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Peripherals Special: Monitors
Monitors continue to tag behind PCs
Monitors can never be seen as a peripheral away from a PC,
but frequent upgrades and newer technology may put it ahead of and separate
from CPU sales, says Shipra Arora
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The replacement of CRT with LCD monitors will be restricted
to a few segments that benefit significantly from using LCD monitors, says
R Manikandan |
Despite being the face of the PC, monitors in the last few years have consistently
stayed out of the limelight and have been the least talked-about part in terms
of any new developments in the PC market. With processing power getting upgraded
even before an adequate market has been created for the previous milestone,
upgradations in monitor technologies were bound to remain in the periphery of
the customer’s decision to buy a PC.
Market overview
According to research and advisory firm IDC, in unit terms the total PC monitor
market in India is estimated to grow at a CAGR of around 23 percent. The market
is estimated to grow at around 20 percent during 2003 over 2004. As compared
to this, there was an estimated 18 percent growth in 2003 over 2002. Even though
the expected growth in 2004 over 2003 does not show any major improvement over
the estimated growth in 2003 over 2002, there is an increased positive indication.
This is owing to the fact that market performance has surpassed earlier expectations.
There has been an upward revision of the figures forecast for 2003 and 2004
by IDC, with both the PC and monitor market surpassing expectations in the third
quarter of 2003.
During that quarter, the overall PC monitor market surpassed earlier expectations
by almost 12 percent. In Q3 2003 the monitor market stood at 7,37,237 units,
valued at close to Rs 486 crore.
Factors driving growth
One of the factors driving the upsurge in Q3 2003 has been the good performance
shown by the PC market, owing to an increase in corporate buying. In this period
the PC market grew by 17.3 percent over the previous quarter and around 22 percent
over Q3 2002. Apart from the corporate market, the consumer PC market—driven
by aggressive pricing and promotions by vendors like HP, HCL, etc—also
provided a thrust to the monitor market. All this was made possible due to an
overall recovery in the Indian economy with GDP growth in Q3 2003 improving
marginally over the previous quarter. According to Anil Gupta, managing director,
Microtek, increased PC volumes was the driving force for the monitor market
during 2003.
Sanjit Sinha, manager of hardware research at IDC India says the monitor market
will continue to grow at a high rate. However, he also throws in a word of caution,
pointing out that this market is heavily dependent on the PC market, and therefore
its performance will be determined by the dynamics of the PC market. One of
the factors that might adversely affect monitor sales is the upsurge of the
sub-Rs 50,000 category notebooks. “The monitor market will continue to
grow as long as the PC market is growing,” Sinha points out.
Standalone shipments
Standalone monitor sales gave a boost to monitor performance towards the second
half of 2003. According to IDC, the shipment of monitors going into the replacement
market increased considerably during the third quarter of 2003. Most standalone
monitors have been used for upgradation in the commercial market, thereby indicating
that the adoption of the latest technologies is faster on the commercial side
than the consumer side. According to Sinha, the usage of specific functionalities
like graphics would call for upgrades to higher technologies.
As a result, the upgrade market is turning out to be an important proposition
for monitor vendors, who are now consciously trying to grow this portion of
their business. For instance, for Samsung the upgrade market is expected to
grow from a mere 5 percent share of the total monitor business in 2003 to 15
percent in 2004. According to Sonal Anand, national product head, volume business,
IT & telecom division, Samsung India, upgrades is turning out to be an important
market due to a combination of factors like technology becoming more affordable,
customers becoming more aware and the emergence of newer applications.
Upgrades are happening both in terms of screen size (from 15” CRT to 17”
CRT and from 17” CRT to above 17” screen size CRTs) as well as in
terms of technology, from CRT to LCD. However, the most discernible upgrade
trend is happening in the area of screen size, especially in the 15” to
17” bracket. There is some extent of price prohibition in moving from CRT
to LCD. According to R Manikandan, deputy general manager, sales and marketing,
IT products, LG Electronics India, an important factor driving the growth of
monitors is the upgradation from 15” to 17”. “With the price
gap narrowing between these two, consumers are increasingly realising the value
of 17” in terms of a better computing experience.”
