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Crunch Craze

Desktop data crunchers are cheaper. Which way is the Indian market for PCs headed?

By Amanpreet Singh

The halving of excise duty on Personal Computers (PCs) to 8 per cent has been hailed across the land. Precisely what an emerging infotech power needs.

So, what happens next?

Sameer Kochhar, CEO, Skoch Consultancy Services, expects "the PC prices to fall between 8 and 12 per cent, depending on the configuration and mode of import". This, he adds, "should yield an additional growth of over 24 per cent over and above the current growth rate of over 30 per cent--- which is like a near doubling of the growth rate".

Wow. Fiscal 2003-04 is expected to close with sales of 3 million PC units. An acceleration to 50 per cent growth in 2004-05 would mean an addition of 4.5 million new PCs humming away in India.

That's good. While India's infotech exploits are becoming more and more prominent, a statistic that stays in desperate need of help is the country's overall PC penetration. At one PC for every 83 people, it's still an embarrassment---and for an infotech power, an acute one too.

Anyhow, it's the future that counts. The boom is just beginning, by the look of things. Prices have already started descending, and branded players have started reformulating their strategies. The big companies, in fact, can probably bank on a renewed conversion to brands---as often happens once prices no longer pinch the relatively evolved consumer. By the end of the last quarter of 2003, Ajay Sindhwani, Senior Analyst, Computing Products Research, IDC detected "a marked shift in the Indian sensibilities towards the branded players". This could pace up, if the brands get their value---and we mean value----propositions sufficiently enticing.

The assembled PC market, concurs Kochhar, is on the wane. It stood at an estimated 61 per cent of the market in 2002, and ought to fall to 30 per cent as a result of the government's recent tax cuts. "These factors are creating virtually an additional market opportunity of over a million PCs that would be up for grabs by the organized sector," says he.

That's quite a lot. It was the size of the entire Indian market not so long ago. Should one expect some interesting brand battles?

Oh yes. The big brand that brand sophisticates would be watching is---no, not Apple, this is India---Hewlett-Packard (HP). Internationally, this brand has shaken people from their slumber with its zany approach to the market. Here in India, the brand has so far been relatively sleepy, but still has a market share of an estimated 13 per cent. For now, the change is in price. "At HP, we have reduced the prices of our PCs by approximately 5 per cent,"says Ravi Swaminathan, Vice President, Personal Systems Group, HP India. But as the competition intensifies, perhaps the brand will sizzle in other ways as well.

There's also HCL, the biggest homegrown brand, with nearly a tenth of the market. And there's IBM, with about 7.3 per cent. "The rush is to give consumers maximum benefits, so the price drop is approximately 10 per cent," says HCL spokesperson. And then there are Dell, Zenith and others vying for consumer mindspace.

Dell has announced a price drop of 11 per cent. This company imports completely built PCs, and ought to be especially pleased with the new tax provisions. Brands that make PCs in India need to pay countervailing duties on assorted parts, and those remain unchanged. Still, the interesting part will not be the price tags being waved at people, but the actual messages.

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