Disaster strikes, market still booms

Disaster strikes anytime anywhere. It doesn't give an advanced warning
before coming. Rather, it strikes when you are least expecting it. This seems to
be the case with the complete drowning of Mumbai city, which paralyzed trade and
industry for a considerable amount of time.

Similar thing had happened in Gujarat couple of weeks back when the entire
state was flooded. Prior to that, Chennai was the place affected with Tsunami
last December. In each of these cases, the IT industry was affected very heavily
as business came to a virtual standstill at all the three places, all of which
normally witness very heavy buying.

Consider the statistics: Gujarat has close to 2,500 channel partners, Mumbai
city also has the same number, and Chennai has around 1,000 partners. Add these
numbers and what you get is that almost one-fourth of the channel community in
the country was affected by either the floods or the Tsunami over the last seven
months.

However, despite the all round gloom, while the market is doing well in the
metros, it is booming in the smaller towns and cities. Sales in smaller towns
and cities are continuing to fuel IT consumption.

According to a recent survey, over 60% of total PC sales came from the class
B- and C- cities in the last fiscal. Even the notebook segment witnessed half
its sales coming from these very towns, in the process growing by almost 100%
year on year. The same cities accounted for more than one-third of the server
sales. Similarly in the printer segment, B- and C- class towns accounted for 80%
of the dot-matrix market; in the case of inkjets and lasers, it was two-thirds
of the marker. Not surprisingly, half the total UPS sales also came from these
very towns.

Do we have some lessons in there? Yes, there are several. Firstly, markets
are in such a buoyant stage, no amount of disaster-natural or man-made-can
put brakes now. People have come to realize now that no matter what, the show
has to go on.

Although that's a very healthy sign and augurs well for the country, the
fact remains that the local authorities also have to play their role in making
sure that the applecart is not turned. Already, India is very high on the agenda
of several leading global IT vendors. However, they would not commit large
capital investments as it involves significant risks.

The government needs to proactively set in place concrete measures that would
help in mitigating such risks, thereby making India an attractive destination
for global investments. These measures will have to include addressing and
providing assurance on infrastructure and coping up with disasters.

Asim Raina