Notebooks

Notebook sales look up

After dipping in 2001, the Indian notebook market picked up in 2002. This year will be better, with the buzz that WiFi will drive the market, says Srikanth R P

According to Rajiev Grover, the notebook market is poised for higher growth this year, and is expected to be around 65,000 units

The sun is certainly shining on the brighter side for Indian notebook players. Apart from prices of notebooks falling rapidly and new technologies being packed into the ultra-sleek notebooks, the entry of non-traditional players to develop wireless infrastructure has given the market a further boost. For instance, a few years ago wireless connectivity on the notebook was considered a luxury. Today it has become a necessity with most major hospitality chains in India establishing wireless hotspots besides many firms, airports planning to do so, and even some schools offering WiFi. The entry of processor giant Intel with ‘Centrino’ is bound to accelerate growth further since the chipmaker is keen on developing infrastructure to support its technology.

IDC says India is the third fastest growing notebook market in the Asian region, with a compounded annual growth rate of 21.9 percent. Those numbers match IDC India’s forecast for the PC market, since it has projected a growth of 22.2 percent for the Indian PC market in 2003. While many factors can be credited to this resurgence in the notebook segment, the biggest driver is probably the fact that businesses are recovering and posting health numbers. This is driving both the PC and the notebook market.

Today, even non-IT companies are giving notebooks to their executives in a bid to boost productivity. The spurt in laptop usage can be attributed to the increasing usage of IT, and the automation of the sales force in sectors like pharmaceuticals and fast moving consumer goods. Even government organisations (traditionally believed to be laggards in the adoption of technology) are today increasingly using notebooks.

But problems remain, as notebooks are expensive even when compared to MNC desktops. A high-end PC with a flat panel monitor will cost you Rs 50,000 less than a notebook with half the processor speed and memory. That said, you can’t take a desktop with you wherever you go.

Increasing penetration

The real opportunity, many market players believe, lies in exploiting the market to its fullest potential. For instance, the Indian market for notebooks and handhelds is still small when compared to other Asian countries.

Says Rajiev Grover, business manager, mobile products, HP India, "Notebook sales account for 10 percent of the computers sold in Thailand, 15 percent in Korea and 20 percent in Australia. In India, the number is 2 percent. HP looks at this as an opportunity. We want to create a bigger pie rather than fight for a slice of a smaller one. The notebook market is poised for high growth this year, and is expected to be around 65,000 units."

The market dynamics of PCs and notebooks are different. Two-thirds of PC sales come from white-box manufacturers. There is no equivalent for notebooks. The notebook market has done pretty well in comparison to sales of branded PCs from Indian and MNC vendors: 50,000-60,000 notebooks to roughly 700,000 branded PCs.

WiFi

Wireless is emerging as a key driver, and is likely to become a standard on most notebooks in the second half of 2003. Most models of Compaq’s Evo range offer users wireless access either through an 802.11b or a Bluetooth module. Similarly, IBM’s new T-series ThinkPads come with WiFi integrated with Intel Pentium 4 processor 2.20 GHz-M, or can be upgraded to WiFi later. WiFi enhances mobility, which has always been the biggest selling point for notebooks. Having to plug a notebook into the wired network kills mobility to a large extent. The unwired office makes owning a notebook more attractive. Intel claims that using notebooks in a wireless environment boosts productivity by 20 percent.

Comments Jyotin Verma, country head, marketing (mobile computing), HCL Infosystems, "In recent years, the mobile computing space has seen a paradigm shift. More and more people want to carry their office along wherever they go." This office-on-the-go concept fits right into the WiFi scene. Adds Alok Ohrie, vice-president, personal computing division, IBM India, "Wireless is an upcoming area that will define the future of mobility. It is the next quantum leap in mobile computing."

Centrino

In case you are wondering why we are talking about Centrino right after WiFi, it’s simple. The Centrino has three components—a processor, a chipset and wireless hardware. Not all WiFi-ready notebooks use all three components. IBM’s new ThinkPad T40, for instance, uses the Pentium M processor and the chipset, but not the wireless hardware. It therefore carries a Pentium M label. Centrino- and Pentium M-labelled notebooks have performed impressively in benchmark tests, with superior battery life and performance.

Enterprises have started investing in wireless LAN so that they can offer wireless connectivity to at least some of their top executives. These executives demand mobility and seamless roaming from a boardroom to their cabins. That’s one aspect of Centrino that it brings to the table. In addition, it offers longer battery life.

Lighter and thinner

Notebooks keep getting lighter and thinner. Current models weigh a little over a kilo. The Evo N200 from HP weighs 1.13 kg, and is 2.11 cm thick. The Toshiba Protégé 2000 weighs 1.18 kg, and is 1.49 cm thick. Neither compromises on power.

The name of the game

Companies are also trying hard to differentiate their products. This is no trivial task, since platforms like the Centrino lead to standardisation, and vendors have to work hard to make their notebooks stand out. Security features like biometric technologies are being built into notebooks. Acer offers notebooks that have a fingerprint sensor built into the notebook’s palm rest. This feature can be configured so that a valid fingerprint is required to boot the machine or decrypt files.

