Peripheral sector riding high

The peripherals segment in India recorded impressive growth in 2005. The digital revolution that India is going through can be counted as the reason behind this. Toms Mathew reports.

The year 2005 can certainly be recorded as the beginning of good times for the peripherals market. Traditionally, growth in computer peripherals has been compared with the growth of the PC market. According to IDC’s India Quarterly PC Market Programme, 4Q 2005, in a year full of changes in the macro- and micro-economic environment, the Indian Client PC market witnessed a 26 percent year-on-year growth in unit shipments in 2005 over 2004.

The year also saw upward trends in the Indian consumer segment. IDC has observed phenomenal growth in the adoption of digital devices and technologies that clearly signals the trend towards fructification of the concept of a digital home. All major indicators—Home PC, Broadband, Digital Camera, High-end Television, Satellite Radios, MP3 Players—have shown very healthy growth in 2005. IDC predicts that the next year is going to be even rosier for a host of digital products aimed for the mass market. India will see a few products enjoying more than 100 percent growth with digital cameras and consumer broadband connections becoming the flag-bearers of this triumphant march.

How the traditional peripheral (i.e. computer-related products) market will shape up only time will tell. The additional customs duty of 6 percent and 7 percent imposed on July 26, 2004 on the CPU box and finished computer (CPU box with monitor, mouse and keyboard) respectively have been abolished. Simultaneously, DVD, flash drives and combo drives have been given an exemption of 16 percent.

Let us look at what has happened in 2005 and the predictions for the individual segments.

Computing peripherals

A computer without keyboard and mouse is unthinkable. Though Bluetooth technology has been introduced which gives an alternative to these products, it has yet to be commoditised. The keyboard and mice segment showed an impressive growth in 2005 with some new technologies stepping in and the Indian PC market recording a high growth.

With the wireless keyboard and mouse becoming a rage, product manufacturers such as Apple, Logitech and Best IT World have been coming out with products that are ergonomically correct and suit the mobile workforce.

Cordless peripherals recorded a healthy growth in 2005. “Consumers are getting savvier by the day and increasingly demand features like comfort, convenience, no-mess and a neat-looking working environment at just incremental cost,” says Moninder Jain, Director, South Asia, Logitech. The trend is slowly moving from cord peripherals to cordless peripherals.

Wireless technologies are taking the keyboard and mice segment by storm. RF and Bluetooth are making their entry into the peripheral segment. Laser technologies are the latest trends in the keyboard and mice segment.

Display devices

"LCD devices are today gaining ground in the country because of their enhanced features and technological edge. This trend is going to continue, and more verticals are expected to adopt LCD monitors since they uplift the image of the company" -R Manikandan GM, Sales & Marketing LG IT products

The colour monitor segment in India witnessed an upward movement in 2005 with the prices of LCD monitors coming down. PC penetration in rural India and increased PC sales in the upmarket segment were the key drivers for monitors. Although many thought LCD monitors would surpass CRT monitors in 2005-2006, that is yet to happen. IDC expects LCD monitor sales to outperform CRT monitor sales in the first quarter of 2006. Increased corporate buying is another reason behind the boost to LCD monitors.

Better technical features are yet another reason for higher acceptance among customers for LCD monitors. “LCD devices are today gaining ground in the country because of their enhanced features and better technological edge. This trend is going to continue, and more verticals are expected to adopt LCD monitors as they uplift the image of the company,” says R Manikandan, GM, Sales & Marketing, LG, IT products.

The LCD market has witnessed a steady growth in India because the price-points of 17-inch CRT and 15-inch LCD monitors have been converging; there is still a gap, but it is not as wide as it used to be. 15-inch LCD monitors offer the same viewing area as 17-inch CRTs, except that the former are easier on the eye.

It is not only the corporate community that plays a major role in the high LCD adoption. Equally significant is the Small Office Home Office (SOHO) segment, though it may not be counted on the same scale of units. “Demand in the SOHO segment has also picked up as the price gap between CRT and LCD narrowed and LCD monitors become more affordable,” comments Rajan Sharma , GM, Motherboards & Peripherals, Gigabyte Technologies India, about the latest trends in the display device segment.

