MAIT says hardware sector will grow by 18%

EC News Network / New Delhi

While FY 2001-02 registered a negative growth of 11 percent for PC sales, the market has been improving and gaining buoyancy quarter on quarter since last year. The desktop PC market grossed 22.9 lakh units, registering a growth of 37 percent over the previous year, with the second half of FY 2002-03 gaining greater momentum. "With robust growth prospects, the IT market is expected to grow at 18 percent in FY 2003-04 and PC sales are expected to cross 27 lakh units," said Vinnie Mehta, the executive director of MAIT while presenting the recent findings of MAIT-IMRB Industry Performance Review for 2002-03.

Personal computers

The turnaround in PC sales can be largely attributed to increased IT consumption by Industry verticals like telecom, banking and financial services, manufacturing, IT-enabled services and major e-governance and Digital Divide initiatives of the central and state governments. In addition, the domestic IT industry’s focused attention on producing and developing low-cost computing solutions and the trend of increased PC purchases in smaller towns and cities, witnessed last year, continued undiminished.

According to the MAIT-IMRB study, assembled PCs (smaller, lesser-known regional brands and unbranded systems), accounted for 46 percent of PC sales in 2002-03. Although the proportion of the assembled market remained constant compared to 2001-02, their sales witnessed an increase of 43 percent. Indian brands grew by 88 percent, staging a dramatic comeback, garnering a market share of 26 percent, while MNC brands accounted for 28 percent of the overall market, registering a drop of 10 percent in sales. The drop in marketshare of MNC brands from 35 percent in the previous year was made up by the gain in marketshare by the Indian brands.

The review reveals that PC sales, both to the business segment as well as to households, witnessed impressive growth compared to sales in the last year. In 2002-03, the business segment accounted for 81 percent of the total market, growing at 37 percent annually. Within businesses, the larger businesses (over 50 employees), medium business (between 10 and 50 employees) and the small (less than 10 employees) segments grew by 54, 43 and 24 percent respectively. In the second half of FY 2002-03, sales were skewed towards large businesses, who accounted for 62 percent of overall sales in the business sector.

In terms of the processor configurations, PC sales last year were dominated by Intel’s Pentium 4, which accounted for 59 percent of marketshare, followed by PIII accounting for another 26 percent. The household segment also witnessed an increased consumption of P4s in second half of the year, amounting to 45 percent of sales to households. This reflects an increased need for faster processing speeds. Sales of processors with lesser speeds e.g. PIII (up to 450 MHz) and PII-based systems witnessed a fall in marketshare.

Class B and C class cities accounted for 35 percent of total PC sales and registered a growth of 63 percent, the proportion increasing from 30 percent in the last fiscal. Smaller towns accounted for 9 percent of total notebook sales, growing at 44 percent. However, it was the top four metros, which accounted for 53 percent of the total PC market.

Operating systems

In terms of usage of operating systems, 86 percent of the overall installed PC base runs on Windows 95/98, while Linux accounted for 2 percent. In servers, Linux and other non-Windows-based OSes accounted for 11 percent, the rest being Windows-based.

Printers

Printer sales, according to MAIT-IMRB estimates, grew by 7 percent compared to 2001-02. Laser printers registered the maximum growth of 54 percent, while the sale of inkjet printers grew by 14 percent. However, sales of dot-matrix printers declined by 9 percent. B and C cities accounted for 42 percent of inkjet printers and 21 percent of laser printers respectively, with consumption improving for inkjets by 15 percent and that for laser by 194 percent respectively. While small enterprises led growth in inkjet consumption (accounting for 42 percent share), sales of laser printers were driven by the large business segment, which accounted for 55 percent of the market. The slow-down in the consumption of dot-matrix printers was on account of poor sales to households as well as to SMEs.

Notebooks

Notebook sales grew by 14 percent, clocking a CAGR of 12 percent over the past six years. However, the major proportion of notebook sales (55 percent) was accounted by the large business segment.

Servers

The server market grew 11 percent in 2002-03, with sales of servers to smaller businesses growing by 46 percent. In the case of notebooks, PDAs and servers, the top three metros accounted for the highest consumption, amounting to 74, 57 and 78 percent respectively.

Networking products

The consumption of networking products witnessed an impressive growth, with the sales of network interface cards (NIC) growing by 50 percent and that of hubs by 151 percent. Consumption of modems, however, declined by 11 percent. In the case of UPS systems, sales grew by 24 percent with the business segment registering the highest consumption at 66 percent.

In the case of Internet connections, the number of active Internet entities increased to 1.43 million in March 2003, indicating an increase of 10 percent over last year. In this, dial-up remained the most commonly used means of accessing the Internet among businesses, with 63 percent of business subscribers using it. Cable, leased line and DSL are yet to catch up.

According to Mehta, growth witnessed in 2002-03 continues undiminished well into FY 2003-04. "With the recent increased focus of the government on the hardware sector, we are hopeful that the industry will flourish." In addition, he also stressed on the need to implement the recently drafted policy for the IT manufacturing industry, which attempts to address most of the challenges currently faced by the hardware sector in India.