SMBs to invest $4 billion on hardware this year

DQC News Bureau
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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.