Not A Four-Letter Word Anymore

border="0" hspace="2" vspace="2" align="right">If Home computing was for years the

future-potential thing, a solution looking for a problem, then 1997-98 was the year it

took off. It did so at the best of times, and at the worst of times. A relatively

recessive year for the Indian industry, which meant that corporates weren't buying PCs.

Infotech India, used to staggering growth, faced the prospect of just about making it to

double digits. Then came an unlikely white knight. Not the now-traditional savior,

software exports; that segment had some help this year.

So how did overall PC sales growth make it to 33 percent, when corporate and government

buying grew at some 25 percent in unit sales? Home buyers, of course. The Home market

bought 66 percent more PCs in the year 1997-98 than it did previous year. So it's easy to

grow on a small base? Perhaps, but this time round the numbers were large enough to affect

the whole industry figures. IDC (India) estimates that 106,500 PCs were bought by Homes

last year, almost a quarter of total PC unit sales. This does not reflect the large number

of PCs that moved from offices to Homes-either as new purchases via the office, or older

PCs bought cheap. These office-to-home PCs also result in revenues in this segment:

through add-ons, peripherals, upgrades, and CD purchases.

The Home and Home office segment, once a victim of overestimates, hype, overpriced

hardware, and other conflicting forces, has begun to define itself more sharply for the

vendor, shattering many myths. Vendors who realized these earlier have products that fit

there, and sell well.

Why do Homes buy PCs? The top reason is to carry work home, which is also the reason so

many PCs move from offices to homes (and don't get counted in Home PC sales). Edutainment

is a major post-purchase application, but for the real volumes of PCs, the former is the

driver.

All those SEC-A families will buy Home computers-those 1.3 lakh Aptivas and Aspires,

right? Wrong. With the work-at-home driver, volumes don't happen there, just as office PCs

aren't fancy high-end multimedia machines. Most of the initial purchases are low down on

the brand scale, though often bristling with current specs.

hspace="2" vspace="2" align="left">Then are these cheap, trailing-end PCs, comparable to

office desktops? No; the Home leads in technology usage: Pentium MMX, Windows 95, and CD

drives-all this entered the Indian home a year ahead of the office. The Home user tends to

upgrade more often, adding things like CDs or modems or printers ad hoc (often with

unplanned purchases). The office follows a much more carefully-planned purchase cycle, and

rarely upgrades more often than once a year. So the average Home user ends up spending

more per PC than the office does. The basic Home PC is just the first step on a family's

IT purchase journey.

How do you convince the Home to buy a computer? There are many Homes out there who are

convinced, but still aren't buying. This still isn't a consumer product: buy, plug-in,

play. There are too many specs and options, too few financing options, and a crisis of

confidence in vendors' bonafides and intentions. The top questions faced by industry

professionals are: Which PC? Branded or assembled? How do we service it, who will support

it? How can we pay in installments? What to do in case taken for a ride, and it doesn't

work, or it has the wrong specs?

One of the things missing from the Home market is adequate packaging. This isn't

necessarily branding, though that's a part of it. A package shrink-wraps a single

well-defined product with specific specs, and service and warranty. A TV buyer goes into a

shop and asks for a BPL FXR 21, or an Akai 25, and knows she's getting the same product

her cousin in another city got. The Home PC buyer struggles with main cache and video RAM,

disk drives, and monitor options. The majority, without access to expert advice, simply

give up.

There's the over-quoted BeanStalk example: the

then HCL Frontline's MR had projected 25,000 sales in its first year, and its marketing

and publicity spend was in proportion. Finally, sales closed for that year at one-tenth

that number, and other companies backed down from the 'exaggerated' Home market. This was

a pioneering effort, and so wasn't as disastrous as it sounds; but the BeanStalk wasn't

one clearly-defined package, and it wasn't aggressively priced.

Compaq came a lot closer with its Presario 2110. It was a

good brand with an aggressive price; but most of all, it was a package with clear specs

and everything the Home user needed-from sound to internal modem. Over time, it lost sight

of that edge a bit, and came out with a series of follow-up models with varying specs. But

that Cyrix-based lineup still sells well.

What is needed is a TV-like package: clear specs with

no options, pre-configured, aggressive price, and backed by a clear warranty and service

policy. Call that package a Presario, BeanStalk, Aptiva, or whatever. Freeze the specs

intelligently, for six months. Ignore Intel when it tells you that there's a new chip you

must use or else. A P200 or MediaGX with 32 MB and 1.2 GB, CD, sound and modem card, and a

good 15" monitor, make an excellent Home package at Rs 40,000-60,000. That can absorb

a Rs 3,000 TCP/IP Internet account too, and Win 98, and a few CDs. Don't highlight the

detailed specs, just the package and its main features. Make it sound friendly.

In the absence of such a clear consumer-product PC, backed

by a major branding exercise, the only yardstick is price, and the brand names will always

lose out. Home and Small Office buyers moved away from brands last year, buying almost 80

percent of their computers from smaller players or assemblers. Now, how many homes buy

their TV sets from assemblers and regional brands? Or refrigerators?

India's big consumer market is sometimes overestimated, but

the infotech industry has barely begun to tap the market that does exist. It's a large

population, used to buying consumer durables. PC vendors haven't quite begun to think like

BPL, Videocon, or Akai. Or use strategic tie-ups to leverage such companies' existing

channels. And that's a pity, because if we jump from the projected 800,000 PCs to the

'magical' million mark by March 1999, it's not going to be thanks to the corporation or

government, but to the Home buyer.