Next-generation mobility

The mobile computing market had never before seen the stellar growth it witnessed last year. Along with desktop PCs, laptop prices have moved down, and there has been an increase in the adoption of handhelds, reports Megha Banduni

According to IDC, the total shipment of laptops in India in Q3 2005 was 1,54,000 units as against 56,000 units in Q3 2004, which translates to a growth of 176 percent year-on-year says Sameer Garde, Director of Sales at Dell India. This growth has come about due to a combination of factors such as affordability, increase in demand for mobile computing in a fast-growing economy, growth of wireless telephony, and adoption of new technologies. The government’s step to deregulate the wireless spectrum and de-licence wireless technologies such as 802.11b and 802.11g has further added to the growth. An important event was the onset of a zero-duty regime in April last year which brought laptops within the reach of the budget buyer.

In 2005, for the client PC (notebooks and desktops) market, the rankings remained unchanged—HP retained the top slot with a marketshare of 17 percent, followed by HCL at 13 percent and Lenovo at 7 percent in terms of unit shipments.

Mobility has become one of the main concerns for enterprises. To remain competitive, an enterprise must constantly improve its communication abilities by enhancing contact tools for its workforce, customers and partners. Efficient communication drives customer responsiveness and improves employee productivity.

Laptop market on the growth path

"The laptop market is expected to show an exponential growth in the years to come as it is growing 100 percent every quarter" -Devita Saraf Executive Director Zenith Computers

There has never been such a good time for laptop buyers in India. In recent times, prices have dropped much faster than anticipated. Can you imagine a laptop at Rs 25,000? Yes, many players have launched low-priced laptops and prices are likely to drop further.

India is fast becoming a large laptop market in the Asia-Pacific region with sales numbers expected to cross approximately 3,00,000 units in 2005-06, according to Frost & Sullivan.

Devita Saraf, Executive Director, Zenith Computers, says that in 2005 the notebook segment grossed sales of 80,000 units, recording 123 percent year-on-year growth and 137 percent sequential growth. Factors contributing to this explosive growth are new technology features, enhanced performance, product durability and post-sales services.

Zenith registered a volume growth of 350 percent in 2004-05 in the laptop segment. “The laptop market is expected to show an exponential growth in the years to come. Laptops are growing by 100 percent every quarter,” says Saraf.

"Buyers have started considering notebooks as an alternative to a desktop PC mainly due to the bridging of the price gap between entry-level laptops and desktops" -S Rajendran GM, Sales & Marketing Mobile & Display Products Group Acer India

S Rajendran, GM, Sales & Marketing, Mobile and Display Products Group, Acer India, believes that buyers have started considering notebooks as a convenient alternative to a desktop PC mainly due to the bridging of the price difference between an entry-level laptop and a desktop. As per IDC, the Indian notebook market for the calendar year 2004 was 1,90,850 units. In the first three quarters of 2005, the same has grown to 3,21,476 units. Acer’s sales have grown from 15,068 units in the calendar year 2004 to 48,405 units in the first three quarters of 2005.

The fact that India has a huge potential for laptops can be gauged from the entry of NEC in the Indian market. During his visit to India in October 2005, Wu Tengguo, MD, South and Southeast Asia Sales, NEC Computers Asia Pacific remarked, “We want to be among the top five PC companies in India. By 2008-09 we intend to have 3 percent of the desktop and 6 percent of the Indian notebook market.”

Vendors are expanding the market by offering consumers more choice in products, and encouraging potential desktop and TV consumers to go in for notebooks, says Rajendra Kumar, Executive Vice-president, HCL Infosystems. HCL has introduced notebooks in the sub-Rs 28,000 category to woo desktop users.

Trends

"With Wi-Fi on handsets, there is bound to be demand for smart handheld devices that are used in department stores, hospitals, shopping complexes and other business sectors" -Ish Bawa Marcom Manager BenQ

Laptops are also gaining acceptance as their portability, and more importantly performance levels, are matching those of a desktop PC. Many customers are switching from desktops to notebooks due to attractive price points. The user is demanding better performance, low price and lightweight machines. The key verticals driving the adoption are education, BFSI and SMBs.

“We expect the broadband, wireless and gaming segments to drive the demand for mobility products. We also see many customers switching from desktops to notebooks due to a better price proposition and the inherent advantages of mobility products. Organisations will be looking at notebooks as a replacement when their existing PC platform environment reaches the end of its lifecycle. We also see quite a few educational institutions and corporates adopting laptops with wireless in a big way,” says Garde.