Key market trends
CRT vs LCD
Within the overall monitor market in India LCD monitors still continue to remain
a niche. However, the segment has been steadily growing, driven by corporates.
According to IDC, the LCD monitor market has grown from around 1 percent in
the third quarter of 2002 to around 5 percent in Q3 2003. In 2004, the LCD market
share is estimated at 5.8 percent of the total monitor market in India. According
to Gupta of Microtek, one of the key highlights during 2003 was LCD making inroads
into the Indian market.
The total LCD monitor market in Q3 2003 was 37,288 units, showing a sequential
growth of around 65 percent and year-on-year growth of over 435 percent. The
growth has been most discernible in the closed market for LCD monitors. With
PC vendors increasingly bundling LCD monitors with PCs, this market grew at
a much higher rate than the open market as well as the overall market for LCDs
in Q3 2003. In terms of CAGR, the total LCD monitor market in India is expected
to grow at around 96 percent owing to its small base. “LCD monitors show
a good presence in market segments like call centres, financial institutions,
corporate and government where there is a growing demand for LCDs and awareness
about them,” says Manikandan.
On the other hand, CRT monitors, which account for the bulk of the market, are
expected to grow at around 20 percent CAGR. During Q3 2003 the total CRT monitor
market in India stood at a little below seven lakh units. CRTs enjoy the largest
market share in the home and SOHO segment.
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Upgrades are turning out to be an important market
due to affordable technology, customer awareness and new applications, says
SONAL ANAND |
15” gives way to 17”
In the CRT space the movement from 15” monitors to 17” will gain momentum
in 2004 and the market is expected shift considerably by 2006. During the first
half of 2003, in the CRT space 15” accounted for roughly 68 percent of
the market with 17” accounting for around 24 percent, 14” accounting
for 4 percent and above 17” accounting for around 2 percent.
According to market expectations, vendors are likely to drop prices of high-end
CRTs to speeden the next upgrades to 19” and 21” screen sizes. According
to Sinha, like in most technology products, as monitors become a mass-market
product prices starts falling. In order to maintain their Average Selling Value
(ASV=Total Value/Total Volume) they try to shift users to higher technologies.
However a sizeable traction towards 19” and 21” is still far off because
of the affordability factor. According to Anand there has not been a major shift
in demand from 17” to 19” CRTs and they still remain niche, largely
restricted to call centres and BPO outfits where there is a requirement for
larger screen size.
Though the 15” CRT will still remain the dominant segment, the growth rate
will keep decreasing as the market upgrades to 17”.In fact, 17” CRT
has emerged as one of the fastest growing categories for LG. For Samsung too
the 17” monitors business is growing faster than the 15”.
LCD
In Q3 2003, the 15” screen size accounted for a bulk of the total LCD monitors
market with almost 85 percent share. 16” and 17” screen sizes had
a 10 percent share with a very negligible presence for the above 17” LCD
monitors. The interesting fact here is that like CRT monitors, the 14”
screen size within the LCD space is also likely to become extinct by the second
half of 2004.
According to Sinha, the 15” CRT market will move in two directions—upgrade
to 17” CRT or to 15” LCD. So there will be either a technology upgrade
or a screen size upgrade. The movements will be majorly driven by vendors and
will depend on how much they drop their product prices. According to IDC, there
has been an ASV drop over 20 percent in 15” LCDs. If the price drop in
this segment intensifies, the 15” LCD might end up attracting quite a few
customers away from 17” CRT, thereby changing the market equations in favour
of 15” LCD. But the 17” LCD equation is unlikely to see any major
change as the first adoption is an LCD which is a 15” one and then there
is a shift towards the 17” LCD monitor.
Over the next three to four years more vendors will be looking at carrying fewer
CRT lines and will focus on developing their LCD business. The LCD monitor market
will be significantly driven by the OEM market, followed by the replacement
market as panel manufacturers start bringing down prices. Atul Gupta, national
marketing manager, Sharp Business Systems India, explains, “LCD manufacturing
is a very capital-intensive proposition leading to high prices. As capacities
increase prices will gradually start coming down.”
