Indian SMBs to invest $4 billion on computer hardware this year

Kolkata

July 4th, 2007

Small and medium businesses (1-999 employees) in India are on track to invest
about $ 4 billion on computer hardware this year. Last year, overall SMB
investments on hardware in India grew 20 per cent to cross the $3 billion mark,
according to a study by New York based Access Markets International (AMI)
Partners, Inc.

Last year, notebook PC spending grew at 43 per cent among Indian SMBs.
Aggressive pricing by vendors has narrowed the price gap between desktops and
notebooks, and the availability of wireless technology has resulted in the
mobile computing boom. Desktops however remain the starting point for less
IT-savvy small businesses (SBs, or companies with up to 99 staff). However,
unlike in the past, adoption now centers on branded computers. "SMBs are
looking beyond the price tag and giving increased weightage to hassle-free
maintenance," says Partha Sarathi Sengupta, Senior Analyst at AMI-Partners.
"Vendors such as HP and IBM have facilitated the growth of the branded
desktop market by drastically lowering prices and providing good after-sales
support."

Last year, second and third tier cities in India witnessed a tremendous surge
in notebook PC growth due to the extensive coverage of vendors' sales network
and aggressive marketing strategies. HP maintained its lead in the SMB space due
to its distribution network and efficient after-sales service. Dell and Lenovo
emerged as strong contenders in the race for notebook PC market share. Lenovo
initially did not have significant brand awareness among SMBs but after its
acquisition of IBM's PC division, it's established a significant presence.

"Many SBs who previously did not own any PCs, have now begun to build
their IT infrastructure by purchasing notebooks straightaway," Sengupta
says. "On the other hand, many of the larger medium businesses (MBs, or
companies between 100 and 999 staff) are replacing desktops with notebooks.
Their notebook PC purchases are not simply additional hardware. Larger MBs have
more mobile and telecommuting employees and consequently value the benefits of
portability."

Server usage has yet to take off in the SB space. Assembled servers dominate
the SB landscape with a significant proportion being white boxes. SBs prefer to
buy lower cost assembled servers, which are regularly serviced by the local
computer stores. In the MB segment, data processing, data storage and faster
accessibility are of greater importance.

"Branded servers enjoy far more widespread usage among India's MBs,"
Sengupta says. "HP and IBM were the market leaders in the Indian MBs
segment, we expect server spending to grow exponentially over the next three
years. SMB expenditures are set to grow at a CAGR of about 30 per cent over the
next three years. Advances in 64-bit, dual-core, and virtualization technologies
will also result in increased momentum in server market growth."