Project Perfect

With recent announcements about Wipro and HCL Infosystems discontinuing their PC business, the ‘Indian PC' business has met a graceful death after living a life of thirty years.

Does this mean that the ‘Indian PC' industry has failed?

No. The death of the ‘Indian PC' industry is simply a result or effect of the change in industry dynamics and market models. All other reasons like the ‘Indian PC' industry not being able to compete effectively against MNC brands, wafer-thin margins, failure to innovate, and many others are not the causes; they are merely the effects of the change in the dynamics of the PC industry.

The ‘Indian PC' industry went through interesting phases during its lifetime. It all began as a pure domestic industry that manufactured IBM PC-compatible machines. The first ten years (ending in 1993) were marked by the emergence of national brands and numerous regional brands- HCL, Siva, Wipro, PCL, Zenith and their power to sell to corporates and ability to innovate on product features.

The next ten years saw the emergence of consumer buying, competition with MNC brands, emergence of form factors, setting up of tiered distribution, creation of large unorganized assembled PC market, Intel's attempt to organize the market through Genuine Intel Dealers, and brand the industry with ‘Intel Inside' campaigns.

The last ten years saw the dominance of global brands, global consolidation of PC vendors, high-impact marketing and branding, consumer buying and emergence of retail and online, expansion of form factors to create new categories like netbooks and ultrabooks, and invasion of tablets that disrupted the growth of the PC industry.

Finally, why did the global brands prevail over the domestic ones? Here are a few reasons:

• Prices of PC components got normalized and supply chain for components got streamlined for efficiencies. Global PC vendors could set up efficient in-bound supply chains for components, semi-finished, finished products and they could manufacture locally to global standards. Same was the case with product service and support. Indian vendors could not optimize their activities along these lines.
• Intense competition in the market led to margins getting thinner due to which Indian vendors did not have enough returns to plough back.
• With the maturing of the market, the PC changed from being a corporate product to a consumer product. Technical features of the product (like clockspeed, etc,) became less important than user experience and brand-driven attributes. Global brands could convey these more effectively.
• High-impact marketing helped solidify the presence of global brands. The distribution model worked in the favor of global brands because they could generate demand.

The ‘Indian' PC vendors- they were a brave lot. RIP.