Monitors: Eyeing The Pie

Monitor

sales are directly linked to PC sales and hence, vendors are very keen to

explore the vast potential. Over a dozen vendors are on the field today to grab

the market share with every trick in the trade. Samsung leads the pack, while

others in the race, including LG, Microtek, Samtel, Philips, BPL, Proview and

Viewsonic are eyeing the pie and wooing partners to join them and expand the

market. An overview:

The monitor market has seen a negative growth in 2001-02 with 8,34,030 units

sold in the first half of the year in comparison to 8,42,730 units sold during

the same period in 2001-02 (Source: MAIT). However, since the sale of monitors

is directly linked to PCs, the moment PC sales go up, vendors realize that

monitor sales can’t remain behind.

Even at a 10 percent growth, the monitor pie should be roughly Rs 1,100 crore

large which no vendor can ignore. As per market estimates, Samsung holds the

leadership position with 50 percent market share, followed by LG and Microtek at

12 percent each. Samtel is placed at third position with 8 percent. Others like

Philips, Proview and BPL fall in the next slab with more or less equal share.

Vendors like Acer, Sharp, HCL, ViewSonic, Vintron and NEC comes next with a

negligible market share.

New players



Recently, Japan-based NEC monitors made its entry in the Indian market

through a national distributor called Moon Computers. Nilesh Shah, director of

Moon Computers perceives a good potential for this new entrant in the market.

Even though the monitor market has many players, Nilesh is confident that with

aggressive marketing and good pricing, NEC monitors will pose a stiff

competition to the current players in the market. As of now, only 15",

17" and 19" CRT models of NEC are being made available. Nilesh has so

far appointed eight dealers in the country and is currently looking out for more

resellers.

According to him, in the last two months, he has already sold 1,200 units.

"We are confident of NEC capturing a sizable share in the market. The

target is set at five percent in the next few years," Nilesh claims that

currently NEC monitors in Europe possess a market share of 22 percent and 15

percent in US.

Philips has been in the market for quite some time. But it was only in the

last two years that it has become aggressive in promoting their monitors. Before

setting up office in the year 2000, they were present through some importers.

However now they have their official representative in Mumbai. Sanjeev Jain,

Head-Peripherals Division, Philips says, "India is a price-conscious market

and we have come out with ‘price-fighting products’ for both resellers and

end-users. We are optimistic about two digit market share by 2004."

According to him, Philips presently has a market share of five percent. More

of it is from the regions. Philips officials feel it is difficult to compete

with Samsung and LG around and hence they are aggressive in regions. Philips

have not appointed any national distributors, instead they have appointed some

50 plus regional distributors.

According to Sanjeev, a national distributor may not be able to reach where

Philips’ regional distributors can reach. "We have all the logistics

ready with 23 warehouses to cater to dealers in regions. All our depots are

linked to branches and these depots are linked to a mother depot at Pune.

Philips has a system to reach any corner at no cost. We have our own dedicated

vans plying to B & C-class cities," says Sanjeev.

Another player who made a recent entry in this segment is Proview. Lately,

the company has been aggressively marketing their product. Rakesh Kapur, General

Manager (operations), Proview Electronics Ltd says, "We are committed to

the Indian market and have developed a network of dealers and distributors who

are loyal to us. We are presently at six percent of the market and are looking

at 10 percent by the end of the year. We are targeting a turnover of Rs 100

crore by 2002-03."

BPL ERL Ltd had entered the market with monochrome monitors in 1992, but

discontinued production in 1995 as the demand for monochrome dipped. Again in

1998, BPL re-entered the market with color monitors. However, these monitors

where largely distributed to OEM customers. In September 2001, BPL launched its

color monitors through channels for regular sales. "Till date we have sold

around 5,000 units through channels," says Mohit Mathur, Sr Manager-Sales

& Marketing, BPL ERL Ltd. According to him, in two years time BPL intends to

achieve a target of 7-8 percent of the market share.

Sharp is another player that is trying to make it big in the LCD monitors

segment. According to Pankaj Sharma, Head-IT Sales, Sharp, for any company to

gain a market share will purely depend on its commitment and its readiness to

invest in India. "The future will see even more domination by the MNC

brands because with WTO regulations in place, duty differentials will go

down," says Mukesh Gupta, Country Manger, TPV Technology Ltd.