Kalpak Bhatt, Product Manager, Gigabyte Technology India, believes that the trend is towards multimedia and mobility. “Multimedia is an inherent part of laptops. For example, a DVD-CDRW Combo drive is the most common feature of a laptop now. As far as market reach is concerned, it is essential to be present all across the country as well as be available globally. We have succeeded in selling our laptops through the Web. Retailing & e-tailing is tomorrow’s future.”

Ish Bawa, Marcom Manager, BenQ says, “Education and BFSI will drive the notebook market’s growth. SMBs and possibly the SOHO segment will also contribute.” In terms of technology, notebooks will not be a laggard to desktops, and the majority of office tasks can be completed, though some high-end design or data intensive work may still be done on the desktop platform.

Budget notebooks in demand

"Vendors are expanding the market by offering consumers more choice in products, and encouraging potential desktop and TV consumers to go in for notebooks" -Rajendra Kumar Executive Vice-president HCL Infosystems

The earlier hindrance to the growth of the laptop market was price. However, with prices coming down that seems to be a non-issue. Besides, Bhatt feels that laptops are also feature rich. For instance, Gigabyte offers a fully-loaded laptop at the entry level. It not only comes with basics like 256 MB DDR RAM, 40 GB HDD, combo drive, 15” TFT LCD, LAN connectivity, modem, USB and PCMCIA, but also WLAN card, IEEE port, card reader slot, TV out and a parallel port on Intel Cel-M CPU & 915 GM chipset. The company is soon coming out with a cost-effective laptop in 14.1” widescreen varieties called the Chocolate Cookie laptop.

NEC has also launched their p8100 and e3100 models in this market segment. The entry-level segment is expected to account for 70 percent of the laptops being procured this year. Nevertheless, this does not discount growth in the middle and higher-end notebook categories. In fact, the Rs 70,000 to Rs 100,000 band still continues to be among the most popular segments.

Buyers have started considering notebooks as a convenient alternative to a desktop PC. Says Rajendran, “Though our entry-level notebooks have been widely accepted in the market and have increased a hundred-fold in the last year, it is still the Rs 70,000-Rs 80,000 category that accounted for a big share of the market in 2004-2005.”

Demand from educational institutions, specifically management institutes, colleges and the SMB segment is growing. Bigger corporates are equipping their mobile executives with entry-level laptops which have full features at an aggressive price.

SMBs: the emerging segment

Apart from large enterprises, SMBs are also contributing to a significant portion of shipments, according to IDC. The SMB community has started looking at notebooks as a mobile productivity tool.

Saraf says that the consumption in small enterprises grew by 118 percent, accounting for 17 percent of the total notebook sales in the business segment. On the other hand, medium-sized enterprises grew by 136 percent, accounting for 21 percent.

It is a similar story at Acer. Over the past two years, penetration of Acer Notebooks in the SMB segment has been growing steadily. Acer’s retail outlets (Acer Mall and Acer Point) have played a pivotal role in penetration into the SMB segment. These retail outlets provide the much-needed touch-feel experience and play a consultative role in shaping an SMB’s IT initiatives.

According to Bhatt, SMBs buy more of entry-level laptops today. The penetration of budget laptops in the SMB segment has started. In terms of percentage, SMBs today would have 60-70 percent of budget laptops. Currently though, desktop penetration is definitely stronger in the SMB segment and will probably remain so for at least 3-4 years as the number of SMBs is large and growing.

Handheld devices gaining popularity

Mobility does not just mean laptops. Today, executives prefer something small, light and easy to carry. Hence, the demand for PDAs, mobile phones and flash drives is increasing faster than ever before. Though still a small market, it is certainly growing.

Rajat Sharma, Industry Analyst, ICT Practice, Frost & Sullivan India says, “The handheld devices market has a low base. It is a logical extension to the notebooks market and will only start witnessing growth after the notebook market gains more traction. The handheld market is in a nascent stage and is growing at the rate of 25 percent a year. The verticals that contribute to this market traditionally have been telecom, IT, insurance, healthcare and manufacturing.”

PDAs and handhelds have made an entry into verticals such as FMCG and pharmaceuticals where they can be used as tools to increase the productivity of the sales teams. Handhelds allow sales executives to check on stocks, price points, SKUs sold and margins of dealers, hence data analysis can be made without the need for travelling to the main office.

Bhatt sees a huge potential in the smart phone market. “Smart phones will eat into laptops and no-frills mobiles to an extent. They will take away a chunk of the PDA market. The demand for such products is still in early stages but I won’t be surprised if it increases rapidly. These markets will peak sometime in Q3 or Q4 of 2006.”

