PERIPHERALS: On the Periphery of Gloom

DQI Bureau
New Update

The previous year’s promise of climbing the maturity curve is all but gone,

replaced by a year full of aggressive pricing, tight margins and inventory

stocks. For most vendors of IT peripherals like printers, monitors and scanners,

the only good news to be carried forward from 2001-02 has been that sales have

been flat, when other segments have shown negative growth.


Fiscal 2001-02 could be considered introspective, with most of the set rules

of the segment changing. Channels went through a challenging phase and struggled

to meet vendor expectations. The impact of 9.11 was pervasive, with

organizations going slow on their IT spend and inventories piling up in the

third quarter. Channel players blamed vendors for not pruning targets, while

vendors ended up with heavy volumes when demand was low. This had a telltale

impact on credit lines–top-tier channels, earlier working on a cash up-front

model, were forced to soften their stand and extend 15-45 days’ credit. With

time, the situation only aggravated, with the second-tier channel segment

buckling under pressure and resorting to bundling. Primary sales of products

like printers and scanners, therefore, were affected–while the strategy

increased volumes, values took a dive and margins got squeezed.

In 2001-02, channels went through a challenging phase and struggled to meet vendor expectations
Government, as well as banks and insurance firms, remained heavy users of dot-matrix printers
The laser market, which increased its hold in the year under review, is likely to rule in fiscal 2002-03

Impact printers: Going strong

When inkjets first appeared, analysts foretold the death of dot matrix

printers (DMP). Doomsday pundits better re-analyze, for going by current market

performance, DMPs are still on-track. Fiscal 2001-02 was modest year for the

impact printer segment, with total sales of 3,38,639 units, valued at Rs 431

crore. And though there was a 6% decline in units against the previous year’s

361,178, the segment grew by 3% in value terms, from Rs 420 crore in the

previous year to Rs 431 crore.


An interesting point was that old-time impact players like Wipro ePeripherals

(WeP) and TVSE fought a close contest, but both lost ground to vendors like Lipi.

Wipro’s sales declined by 17% while TVSE registered a negative growth of 9%.


Vendors are

rolling out high-resolution printers to counter lower

revenues, but with little success

Despite the fall in units, WeP overtook TVSE in value by posting Rs 150 crore

from 116,155 units. TVSE sold more units (122,500) but its valuation was only Rs

121 crore. This was because WeP was able to push higher-end DMPs. Lipi entered

the high-end DMP category and garnered Rs 79.2 crore from 3,834 units.


With the DMP market fast becoming competitive, vendors kept rolling out newer

products with added functionality and evolved models in order to retain

dominance. TVSE, for instance, unleashed several new models, broad-basing its


Through its R&D initiative, it designed its own print-head, and this gave

it a significant competitive edge in the DMP space. At the same time, WeP

extending its reach into the Far Eastern markets by forging synergies in China

and Thailand for DMP exports. The company is also learnt to be seeking contracts

and OEM agreements in that part of the world. Such a move by Wipro would be

strategic, insofar as the printer market in Far Eastern geographies is growing

at a rate of 15%, while that for impact printers is growing at over 25%.

Despite a flat growth rate in 2001-02, impact printer vendors can now look

ahead to better times ahead. Major DMP consumption is still on in the government

sector and banks. Government buying is expected to take off in a big way,

especially as Indian states embark on large e-governance initiatives. Banks,

meanwhile, are aggressively automating their business processes.



Printer Scorecard

  2000-01   2001-02  
Category Units Values


Units Values



361,178 420 45 338,639 431 46

472,165 326 35 436,500 260 28

68,882 196 21 84,337 239 26

902,225 942 859,476 930
Other 1,694 1,863
Total 2636 2794

More doesn’t always mean merrier

Slowdown blues: At a weekly meeting, the CEO of a large MNC urged his staff

to use the ‘economy toner’ mode of the printer to the greatest extent

possible. Similar cost-cutting proliferated across companies, irrespective of

size and stature. With dwindling IT budgets, inkjets, the most dynamic in the

printer category, bore the brunt of the slowdown with a fall of 8% in units and

20% in value terms. An estimated 436,500 inkjets were sold in the Indian market

in 2001-02, compared to 472,165 units the year before. While unit sales

decreased, values crashed 20% from Rs 326 crore to Rs 260 crore in fiscal

2001-02. The fall in value came from slackening prices. For instance, HP’s

entry-level DeskJet printers came tagged with an ASV of a paltry Rs 3,800.

Inkjet volumes rose as PC vendors entered into alliances with HP, Canon and

Lexmark and bundled printers with their PCs. 

The market movers for inkjets were mainly the SOHO and home segments, which

together made up 70% of the revenues.


Large companies and the government sector shared the remaining 30%. HP

remained the undisputed leader in this segment, with a marketshare of 76%,

followed by Epson with 14%. Canon, meanwhile, gave stiff competition to Epson,

doubling its marketshare from to 3% to 5% in 2001-02. A late entrant, Canon

stormed the market with a slew of products. Other players like Lexmark,

Olivetti, WeP and Xerox managed a cumulative 6% marketshare.