Despite this, the CRT monitor will continue to see stable growth as PC penetration
increases in the price-sensitive B and C class cities and the SME and SOHO segments.
According to Manikandan, the price advantage that CRT monitors carry will continue
to be perceived as very big, and hence there will be a continuing demand for
CRTs for a long period. “The total replacement of CRT with LCD monitors
will happen only in the distant future and shall be restricted to a few segments
that benefit significantly from using LCD monitors,” he says. At the same
time, experts have dispelled the possibility of high-end CRTs (19” and
above) getting totally usurped by LCD technology.
OEMs strengthen base
Though the dealer network was the major channel for monitor sales in India during
2003, sales through OEM channels increased their share in the total monitor
pie and also grew at almost double the rate of the dealer channel business.
This was due to the growth in the PC market. While the monitor business through
the OEM channel grew by almost 33 percent during the third quarter of 2003,
that through the dealer saw a growth of almost 18 percent growth. The OEM business
also grew its share of the total business from around 23 percent in Q2 2003
to 26 percent in Q3 2003, according to IDC. The dealer portion accounted for
almost 57 percent of the market during the third quarter of the year. This trend
will bring about some changes in the channel strategies of monitor vendors,
who may increase their focus on the OEM business. With the PC market hit adversely
in 2002, vendors had consciously decreased focus on the OEM part of their businesses.
However, if the latest trends are to be believed, the OEM business seems to
be coming back into the reckoning for monitor players.
Pricing
A significant trend that hit different monitor categories across the board was
the fall in prices during 2003, which is expected to continue over the current
year. According to IDC, the ASVs for LCDs dropped from Rs 38,053 in first half
(FH) 2002 to Rs 27,688 in FH 2003, while in CRT there has been a marginal drop
in the ASV–12 percent from FH 2002 to FH 2003.
Over the next three to four years, in LCD the 17” ASV will grow faster
than that of the 15”. This will lead the 17” LCD to cannibalise the
18” LCD market as the price gap between the two is high. This will also
reduce the price gap between the 15” and 17” LCD. What is further
narrowing the gap between the two is the continuing shortage of 15” LCD
panels since mid-2003, because of which the prices of 15” LCD monitors
are not decreasing as fast. Due to the demand-supply disparity (where 17”
LCDs are in greater supply than their demand), the prices of 17” are likely
to fall further in 2004. This will lead to some shift from 15” to 17”
LCDs. In the case of CRT, IDC forecasts a marginal fall in the ASVs.
Vendor positioning
Consolidation is the highlight of vendor positioning in the Indian market. In
the total open market for CRT in India, the top three vendors—Samsung,
LG and HCL—accounted for almost 82 percent of the market in unit terms
in Q3 2003, with the rest of the pack (including Microtek, Philips, Proview,
Viewsonic, Comptech and BenQ) hovering around with a single digit market share.
The open market for LCD flat panels in India was similarly consolidated with
the top three players—Samsung, Philips and LG having almost 84 percent
market share in unit terms during the same period. The other players were able
to grab less than 5 percent share each; these included Umax, BenQ, Proview and
HCL.
- A few vendors have been witnessing dwindling shipments due to stiff
competition and aggressive pricing that exists in the market.
- Due to the shortage of LCD panels, prices of 15” LCD monitors
are decreasing at a lesser rate, which is preventing the market from
growing at the desired rate.
- All government purchases are centralised through the DGS&D rate
contract. The date for the issue of contracts has been postponed, which
has delayed government purchases and thereby inhibited overall growth
of the monitor market.
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- With increased economic activity and soaring corporate profits, IT
spending by corporates has also gone up. This has been the major driver
for growth in Q3 in the standalone monitors market.
- The third quarter of the year is usually characterised by an increase
in corporate purchases to qualify for the depreciation benefits on purchases
made before September 30. This was one of the growth drivers in Q3.
- Shipments of monitors going to the replacement market increased considerably
during Q3 2003.
