MAIT recently conducted a quarterly industry performance review for the AMJ quarter of 2002-03, which states that the first quarterly PC sales have crossed five lakh units and the industry is well on the recovery path. PC sales are
expected to cross 19 lakh units in 2002-03.
MAIT, an apex body representing hardware, training and R and D services
sectors of the IT industry in the country has announced the findings of its
first ever ‘Quarterly Industry Performance Review’ for the April-June
quarter of 2002-03. This review was conducted by the market research firm Indian
Market Research Bureau and aims to address the hardware sector´s efforts to
manage the business environment, gauge the market potential and consumer trends.
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HOW THE SURVEY WORKS
The first round of the quarterly study from AMJ involved data collation from
six major vendors and 367 resellers/vendors across 13 metros in India.
The review covers the market size estimation for desktop PCs, notebooks,
servers and peripherals like printers and UPS.
Though year-on-year comparisons have not been possible, the survey findings
lend themselves to identifying significant trends in buying and usage pattern.
In AMJ 2002-03, the desktop PCs, notebooks, DMP and laser printers have
registered sales of close to 2/3rd of their sales during the first half of
2001-02. Products like servers, inkjet printers and UPS have registered around
50 percent of the sales during H1/ 2001-02.
Typically, the JAS quarter is usually characterized by higher sales than AMJ,
thus the sales of IT products in H1/2002-03 is expected to comfortably exceed
that in H1/2001-02, showing definite signs of market recovery.
Sales in H2/2001-02 were characterized by increased sales to smaller towns
and cities and the same continued in Q1/2002-03 as well.
PC STUMBLES TO RECOVERY
The desktop PC market grossed 5.08 lakh units  63 percent of that sold in
the first-half of 2001-02. The market has shown signs of recovery, with sales in
almost all product categories amounting to two-thirds of that sold in the last
fiscal.
With the buying sentiment in the market improving, PC sales in FY 2002-03 are
expected to grow by 15 percent crossing 19 lakh units. Fiscal 2001-02 had
recorded 16.5 lakh units of PC sales.
In the PC market, among the business segment it was primarily banks,
educational institutes, government purchases, IT sector and IT related companies
that have provided the recovery thrust to the hardware manufacturers and
vendors. In the household segment, reduced prices coupled with increased selling
efforts, like schemes, promotions and loans have been instrumental in bringing
in the recovery.
Replacement demand in PCs is also expected to enhance growth in this market.
New technology and new features, application better suited to run on latest
machines are likely to drive replacement market.
NOTEBOOKS, SERVERS AND PRINTERS
Notebook sales are still largely confined to business/ establishment market
and hence these segments would drive the current and future demand. The
corporate office, IT companies and financial service sector institutes have
emerged as the most sought after markets for notebooks.
The server market, predictably, has been restricted to the corporate segment.
The corporate/office segment has not been able to reflect a significant increase
in the consumption of servers as in the case of desktop PCs. A significant
replacement demand does not seem imminent either.
CHANNEL AND GOVERNMENT
The channel plays an important role in reaching IT to the end-user. For the
first time, the MAIT-IMRB study attempted to understand the dynamics of this
business and focused on issues being faced by the segment. Some of the salient
recommendations from the resellers polled are:
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l The government should focus on a
conducive policy framework for IT consumption. The current domestic taxes viz
sales tax and excise duty make IT products significantly expensive for a
price-sensitive market like India. Further, incentives such as income tax breaks
for individuals for purchase of IT product and increased depreciation on IT
products in the corporate sector would help boost the demand.
l The Government should expedite
implementation of e-governance. Online transactions for business and individuals
would prove to be a major incentive for SMEs and individuals to use computers
thus positively impacting sales of IT products.
l Thirdly, major government
intervention is required in educational initiatives. This would provide a higher
mass of computer literate individuals.
l The hardware players need to focus
on producing PCs at lower costs. The market still perceives the product to be
slightly above reach for immediate purchase decisions. This can be minimized by
lowering the costs.
l The availability of better support
and service from hardware vendors and manufacturers was also cited as a
significant initiative that can better the market. Establishing more service
centers, longer duration warranty, replacement options and customer training
sessions for SMEs have been suggested as some other measures to enthuse the
market.
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COMMENTS FROM MAIT
Though the entire country witnessed an economic slowdown last year, with
signs of economic recovery this year, the IT market is expected to perform
better. According to Vinnie Mehta, Executive Director, MAIT, to ensure that IT
reaches grass root levels in India, there is a pressing need to bring down the
prices of IT products.
The hardware industry, on the other hand needs to seriously contemplate
developing products for the Indian market. Fortunately, the growing market in
sub-urban India will help us validate and prove such products.
While there have been some admirable efforts in the industry in this
direction, the government needs to facilitate and encourage this process by
creating simple mechanisms for quick access to low-cost finance for product
development and pilot production.
Vinnie adds, "The performance of the industry will get a further boost
by increased IT consumption in the government." The initiatives launched by
various state governments for e-governance are encouraging, but need to gather
momentum.