16 lakh non-PC SBs to purchase PCs in 2008

Kolkata



July 11, 2008

Over 40 percent of SBs (small businesses, or companies with up to 99

employees) in India have indicated plans to invest in computers for the first

time in the next 12 months, opening up a huge opportunity for hardware, software

and solution vendors. The number of people not owning any computers (also termed

as non-PC SBs) is vast-around 2.6 million in India. On being queried, over 40

percent of them-totaling more than a million-revealed plans for first-time

PC adoption in the next 12 months. These findings emerged from a recently

concluded study by Access Markets International (AMI) Partners, Inc.

“The India SMB sector is en route to becoming an extremely potent force

within the Indian economy; yet it may seem surprising to many that a huge

majority of this segment (roughly 65 percent) still manage without owning a

single computer,” said Dev Chakravarty, Senior Analyst, AMI-Partners. “If we

delve into the cause of the relatively lower usage of PCs, a single-most

striking barrier looms large-the lack of awareness and education about the

utility of computers. After all, a commercial unit is not likely to invest on

computers if it feels that they have 'no relevance to their line-of-business';

this sentiment exists for over half of the entities that AMI surveyed.” Hence,

a need remains to educate SBs about the myriad benefits and applications of PCs.

The demographic analysis of SBs without PCs reveals that a huge majority;

above 90 percent of them are quite small and fall within the one-nine employee

category. The vertical breakout indicates a skew towards the wholesale/retail

sector that makes up 55 percent of the universe. The non-PC SB segment is also

growing quite fast and displaying a healthy economic trend. More than one third

of them mentioned hiring plans in the next 12 months and over three quarters

experienced revenue growth last year.

“Non-PC SBs are gradually realizing that computerization and automation is

the first step towards managing rapid business growth-this probably explains a

shift towards PC-purchase plans. Pressure from ecosystem players like customers

and suppliers as well as an urge to outshine competitors are some other key

drivers behind PC purchases in the next 12 months,” indicated Chakravarty.

The adoption plans of these first-time PC buyers add up to a likely planned

shipment of 1.6 million PCs in the next 12 months. Even if a small fraction of

these purchase plans is translated into actual practice, this is going to boost

the overall PC installed base and PC penetration within the nation to a

significant extent. Thus the future holds considerable promise for hardware and

software vendors.

When asked about their channel preference for future PC purchase, 57 percent

of non-PC SBs preferred the local retail store. Retail offers many advantages,

eg convenient options of buying over the counter and scanning through the

available brands and models-thus providing a chance to weigh the pros and cons

of each.

“However, an interesting trend is also the rising popularity of local

resellers/system builders/box-pushers (also known as value-added resellers, or

VARs) as a preferred channel-mainly due to their personalized service and

support. Non-PC SBs need considerable hand holding in the initial stages, in

terms of installation and occasional troubleshooting. And herein lies the

utility of VARs,” mentioned Chakravarty.