major price categories-the sub Rs 30K to Rs 50K, the notebooks for basic
computing which is the entry level or budget category. The mid-end at the sub Rs
70 K, is the enterprise category wherein notebooks comes with enterprise class
features like fingerprint authentication and enhanced security features. The sub
Rs 80K, is the high-end notebooks, which comes in a thin and light form factor.
The fourth category is the ultra portables.

If we look at vendor wise performance, HP tops the notebook market in India.
HP shipped around 230,000 notebooks during 2005-06 and registered a whopping
207% growth in volume terms. HPs share in notebook space is close to 40% and its
success is primarily due to the wide array of configuration across different
buying segments. HP is also one of the major consumers of AMD processors and
recently the company has launched its first dual core Turion 64 based
notebook-Compaq nx6325, priced competitively at Rs 50k.

Lenovo, which is the number two notebook player in India, is pitching heavily
on innovation. The company's strategy for the notebook segment is to
comprehensively address specific requirements for each end-user category. To
that end, it has realigned the business to address different segments of
customers more efficiently. For instance its ThinkPad series is targeted at
large enterprise users and its own branded Lenovo notebooks are more at mid-end
segment.

Says Gupta, “The market is highly competitive today and innovation is
becoming a very important differentiator. At Lenovo, we are incorporating
innovative features that add value. For instance, Lenovo ThinkPads are equipped
with ThinkVantage Technologies (TVTs), which offer unparalleled security,
imaging and support features while the Lenovo 3000 series of notebooks showcase
similar features called Lenovo Care and have high-end multimedia
capabilities.”

Acer meanwhile is known for its aggressive pricing strategy. The company over
the years has offered notebooks suited for the education sector with processors
like AMD Sempron and Intel Celeron M and attractively priced it. In the mid to
high end Acer has various models starting from Pentium M to Core Duo. Says S
Rajendran, general manager, Sales and Marketing and Mobility, Acer India “Acer
has been concentrating on the Home, SOHO and the SMB for the notebooks, which
are the fastest growing segments in the market. Our product, pricing, special
offers and go-to-market are based on this target segments.”

If we look at the larger notebook market, the biggest slice of the pie comes
from the entry and mid end notebooks. This is the volumes space in notebook,
which all the vendors target. Last year also saw the escalation of Indian
players like HCL, Xenitis and Sahara, which offered their brand of notebooks.
For instance, HCL launched its own brand of notebooks called 'Leaptops',
which is available in different configurations. Says Rajendra Kumar, executive
vice president, HCL Infosystems “Our aim with leaptops is to leap to the top
in the notebook market with our offerings. Our notebooks are available through
more than 800 existing channel base spread across the country and moreover we
have got Ingram Micro as our national distributor.”

With all the PC vendors concentrating on notebooks augurs well for the
buyers. Every vendor is trying to raise the performance bar, and offering great
value adds to the buyers. For instance, Dell in the recent times is going
aggressive in this space. In the last few months Dell has announced various
notebooks, starting at sub Rs 40K to Rs 50K. All these developments signify that
the Indian market was able to react to the latest notebook technology offerings
and all vendors are fighting to gain more market share.

The outlook for the notebook market remains bullish, as Gupta points out,
“Growth in the notebook market looks extremely promising and is expected to
continue. However, desktops will remain attractive to the consumer and
enterprise segments as they offer great value for money. Notebooks will be
popular because of the mobility factor and falling prices.” Going by the
current buoyancy, observers expect that India will clock close to nine lakh
notebook units by the end of the ongoing fiscal.

Shrikanth G


shrikanthg@cybermedia.co.in