According to HIRJI PATEL, the company customised notebooks for the Indian market with features like a serial port for compatibility with legacy hardware

IBM has developed a software solution called ‘Rapid Restore PC’ for its range of notebooks and desktops. The software is available as a free download, and provides a one-button back-up of a user’s hard drive to a hidden partition on the drive to enable quick recovery in the event of system crashes or virus attacks.

Explains IBM’s Alok Ohrie, "With Rapid Restore PC, users are better protected against unexpected computer disasters such as image correction and data loss. This solution will also help avoid the expense of sending a technician, or using bandwidth to transmit a new image to a system. Moreover, the system can integrate with enterprise-wide systems’ management policies that can be automated and controlled through a command line interface."

IBM has also gone one step ahead: all IBM ThinkPad notebooks are supplied with an insurance option for the end-customer. The ThinkPads are equipped with an insurance equal to the warranty period, so if the ThinkPad carries a three-year warranty, the insurance cover is for three years. There are other vendors like ACi who have introduced innovative technologies like Web cameras in their notebooks. For example, the ACi Emerald Pro is probably the only notebook in the country with a built-in Web camera that can be used for video conferencing.

Besides the price factor, vendors like ACi have also customised their notebooks for the Indian market. Says Hirji Patel, chairman and managing director of ACi (Asia), "We have customised notebooks for the Indian market with features like a serial port for compatibility with legacy hardware. Since over 80 percent of the Indian customers prefer notebooks with serial ports over those with USB ports, we believe that we stand a better chance of capturing market share."

Reaching all segments

Apart from offering customised notebooks to different market segments, vendors are also betting on individual strengths for boosting their market shares. Says Verma of HCL, "Segments like education, home, and small and medium enterprises (SME) are showing keen interest in mobile computing." Not surprisingly then, vendors have segmented their products. All the major players have notebooks catering to different market segments. Toshiba has four models. Explains Verma, "Every user has different needs, and we have positioned our products accordingly. For instance, if the notebook is being used by the corporate segment, they typically prefer features like wireless connectivity, long battery life, low weight and flexible configurations. The Protégé 2000 would be ideal for them. However, if professionals, students or small office home office (SOHO) customers purchase a notebook, they typically prefer features like enhanced sound and video capabilities, higher storage space, and larger screen size. The Toshiba TE2100 or Satellite 1100 are ideal for this purpose."

IBM has a laser-sharp focus on the corporate market, with its ThinkPad series aimed at different usage profiles. HP targets business users with the Compaq Evo range, while its Compaq Presario notebooks are meant for the SOHO segment. Similarly, Acer has different models starting from the entry-level TM 230 series catering to education, SOHO and SME users, to the TM 800 series for corporate users. ACi has segmented its models into categories like entry-level, mid-range and high-end, with prices ranging from Rs 55,000 to Rs 99,500; the company gives a customer the facility of upgrading the entry-level notebook to higher processor speeds.

According to ALOK OHRIE, wireless is an upcoming area that will define the future of mobility. It is the next quantum leap in mobile computing

Retail and financing

Besides targeting traditional sectors like corporates, players like HCL Infosystems (Toshiba) are also targeting niche segments, and even non-IT users like doctors, lawyers and CAs. The company also has plans to have at least 50 retail stores across the country to target the home and SOHO user. In order to encourage more customers to buy notebooks, HCL is also offering easy finance and insurance schemes to lure the home user. Also on the anvil are plans to introduce a Celeron-based notebook at an aggressive price point. Vendors have also started courting B&C class cities in a bid to up their market share.

Will notebooks replace desktops?

Says Raghu S, senior product marketing manager, Acer India, "In India, notebooks represent a minuscule percentage of total desktop space. Price has been a barrier to higher sales." Acer’s response has been to offer a sub-Rs 60,000 notebook. Verma of HCL adds, "India being a price-sensitive market, cost is certainly a factor as far as mass adoption is concerned. But prices will certainly come down with time. For example, currently the pre-duty in laptops is 40 percent as per WTO norms. In the near future it will come down to zero percent, and consequently, the price of notebooks will also be reduced."

The performance gap will reduce with the Centrino; the Pentium M processor that powers this platform is tailor-made for mobile computing, and its performance is substantially greater than its clock speed suggests. The chip completes more instructions per clock cycle than its predecessor, the P4 mobile processor. The performance boost will help reduce this gap.

Inflection point

The notebook market needs what Intel’s Andy Grove called an inflection point—some dramatic change that makes a notebook a necessity. All said and done, notebooks are still perceived as status symbols. This is clearly visible from the average sale price of a notebook from the top three vendors, HP, IBM and Toshiba. The average unit price for a notebook from them works out to over a lakh of rupees—Rs 1.12 lakh to be precise. Something needs to be done to transform the notebook into a must-have. If Intel seeded genuine Intel distributors (GIDs) with notebook kits, that would immediately send notebook sales skyrocketing. As it is, Intel has big plans regarding hotspots and WiFi. Wireless infrastructure has so far been mostly confined to hospitality chains, and limited deployments in STPs and educational campuses.

There’s no doubt that notebook sales are keeping pace with the PC market, a substantial achievement considering that 65 percent of PCs sold come from the grey market. There’s tremendous buzz around WiFi, and Intel’s increased focus on the notebook market can only be good for notebook sales. The other factor that could boost notebook sales is the mushrooming WiFi centres in certain pockets of cities, especially at hotels and airports.