Benq (formerly Acer) is another brand that is eyeing the market with revised

pricing for their products. Sandeep Nair, MD, Benq says, "We were slow on

promoting monitors in the last few year, but now we intend to focus on it.

Monitors have got good visibility when it comes to promoting a brand. With the

new name Benq, we definitely will go strong with monitors because our products

are superior in performance."

Benq is in the process of revamping all its products’ pricing. "It is

being revised so as to make it competitive in the market," says Sandeep.

"Indian market is price elastic, and hence we are repositioning our

15" monitor prices," he adds.

Unlike all other newcomers, Sandeep feels metro market is still growing and

there is a lot of scope in metros. "Competition is good for customers as

well as the company because the market is growing," feels Sandeep. Benq

claims to find a place in the top three slots in a few years from now.

Indian vs MNC



Indian brands have always managed to price their products lower compared to

the MNC brands. But is it at the cost of quality? According to market analysts,

Indian brands manage to price their products lower by cutting on various costs.

Some resellers have alleged that the only way to bring down prices will be at

the cost of quality. Use of cheaper components, plastic casings cheap and

packaging material certainly bring down costs.

Mukesh Gupta of TPV Technology says, "Quality is the main factor. If you

compare manufacturing of MNCs and domestic companies there is a huge difference

both in the processes and components used. For example the quality of the

plastic used is vastly different, therefore the difference in finished

good."

The miniscule brand promotion adopted by Indian brands also helps them in

bringing down costs. "Brand plays a major role. Most MNC brands are

perceived by the customer as a quality product at the right price. So when

Indian brands position themselves a rung lower, it does not really help them in

going too far," says Mukesh.

However, Manish Agrawal, Director (Marketing), Vintron Informatics Ltd

differs. According to him, Indian companies are forced to sell at a lower price

even though their costs may not be as low. This is so because the overall

acceptability of the MNC brands is higher, also their ad expenditure is higher.

So, it is the consumer perception that is the key. MNC brands enjoy the

acceptability by virtue of their presence in the consumer electronic space too.

"This puts an undue pressure on the bottomline, and that’s why we have

reduced focus on the monitor business. And if you look at the last few years the

market share has steadily slipped out of the hands of the domestic brands. This

is not a healthy sign," says Manish.

Microtek and Samtel are the only Indian vendors now focussed on monitors.

Samtel monitors have significant presence amongst Indian OEMs and the assemblers

market. According to the company, it is planning to create a visible presence in

the MNC OEM segment too.

Samtel, so far has been supplying CPTs for CTVs to companies like Samsung and

LG. The supply of CDTs (display tubes for monitors) to above companies is

expected to commence by the middle of 2002.

Globally, companies like Samsung and LG, manufacture color monitor as well as

supply CDTs to their competitors. Hence, supplying monitor components to

competitors is in line with global practices. In fact, Samtel supplies its

components to Samsung and LG.

"With our own CDTs expected to be available by mid-2002, Samtel plans

are to substantially enhance the volumes of color monitors. We want to be at No

2 in the industry by end-2003," says Alok Dutta, CEO, Samtel.

"Samtel is already investing in R&D, product quality, distribution

and service. Now we need to communicate these achievements to create a strong

brand through various activities like assemblers’ meets, advertisement,

exhibitions, road shows and PR activities," says Alok.

Local manufacturing



Monitors are locally manufactured today mainly to reduce costs. In the

process, maintaining international quality has become crucial as more and more

MNC brands are venturing into local manufacturing. It is a common perception

that Indian brands manufactured here are not comparable in terms of quality.

"There is still scope to get to the international level of quality. Though

a trade-off is made, it is not on functionality of the product, it could be

packaging, it could be finish," comments Rakesh Kapur of Proview.

Last year Samsung also put its assembly line at Noida. But most of the

components including picture tube and most critical components are manufactured

by a Samsung subsidiary worldwide. "This ensures a very good control on

quality and supply chain management. We have an enormous amount of backward

integration," says Sonal Anand, Country Product Manager, Samsung.