- Aggressive pricing and promotion gave a big fillip to the market,
increasing PC shipments to the home segment. The consumer PC market
grew by 11 percent, which also acted as a booster for the monitor market
in Q3.
- Vendors are also focusing on smaller towns and cities, realising the
vast potential that exists there. These are price-sensitive markets
where PC vendors are pitching low-priced entry-level monitors to increase
market penetration of PCs, and hence monitors.
- To capitalise on the seasonal increase in shipments, most leading
vendors have undertaken very aggressive channel and end-user promotions.
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| The Korean giant has
continued to retain its lead position in the Indian CRT market. During the
third quarter of 2003, the company was able to bag almost 43 percent of
the total market. With the market consolidating and smaller players being
unable to sustain themselves with smaller volumes, Samsung gained from the
situation.
The
company is now growing its presence in the 17” CRT monitor space.
This will have a significant impact on the overall monitor market in India,
which may shift from 15” to 17” screen size. The total contribution
of 15” CRT to the overall monitor business declined from 75 percent
in 2002 to around 67 percent in 2003, giving way to the 17” market.
The company witnessed a growth of over 35 percent in its 17” CRT
business, which was much higher than the growth in the 15” business.
According to Samsung, the 17” monitor business is being driven by
the growing number of applications for these monitors as well as their
greater affordability.
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| LG has retained its number two position in
the Indian CRT market for some time now. According to IDC, during the third
quarter of 2003, LG accounted for over 25 percent of the market in unit
terms with over 1,70,000 units being sold. However, though it is the number
two player, there continues to be a huge gap between LG and Samsung.
According to the company,
its quarter-on-quarter growth in the colour monitor segment in 2003 was
12.2 percent in JFM, which improved to 19.4 percent in the AMJ quarter.
Overall, LG’s growth in the monitor segment in 2003 has been a whopping
88 percent. The company foresees a very healthy growth rate in the CRT
17” and Flatron segments, which are the fastest growing for LG. Last
year the company introduced some cutting-edge monitor technologies like
LightView and the Colorific programme.
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| During the third quarter of 2003, HCL stood at the
number three position in the CRT market in India. The company accounted
for almost 12 percent of the market with around 75,000 units sold, a figure
that is significantly below Samsung’s. But the interesting fact here
is that HCL has recently come up in the monitors segment, overtaking another
domestic brand, Microtek, which earlier occupied the number three position.
It will however be tough for the company to retain its position since Microtek
is not very far behind. Microtek’s share stood at around 8 percent
during the same period with over 52,000 units being sold. What might work
to HCL’s advantage is its already well-established presence and brand
in the Indian PC market, which can rub off on its branding in the monitor
segment as well. This can give a boost to HCL’s sales over the next
few quarters. |
| Vendor |
Units |
Share percent |
Value percent
|
Share (Rs crore |
| Samsung |
13454 |
36.1 |
31.42 |
35.7 |
| Philips |
5820 |
15.6 |
11.20 |
12.7 |
| LG Electronics |
2855 |
7.7 |
5.58 |
6.3 |
| Umax |
1020 |
2.7 |
1.75 |
2.0 |
| BenQ |
930 |
2.5 |
2.36 |
2.7 |
| Proview |
800 |
2.1 |
1.16 |
1.3 |
| HCL |
350 |
0.9 |
.74 |
0.8 |
| Viewsonic |
100 |
0.3 |
.29 |
0.3 |
| Others |
11,959 |
32.1 |
33.69 |
38.2 |
| Total |
37,288 |
100 |
88.18 |
100 |
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Source: IDC |
| Vendor |
Units |
Share percent |
Value percent
|
Share (Rs crore |
| Samsung |
2,75,095 |
43.4 |
162.98 |
48.9 |
| LG |
1,75,092 |
26.9 |
89.03 |
26.7 |
| HCL |
75,100 |
11.9 |
29.16 |
8.8 |
| Microtek |
52,440 |
8.3 |
22.09 |
6.6 |
| Philips |
17,673 |
2.8 |
10.04 |
3.0 |
| Source: IDC |
shipra@expresscomputeronline.com
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