Nokia, the largest mobile manufacturer, is tracking the developments in this sector. Its Enterprise Solutions arm is helping businesses and institutions worldwide improve their performance through extended mobility. Two years into its operation, this particular wing is worth a billion dollars.

With its product offerings—9300i, E60, E61, E70 and 6708—Nokia seeks to meet all the needs of the corporate segment. For instance, the Nokia 9300i smart phone is a compact business device with a full keyboard, 65,536-colour screen, and incorporates WLAN connectivity for faster wireless access to corporate information. The 9300i supports a broad range of enterprise e-mail solutions and has an attachment viewer that makes it the perfect combination of design and functions to meet the growing demands of mobile professionals.

G K Chakrapani, Country General Manager, Nokia Enterprise Solutions says, “Business mobility is catching on in India, and mobile professionals want efficiencies in time and cost. We are looking at how we can be of help to enterprises in achieving mobility and meeting their goals. How can enterprises look at extending certain tasks beyond the office domain? It is about using a device to access information that is in the corporate network, and do so in a fast, secure, convenient and simple manner.”

Gigabyte launched a smart phone that has features such as built-in TV (you can only watch free-to-air channels), card reader, Bluetooth and WLAN apart from the normal features like camera and USB connectivity. This phone runs on the Microsoft Mobile 5.0 version OS designed for smart PDAs.

On the applications front, BenQ has entire office suites now available on these devices; there are seamless messaging, calendar and browsing applications. The mobile phone and the PDA have converged into a single handheld computing-cum-communication device. Also, with e-mail-enabled handhelds, one can almost take the office anywhere.

Security concerns

While the demand for mobile solutions is growing, the need for security is also rising.

An increasing number of executives are storing company data on mobile devices such as smartphones, PDAs, laptops and USB drives, and with Bluetooth-enabled devices entering the mainstream, IT departments are confronted with security issues. Vendors too are doing their bit to ensure that such issues do not affect the overall market.

Most Acer notebooks are equipped with Acer Empowering Technology functions such as Acer eDataSecurity Management which makes use of passwords and advanced encryption (up to 256-bit) algorithms to protect files from being accessed by unauthorised users. It is integrated with Windows Explorer as a shell extension for quick and easy data encryption/decryption, and also supports on-the-fly file encryption for MSN Messenger and Microsoft Outlook.

As far as software security is concerned, Gigabyte says that they provide over 90 percent of their laptops with Linux OS, and these open source OSs are generally safer when compared to other laptops.

Dell takes third-party support to resolve security solutions from hardware encryption to tracking data. There are a couple of ways to track data such as installing GPS module in the products themselves; another way is to put codes in either hard drives or BIOS which will send out a signal while connected to the Internet or utilise 3G technology.

Future of wireless

Wi-Fi and wireless LANs are the rage today, with most new notebooks and PDAs having built-in features to access WLANs.

Technologies like Wi-Fi have been a great boon, says Bawa. “The setting up of hotspots and Wi-Fi networks have changed the future of how business is conducted. With Wi-Fi on handsets, there is bound to be a steep demand for smart handheld devices that are used in department stores, hospitals, shopping complexes and other business sectors.”

To top it, Wi-Fi tariffs in the country, which were earlier among the highest in the world, have come down over the last 12 months. With the number of hotspots increasing and laptops becoming more affordable and customised, industry analysts expect most airports, hotels, cafes, restaurants, railway stations and hospitals to opt for wireless connectivity.

Mukund Ramaratnam, Director of Marketing and Business Development, AMD India believes that as laptops get popular, the demand for Wi-Fi will shoot up. “But with Wi-Max, there are various associated issues like different open standards such as GPRS and 3G.”

Souma Das, Area Vice-president, Citrix Systems India believes that a mobile workforce is a great revolution that is creating a new way of doing business and will ultimately benefit both employees and the management. Times have changed in the wireless networking industry. “Key factors such as high-speed networks, new devices and anytime-anywhere access to applications are in place to support a truly mobile workforce. As the ‘work from anywhere’ concept catches on, the demand for robust application access will grow likewise.”

Conclusion

For most vendors, 2006 will be a year of profits. On the other hand, the increasing demand for sub-Rs 10,000 notebooks will mean tough times for vendors on the margins front. For buyers, the lower the price-point the better. The future will bring with it thinner and lighter notebooks with a high battery life and enhanced wireless capabilities.

megha@expresscomputeronline.com