IDC Report

IDC: servers and digital devices to shine in 2006

The domestic IT market in India is in a growth phase. IDC expects the growth story to continue in 2006, keeping intact for India the crown of the fastest- growing IT market in the Asia-Pacific region. The domestic Indian IT market is estimated to grow at 19 percent in 2006 over 2005.

“In 2003, the market was just out of a slowdown and it was a phase when strategic choices were made and trends were at the tipping point. 2004 and beyond was predicted to be a period of operationalising these strategic decisions. 2006 will see some key trends governed by mobility, convergence and infrastructure management,” said Kapil Dev Singh, Country Manager, IDC (India).

“As per IDC’s 2004 and 2005 predictions, the industry convergence, consolidation and re-alignment was around two themes—dynamic IT in the enterprise space and the advent and increasing proliferation of digital devices in the consumer space. These themes will further get defined and enhanced with increasing penetration of IT in households and expansion in the enterprise segment,” Singh added. “The ecosystem in terms of PC adoption, broadband usage and the increasing relevance of IT to small enterprises will fuel the growth, and the integration of IT with business in enterprises will increase the size of the market.”

Growth engines

Server story

Servers will do well as consolidation and the need to deliver higher performance across business functions pave the road to dynamic IT. The challenge facing CIOs in 2006 will be to deliver higher IT service-level performance to meet diverse business needs while lowering the costs of infrastructure - a tough balancing act.

For the past 10 consecutive quarters, server shipments in India increased year-on-year in excess of 20 percent until the third quarter of 2005, while growth in spending was equally impressive. Virtual-hosted clients (in which client/PC workloads migrate to a server which hosts multiple clients) will add to the growth in the server market in 2006.

For the first time, the server market in India is expected to cross the 100,000-unit mark in 2006. The milestone will enable India to supersede Australia as the second-largest server market in the Asia Pacific (excluding Japan) region in terms of unit shipments. Against this backdrop, server consolidation will be an integral part of the process of IT consolidation, and in turn pave the way for dynamic IT.

Digital growth

IDC has observed phenomenal growth in the adoption of digital devices and technologies that signal the trend towards implementation of the concept of a digital home. All major indicators from segments such as home PCs, broadband, digital cameras, high-end televisions, satellite radios and MP3 players have shown healthy growth in 2005.

IDC predicts that India will see a few products enjoying more than 100 percent growth, with digital cameras and consumer broadband connections becoming the flagbearers of this march.

Low-cost broadband is another market where India is going to see unprecedented growth. The cost of owning a broadband Internet connection (primarily ADSL) has come down drastically, thanks to the bundling and offerings available from service providers. It makes sense for home PC users and small offices to opt for a broadband connection instead of a dial-up. While the overall broadband subscriber base is expected to go up by 64 percent in 2006 over 2005, the growth in the consumer segment is expected to go through the roof and clock a year-on-year increase of more than 100 percent in 2006.