In two months time Philip plans to begin local manufacturing in Pune. Says

Sanjeev of Philips, "This will help us logistically as supplies will be

more regular without delays." Philips has been importing monitors from

their China plant. Sanjeev is optimistic about maintaining international quality

at the same time bringing down costs.

Samtel has been a local manufacturer for quite a long time. According to Alok

of Samtel, "Being a local manufacturer has helped us in understanding

channel and customer psyche, preferences and expectations much better. Moreover,

Samtel is now emerging as an Indian MNC with the acquisition of the Thomson

business in Ulm Germany."

The local manufacturing has helped these companies in overcoming supply

pressures. But the problem that local manufacturers face is the lack of

flexi-time. In the monitor business most of the orders come in the last week of

the month. In China, they follow a flexi-time approach, so if there are no

orders, the plant goes slow, and if there is a rush, they work even 24 hours to

fulfill that order. "In India that is not the case, even if we keep

building up inventory throughout the month, to meet the month-end demand, it can

still fall short because of unforeseen orders coming in. That puts undue

pressure on us as a supplier and also adds through inventory stocking

costs," he adds.

Support network



Equally important in the monitor trade is the presence of a good support

network. Right from Samsung to every one in the game is aware of support network’s

importance. Samsung claims to have over 100 service centers across the country.

Acer claims to have three main service centers in Mumbai, Delhi and Bangalore,

35 authorized service providers and is in the process of expansion it to 100-odd

cities.

For Philips, its existing 120 service centers catering to other products are

being equipped to handle monitors too. Dedicated technicians are being employed

to service monitors. New players like NEC claims to have set up enough support

centers in the country and are in the process of expanding them.

Samtel claims to be best in the customer care industry. This is being

strengthened further with recent alliance with Onida who has taken over as a

national service provider. According to them Onida service reach to over 140

locations within the country. A team of over 1,000 trained service personnel

supported by a networked information system ensures prompt and efficient service

to our customers.

ViewSonic claims that each of their distributor have the ability to service

their monitors. It has also employed third party service providers to enhance

the support network.

The list is big. And yet there are complaints of unsatisfactory service.

According to market sources, there are enough authorized service centers, but

for a common man it is not affordable. Some have even alleged that these

authorized service centers are for name sake and make sense only to get service

during warranty period. Which means vendors cannot just boast about their

service network, but need to make service affordable for common users.

Pricing and features



India is a price-conscious market. Be it monitors or any other products, the

first thing that a customer looks for is price and then quality. There was a

time when customers had very little choice in monitor preferences. Now the

market is maturing and the knowledge of customer has improved a lot. Now you

find customers buying monitors for its quality and features. The trend is that

prices continue to go southward. Every vendor has priced his products at

competitive rates with equally comparable features. This leaves customers to

look at failure rates, warranty and support.

The failure rates for various brands has been found to be more or less

similar. All the brands put together, this ranges from 0.4 to five percent. Does

this mean all of them make reasonably good quality monitors? No, say market

experts. "Usually, a small number of monitors fail in the first two years

which is also the warranty period of most vendors. And it is this time period

that is taken into consideration for the failure rate," says an analyst.

According to the industry standards, the failure is at five percent. However,

the biggest problem is premature failures, says an industry expert who does not

want to reveal his name. Premature failure would mean the failing of the monitor

for any reason within the first twelve months of purchase. The failure rates in

India are relatively higher because of usage and power conditions in the

country. While internationally it is 0.7 percent, in India vendors look for a

benchmark of 1.5 to 2 percent.

Bottomline



With the signs of recovery on the horizon, monitor vendors are gearing

themselves up for a better year ahead compared to 2001-02 when sales actually

dipped. While Samsung will work hard to maintain its leadership position, it

will have to give away some of its market share to the newcomers in the field.

But the newcomers will have to work even harder to gain a foothold in the market

because the leader has set certain standards of quality, price, support, and

service.

NELSON JOHNY in Mumbai with inputs from MOHIT CHHABRA in Delhi and SUNILA

PAUL in Bangalore