The PC in India The Desktop Story

The first personal computer is generally accepted to have
been the Altair 8800, launched in 1974 in the US. India, the land where the
digit zero was conceived, was introduced to the PC world only in 1984. Minicomp
was the first company to launch a PC here–the Neptune PC.

The early PC

On
a global scale, the advancements in the chip have kept the desktops evolving.
First, the 8088-based PC gave way to the PC-XT, which was also 8088-based but
came with a hard drive. Then came the 80286-based PC-AT, followed by a whole
range of 286, 386 and 486-based systems. Indian companies also kept pace.
Between 1984 and 1986, Usha Micro Process Controls had launched Usha-Eagle PC,
HCL had introduced its Busybee and Wipro had launched Wipro-PC. The early years
of the PCs in India were characterized by a small number of players in the
market space, mostly native.

Staggering prices

An average desktop sold for Rs 5 lakh in the early 80s.The
mid 80s was a period when prices fell drastically, largely due to fierce
competition. The average unit price of microcomputers in 1985 was around Rs
80,000. Prices rose artificially during 1988-89, due to hikes in the duty on
computer and computer parts. In 1990, low-cost PCs appeared, triggering a fall
in prices–there would have been a 16% drop in per unit price as compared to
the previous year, but for the higher-end 386-based PCs that made an appearance.
The increased sale of 386-based systems was able to contain the drop to 3%. The
following year, however, prices of 386-based systems also fell. The mid 90s saw
the average unit price of desktops hover around Rs 50,000. A point to note here
is that though the average unit price remained steady, there was an increase in
the value of the product. The PCs, based on chips having built-in support for
features like multimedia, started becoming available. Intel heralded the ‘movement’
with its Pentium series of chips.

In 1999, Zenith introduced a Pentium MMX-based multimedia PC
at Rs 33,500 and HP launched the Brio priced at Rs 40,000. The year 2000 saw an
average unit pricing of Rs 40,000, indicating the continual drop in PC pricing.

The million mark

The sale of the PC units grew over the years. In 1985, the
number of PCs sold went up from 1,200 in the previous fiscal to 2,600, a growth
of 116%. The figure crossed the 50,000 mark in 1989–when 51,715 units were
shipped–and continued to keep rising steadily throughout the 90s.

Though
initially limited to corporate usage, the advent of 386, and later 486-based
systems, gradually led to the spread of computer usage among a wide range of
users during the 90s. Also, in the later half of the decade, the Internet
started contributing to the PC boom, especially in the urban homes. Finally, in
the fiscal 1999-2000, the number of PCs crossed the one-million mark.

In terms of sales, the growth was more pronounced. In 1985,
there was a 50% increase in sales over the previous year. The growth figures for
1994-95 and 1995-96 were 60% and 50% respectively. There was a slowdown in
1996-97, when the growth dropped to 22%. The market recovered to 32% in 1998-99
and 45% in 1999-2000. The closing years of the millennium witnessed the growth
of home PC market.

Along with the number of units and sales, also grew the
general awareness about PCs and the latest technologies. Moreover, the sale
patterns indicated that Indian buyers were conscious of the latest technologies
and were quick to embrace them. For example, In 1986-87, XTs accounted for 52%
of the PC sales as compared to 43% of PCs and 5% of ATs. Vendors saw this, and
realized that users had to be offered enhanced products.

The death of giants

The evolution of the Indian PC market would not have been
without some key players. And the story of these market movers has been that of
constant change.

The 80s saw a fluctuating performance. While companies like
HCL, Usha, DCM DP and Zenith were the top players in the early half of the
decade, new entrants stole the show in the latter half. Today, DCM DP, Usha,
Hinditron are no longer in the fray.

In 1989, Sterling topped in PC sales, shipping 8,284 units.
The following year too, the company’s PC sales accounted for a whooping 97%
share of its total revenue. However, it failed to keep pace later.

Another company with a strong presence, though for a short
period, was PCL. PCL made its entry into the club of top three players in 1991
and continued to remain there till 1996.

HCL and Wipro were those major players who were consistent
too. Both of them remained dominant in the late eighties and for most of 90s.
HCL is still going strong, along with Compaq and Zenith.

Consolidation–and MNCs

Going
by the top-three companies’ PC revenues vis-à-vis the overall PC revenue,
many trends emerge. In 1985, the share of the top three companies–HCL, DCM DP
and Zenith–accounted for 87% of the industry-wide PC sales, which declined to
40% in 1986, when the top three players were HCL, Usha and DCM DP. The top-three
share rose to 49% in 1989 but dropped to 42% in 1990, the key players for both
the years being HCL, Sterling and Wipro.

The 90s witnessed a steady contribution by the top-three
players–HCL-HP, PCL and Wipro, who formed the echelon from 1993 to 1996,
contributed 42% in 1993 and 45% in 1996 towards the overall PC sales in the
industry. This consolidation reflects the shift of the PC market from being a
fragmented one to an organized market where a few key players act as leaders.
The entry of MNCs into the PC fray has also contributed to this phenomenon–Compaq
became a leading player in the PC market in the past two years. But at the same
time, there has been a growth in the sale of assembled PCs, who have come to
enjoy the majority market share. This, coupled with the declining profit
margins, has seen the interests of many PC players fade.

The
90s witnessed a steady contribution by the top three players: HCL-HP, PCL and
Wipro, who contributed between 42% and 45% of the PC market between 1993 and
1996. This consolidation showed the shift in the PC market from fragmented to
organized, where a few key players were the leaders. The entry of MNCs into the
PC fray has also added to this phenomenon–Compaq became a leading player in
the in the past two years, with HP catching up and IBM a little way behind. But
in the white-box segment, assemblers are putting up a good fight for the
majority of the pie. This, coupled with the declining profit margins, has seen
many PC players fade.

The PC industry has evolved steadily in its two decades of
existence in India. The market has shown that the only way to grow is to keep
pace with the technologies, which become outdated at the turn of every quarter,
while managing supply chains and distribution channels amidst ever-tightening
margins. And while fighting component shortages. The challenge is tough, indeed,
and the few big survivors will live to tell their story–and dominate the
Indian PC market.

Priya Sivakumaran

in New Delhi