PERIPHERALS: Price-cuts Stunt Growth

Growth slowed down, and the US slowdown was the best-known culprit. Hidden

away were far more causative factors–the aggressive pricing model adopted by

most MNC vendors resulted in a bloodbath. While the top-end numbers looked

healthy enough–with the peripherals market clocking revenues of Rs 2,517 crore

overall, against Rs 2,070 crore in the previous year, a growth of around 22%

(45% in 1999-00)–a segment-wise analysis revealed that it was only heavy

buying by the SME and SOHO segments that were fueling growth... For much of the

rest, it was time for cautious treading, and thoughtful planning.

Printers

An estimated 798,732 printers were sold during 2000-01, a growth of 17% in

unit terms. However, in terms of value, the growth actually slipped from last

year’s Rs 823 crore to Rs 767 crore.

Inkjets, at the cost of other printer categories, enjoyed a healthy growth of

52% in terms of value and 48% in terms of units. A total of 472,165 units were

shipped during the fiscal, valued at Rs 326 crore. Hewlett-Packard, the market

leader in the category, made a drastic gradual cut of about 30% in the price of

its models, forcing other players like Epson and Canon to reduce their price

points. HP dominated the market, commanding around 74% marketshare in unit

terms, followed by Epson with 17%.

New entrants like Xerox and Sharp threw in some challenge. Compaq made a

surprise entry, bundling its own brand of inkjet printers with its Presario and

Deskpro range of PCs. It will be interesting to watch if these debuts will

affect the so-far bipolar nature of competition–driven by HP and Epson. The

home segment emerged as the biggest driver, accounting for nearly 40% of inkjet

units shipped. The SMB and the SOHO segments made up for 30% and 25%,

respectively, while others consumed the remaining 5%.

The impact printer market underwent a major vendor repositioning, as last

year’s leader Wipro lost its dominance. In stark contrast to a total of

111,616 impact printers last year, valued at Rs 143 crore, Wipro shipped a mere

35,800 units this year at a total of around Rs 43 crore. The dismal performance

by Wipro had a great deal of negative impact on the overall printer revenues,

and consequently on the peripherals revenues as well. From a revenue of Rs 370

crore last year, the impact printer market witnessed a sharp skid to Rs 301

crore, and was thus forced to bear with a negative growth rate of 19% in value

terms. With the overall printer market closely tied up with the PC industry,

vendors are taking the bundling route like never before. For instance, Epson

forged a tie-up with Zenith, Compaq, Vintron, Acer and HCL to bundle its

offerings.

Monitors

The year started on a strong note, and vendors enjoyed the healthy trend till

Q3. In the last quarter, however, they found it somewhat difficult to push their

offerings. This is the quarter when the bulk government buying takes place.

Overall, in the fiscal 1999-00, the segment notched up a high growth rate of 60%

to garner revenues worth Rs 807 crore. Samsung dominated the monitor arena,

commanding the maximum share. The spurt of multimedia activity also led to

growth in the 15-inch monitor segment. Since these monitors are larger and more

suited to the job of multimedia professionals, these were gobbled up overnight.

Samsung and LG got aggressive to prop up their marketshare, flexing their

financial power also for the same. This gave domestic monitor vendors a rough

time, as their marketsher continued to skid.

Hard disk drives

The segment grew at a rate of around 35%, even as vendors packed more and

more storage capacity on the platters. 20 GB became the default for the

entry-level disk space. Seagate remained the undisputed leader, commanding a

market share of around 70%. The rest was divided between players like Samsung,

Quantum and Western Digital.

The year also saw the spears being sharpened for a battle in the ensuing

year. Samsung was busy crafting strategies to up its market-share, and announced

its intent to garner a market share of 40% in 2000-01. It has put in place an

aggressive customer-support strategy by launching a dedicated help line for its

hard disk range in the country. Seagate was not blind to these developments–it

took concrete steps towards enabling consumer appliances with HDDs. It is

already in talks with leading consumer electronics vendors in India for

integrating its drives in appliances like television and refrigerators.

Scanners

The competition between major players–UMAX and HP continued with each

trying to dominate the other. HP’s domination in the government sector was

challenged by UMAX, which made a significant number of installations in the

sector. HP made successful inroads in the home segment by leveraging its huge

reseller network and bundling its scanners with its Pavilion brand of home PCs.

Domestic players like Microtek took strong initiatives, and made their presence

felt in the space.

The demand for scanners was also strong from small desktop publishing

outfits, many of which started offering scanning services. Although it was not

significant in terms of numbers, it certainly outlined the emergence of a new

trend. More importantly, such a phenomena is likely to speed up the adoption of

PC-based imaging solutions in the country. This, in turn, should catalyze the

rate of scanner penetration.

CD drives

Compact disk drives have really moved toward becoming a default choice for PC

users. This is a major shift from the device being seen as a costly accessory

barely a couple of years ago. In the last fiscal, on an average, an estimated

72,000 CD drives rolled out.

The Indian market, as of now, is divided between read and write disk drives.

While the majority of home PCs sported only CD-ROM drives, players made attempts

to migrate users to CD-RW drives. HP, for instance, fitted CD-RW drives in its

high-end Pavilion PCs. Among other peripherals, keyboards, FDDs UPS,

motherboards, Web cameras, graphic cards, and SCSI cards registered a decent

growth during the year. DVD drives are yet to pick up, mainly because of the

high costs and also because enough DVD applications are not available in the

country right now.