Impact printers

continue to be strong, and are expected to dominate in the

ongoing year

Major vendors rolled out high-resolution printers like 2,800 dpi, but their

success was limited. At the end of the day, 1400 dpi looked set to lead the pack

till 2003, by which time higher-resolution printers like 2,000 dpi and above

would establish themselves as entry-level products. That timeframe will also see

the emergence of universal serial bus (USB) version 2.0 making headway into the

peripherals market. HP and Wipro have already adopted this standard and devices

like printers, high-end digital cameras and scanners are expected to perform

faster with this, as data transfer speeds will be increased and PC-peripheral

connectivity will be simplified.


Lasers: Slow, yet steady

With inkjet printer values crashing, the market for laser printers looks

buoyant in the ongoing year. Fiscal 2001-02 was a good one for lasers. Lasers

grew by 22%, with an estimated 84,337 units sold at a value of Rs 239 crore. HP

dominated with a marketshare of 77%, while Samsung captured 13% and Xerox

followed with 4%. Other players–Lexmark, Wipro, Canon and Epson–shared the

remaining 10% of the market.

The laser market might see further growth this year as top vendors go all out

to push volumes. Potential buyers of mid-range inkjets will prefer lasers, given

the long-term value proposition laser printers offer. Vendor-wise, HP has the

most powerful brand image in the laser circuit, while Samsung, seen as the most

proactive, is strategizing to emerge as a one-stop peripherals shop. WeP has

also chalked out an ambitious strategy for laser printers, based on the FMCG

model, with 4,000 retail outlets.

Monitors: Inching ahead

Fiscal 2001-02 was the year of 15-inch monitors, which dominated both in

units and value terms, with sales spurting by 66%.



With vendors

pushing for volumes, the coming year should be a bright one

for laser printers

The 14-inch, definitely on its way out, made up only 20% of total sales,

while 17 and 21-inch monitors together appreciated from 8% to 14%–the primary

demand for the latter two came from users upgrading to larger monitors and

first-time buyers.

The monitor market, which grew by 5%, crossed the Rs 1,000-crore mark in

2001-02. Samsung’s aggressive campaign allowed it to retain its leadership

with 50% marketshare, with LG coming in next with 20%. Other players like

Viewsonic, Samtel, Philips and Hansol shared the rest.

HDDs: Size does matter

In 1998, an HDD of 4GB was entry-level. Four years from then, the

entry-level capacity for HDD has grown ten times and is at 40GB. Seagate

captured a marketshare of 60% by selling the maximum number of HDDs. Samsung’s

share stood at around 30%. Western Digital, Maxtor, and Fujitsu occupied the

rest of the market. Interestingly, HDD sales were higher than PC volumes in

2001-02. The demand for standalone disks came from users migrating to higher

capacities. In addition, the home segment consumed more than 50% of higher

capacity HDDs. Corporates, meanwhile, bought within the 80-GB segment, with data

backup becoming a major concern area after 9.11. Also, vendors embraced the

consumer electronics segment, which is becoming a secondary market for HDDs.

Seagate took the lead and launched HDDs for cable TV set-top boxes.

Scanners: UMAX’s pain, HP’s gain

According to market intelligence reports, 100,000 scanners were sold in

India in fiscal 2001-02. On an average, 25,000 scanners moved every quarter. In

March 2002, the scanner segment generated revenues of Rs 60 crore. The scanner

market went through major vendor re-positioning when UMAX and its principal

distributor, Summit Infotech, parted ways. UMAX appointed Neoteric as its sole

distributor for India. As a result, it’s marketshare fell to 30% in 2001-02,

from 40% in the previous year. Cashing in on UMAX’s woes was HP, which ended

the fiscal with 45% of the marketshare. The rest of the market was divided

between Microtek and Canon. However, the home segment is yet to extensively take

to scanners. As of now, the major demand-pull comes from the small and medium

segment, and publishing.

ODDs and UPS’

That ubiquitous silver platter, the CD-ROM, still rules the optical disk

drive (ODD) market in the country, with 70% marketshare. CD-Rs, CD-RWs and DVD-ROMs

occupied the remaining 30%. The CD-ROM segment is currently valued at Rs 300

crore. Samsung emerged as the clear winner here with 60% share, followed by LG

and HP. The CD-ROM dominion will falter as CD-RWs become more popular–a move

towards this came from HP and Compaq with the high-end Pavilion and Presario


APC, Wipro, TVSE and Powerware dominated the UPS market. However, there are

more than 100 players comprising the Rs 1,000-crore plus market. Given the

dismal power situation in the country, UPS players are confident that this

segment will grow at an over-25% CAGR. To capitalize on this demand, vendors are

strengthening distribution models, manufacturing capabilities and product

designs. APC, for instance, has chalked out an ambitious strategy to leverage

its line in the upcountry space. WeP, meanwhile, has started manufacturing

high-capacity 1kVA Emerge brand of UPS targeted at the SME segment, which

demands high power backup. Other vendors have also expanded their product lines

and channel strength. As for other peripherals lines like webcams, digicams and

zip drives, 2001-02 has been a lean year, with sales being near negligible.