PCs Lure Small Businesses Finally

Several people from small businesses admitted that they wanted
to purchase a PC as they didn't want to be left out of the league of technical
superiority in business. As for those who will get their businesses
computerized, company heads preferred an assembled PC to a branded one.

India's small businesses (SBs) constitute the vast majority (over 98%) of
the country's commercial universe in terms of number of enterprises. Yet they
lag behind their larger counterparts when it comes to the adoption of
information technology-related products and services.

This is borne out by the low PC penetration rate among Indian SBs; only a
little over one sixth of these businesses currently possess a computer.

However,
the situation will change quickly since India is on its way to becoming a major
IT power. Over half of India's non-PC SBs located in major cities have
expressed the intent to embrace the benefits of computing technology by the end
of 2005. This translates to an enormous planned PC-hardware market of over 4.8
million computers.

The above findings were released by New York-based Access Markets
International (AMI) Partners, drawn from its surveys of small and medium
businesses (SMBs) in key developed and emerging market countries that account
for almost three fourths of total SMB IT spending. AMI specializes in IT,
Internet, telecommunications and business services market intelligence-with a
focus on global small and medium business enterprises.

Barriers to PC adoption

"Indian SBs are definitely price sensitive when it comes to the
purchase of computers," observed Dev Chakravarty, Senior Analyst at
AMI-Partners. "However, non-PC SBs have clearly stated that there are other
factors to be considered-such as the high cost of PC maintenance/support and
the expense of training courses. Moreover, there appears to be a dearth of PC
financing/leasing options and a lack of awareness among SBs about such finance
programs. PC vendors need to introduce financing schemes targeted at Indian SBs.
Additionally; they must spread awareness of these programs and educate small
business owners about the advantages of computers."

The necessity to evangelize regarding the benefits of computers and their
application in various facets of business has acquired a new dimension in the
context of recent AMI research findings. More than 60% of India's non-PC SBs
still maintain that computing technology has little relevance to their
businesses, or that benefits are not worth the cost.

Some are also reluctant to adopt computers due to a fear that data may get
stolen or copied. Close to two in five SBs admit that they are hampered by the
complexities of PC installation, support and utilization. Introduction of
short-term computer training programs could go a long way toward overcoming
these barriers and promoting PC adoption.

The rat race

An overwhelming factor encouraging India's non-PC SBs to adopt computers
is a fear of being left behind in the race for business and technological
superiority.

Over
40% of these businesses confess to an apprehension that others will use PCs and
the Internet to gain a competitive edge. More than one third mention direct
pressure by their business partners (suppliers and customers) as a motivation
for purchasing PCs.

The attraction of the worldwide Web is another major factor driving India
non-PC SBs. These SBs want to embrace the benefits of the Internet since they
believe it will put them on par with the other businesses-both at home and
abroad. Non-PC SBs in India would like to leverage the Internet, both in
providing and receiving online customer support. This would go a long way
towards improving business process efficiencies.

Over a quarter of India's small businesses have also stated a preference
for accessing different software over the Internet, as opposed to purchasing
packaged software and installing it on their PCs via diskettes and CD-ROMs.
"This will enable small businesses to access their software from any
computer without incurring repeated licensing costs. It is also a simpler
procedure for many small business owners who are unfamiliar with the
installation process, but are more comfortable with the Internet," observed
Dev.

Mindset of prospective buyers

Assembled/white-box computers still rule the mind space of SBs intending to
purchase a computer in the next 12 months. Though the gap in pricing of branded
and white-box PCs has narrowed, over half of prospective PC purchasers still
express a desire to buy unbranded PCs. This is due not only to price but also to
the efficient and personalized service offered by

the value-added resellers who mainly promote assembled computers.

Among branded desktops, HCL, Lenovo and HP/Compaq have a slight edge over
other manufacturers. The channel of choice for most PC-planning SBs is computer
resellers/local dealers/assemblers, while  over 30% intend to buy their PCs
at retail stores. As for hardware peripherals that they want to be bundled, they
preferences are as follows:

1. Printers

2. Speakers

3. CD-ROM drives

4. Modems

5. Scanners

6. NICs

Software bundles tend to be comprised of:

1. Productivity suites (MS Office)

2. Anti-virus protection software

3. Finance/accounting software

4. Communications (fax, e-mail, voicemail)

5. Tax-related software

6. Web browsers (Navigator or Explorer)

In terms of preferred PC features, approximately 75%-80% of
SBs mention processor speed and hard drive capacity as important criteria when
evaluating PC configurations. Over 60% emphasize that 256 MB RAM size is
imperative for smooth PC operations. Regarding operating systems: close to 40%
have confidence in the traditional and trusted MS Windows, while Linux is
mentioned as a preference by only 5% of non-PC businesses.