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.
|
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%.
|
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
range.
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.
The |
||||||
 | 2000-01 |  | 2001-02 |  | ||
Category | Units | Values (Cr) |
Share %* |
Units | Values (Cr) |
Share %* |
Impact Printers |
361,178 | 420 | 45 | 338,639 | 431 | 46 |
Inkjet Printer |
472,165 | 326 | 35 | 436,500 | 260 | 28 |
Lasers Printer |
68,882 | 196 | 21 | 84,337 | 239 | 26 |
Total Printer |
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.Â
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.
|
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%.
|
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
series.
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.