SMBs to invest $4 billion on hardware this year

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 percent and crossed the $3 billion
mark, according to a study by New York-based Access Markets International (AMI)
Partners, Inc.

Previous year, notebook PC spending grew at 43 percent 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). “SMBs are looking beyond

the price tag and giving increased weightage to hassle-free maintenance,” said
Partha Sarathi Sengupta, Senior Analyst, 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,” he added.

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 marketshare. Lenovo
initially did not have significant brand awareness among SMBs, but after its
acquisition of IBM's PC division, it has established a significant presence.

“Many SBs who previously did not own PCs, have now begun to build their IT
infrastructure by purchasing notebooks,” said Sengupta. “On the other hand, many
of the larger medium businesses (MBs, or companies between 100 and 999 staff)
are replacing desktops with notebooks,” he informed.

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. 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 percent over the next three years. Advances in
64-bit, dual-core, and virtualization technologies will also result in increased
momentum in server market growth,” he added.

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