LCD monitors score high on sleeker aesthetics and space saving. Since there is no flickering or electromagnetic radiation associated with LCD monitors, they score on safety aspects too.

Manufacturers are positive about their growth. “In the LCD space, LG has 23 percent marketshare whereas in CRT the company commands 35 percent marketshare,” says Manikandan.

Gigabyte Technology also saw a boost in sales in the display device segment. “The display devices market witnessed significant growth in 2005-06 as prices of TFT went down and end-users showed interest in replacing CRT with TFT monitors,” says Rajan Sharma, General Manager, Motherboards & Peripherals, Gigabyte Technology (India).

Digital market

IDC observed phenomenal growth in the adoption of digital devices in India in 2005. The digicam segment is expected to grow at 100 percent in 2006. Analysing the growth percentage leads us to the conclusion that Indian customers have become more aware and are not shying away from the latest in technology.

The market for digicams can be gauged from the product range available. Today the world’s leading brands are in India. Ravi Karamcheti, Managing Director and Country Business Manager, Digital and Film Imaging Systems, Kodak India says, “Consumer insight tells us that the awareness among consumers towards digital cameras is growing.”

The digicam segment will continue to grow at a much faster pace. Says Alok Bharadwaj, VP, Canon India, “By 2007 it is anticipated that the Indian digital camera market will be close to 900K units. In other words, the Rs 100 crore digital camera market in 2004 will grow to Rs 600 crore by 2007.”

One trend in terms of technology in 2005 was the adoption of higher pixels. If three mega-pixel digicams were the object of desire in 2004, 2005 saw four mega-pixel digital cameras getting more attention at the entry level.

The digicam segment also saw a rise in zoom capability with 6X and 8X digicams sold more in the mid-level market. Along with this, the LCD size of the digicam has grown from 1.5” to 2.0” in 2005.

Notes Rajiv Kenue, GM, AV Products, Samsung India, “The factors that contributed to the growth of these segments include the growing product availability through the regular channel, rising consumer awareness, and the drop in prices.”

Another factor for growth in digicam sector are the advanced features. Says Bharadwaj, “Digital photography avoids the need to use and develop film, making it possible to view recorded images immediately; it allows pictures to be shared worldwide via the Internet.”

"The entry of flash drives with high capacity was correctly timed. Companies were eagerly waiting for a small-sized device with high capacity, and it was then that flash memory made its entry" -Dushyant Mehta MD & CEO Mediaman Infotech Transcend

As customers get to know the technology better and more models become available, digicams will go deeper into the average Indian customer base. “More choices, increase in promotional campaigns, increasing accessibility and demystification of the technology are the key factors behind the growth of digicams,” explains Karamcheti.

Digicam companies are eagerly waiting to get a grip in the fast-growing segment by introducing new products. “To meet the growing needs of the market, we are expanding the line-up by introducing a new digital still-camera range,” reveals Kenue.

With its growing customer base and high penetration in India, Kodak aims to make the cameras more accessible to the customers. “In India, our digital cameras are easily accepted due to the strong brand equity enjoyed by us in this space,” says Karamcheti.

Flash goes the market

According to a recent Gartner report, the NAND flash memory market is growing at a rapid pace. “Strong growth in the NAND flash market was a recurring theme in the 2005 marketshare rankings,” says Andrew Norwood, Research VP at Gartner.

Flash memory growth was tremendous in India in 2005, and got an added boost from the Finance Minister in the recent budget. Dushyant Mehta, MD & CEO, Mediaman Infotech, Transcend says, “The growth in India was phenomenal...I would say it touched about 300 percent.” He feels that the entry of flash drives with high capacity was correctly timed. Companies were eagerly waiting for a small-sized device with high capacity, and it was then that flash memory made its entry.

The demand came from a variety of devices including PDAs, mobile phones and music players. “Then came flash memory, especially NAND-based flash memory. It was well-suited for all kinds of devices because of its small size,” says Mehta.

2005 saw flash prices coming down and capacity going up. As more people start to use electronic gadgets, the demand for flash memory is all set to increase. Because of mobile computing, the acceptance of flash will breach boundaries.

toms@expresscomputeronline.com