Laptop sales: will 3G add fuel to the fire?

Vendors are closely monitoring the developments preceding 3G's Indian launch, and are of the view that the technology could further propel an already buoyant laptop market. By Neeraj Gandhi

Notebooks have surpassed desktops in terms of style, comfort, design and handling. With additional features like large screens, one touch management; enhanced security features such as biometrics; Wi-Fi cards and striking colors; laptops sales are going through the roof.

According to a study conducted by MAIT, notebook sales grew 97 percent in 2006-07 to account for over 13 percent of the PC market compared to nine percent in 2005-06. Consumption of notebooks by the business segment grew by 41 percent, and demand by the household segment increased five-fold, accounting for over a fifth of the notebook market.

“Factors like convenience, ease-of-use, longer battery backup, mobility and space have driven the growth of notebooks in the Indian market,” said George Van Der Merwe, COO, Sahara Computers & Electronics Limited. “Low cost of acquisition is not the only criterion,” he added.

Francis Kao, Product Manager, Notebook Business, ASUS India, argues otherwise. He said, “Most laptop buyers are still first-time buyers in India. Therefore, the growth drivers are the rapid growth in per capita income and the steadily dropping average selling price. These two forces make laptops more affordable to a greater number of Indians. However, the boom will really happen around 2009-2010 when people start to change their first laptop, and many Indian families will be able to buy two or three laptops by then.”

In the mean time, 3G, or third generation mobile communications which is considered to be the next big thing in terms of connectivity, is soon to make its entry into the Indian market. Supporting bandwidth of up to 2 Mbps, it facilitates faster data exchange, streaming video, music downloads, and real time data sharing. The technology has the potential to solve 2G related data transfer problems.

With a wireless subscriber base of approximately 193 million, and 7 million additions in the month of July, the combination between handset and 3G seem to be made for each other. What is to be seen is whether a similar combination between a laptop and a 3G data card will emerge as a clear winner in the Indian market. 3G enabled laptops may be alien to Indian users but they have already marked their presence in the European market, where broadband connectivity is not an elusive commodity as it is here in India.

That said, vendors still are excited about the thought of 3G coming to India and the possibility of its integration with a notebook. This combination will provide users with a unique mobility experience, and it will also give a huge impetus to the notebook market in the country. “3G will definitely give an impetus to this market as it will help support features like mobile e-mail and large file transfers,” said P Raghuraman, Country Manager-Emerging Business, Personal Systems Group, Hewlett-Packard India.

Moreover, the dramatic rise in the number of laptop users is an indication that at some point in time the demand for better connectivity will come forth. This will eventually lead to demand for 3G enabled laptops. Merwe said, “3G will have a definite impact on notebook sales in India. It has the potential to offer anywhere connectivity. This will provide laptop users with a platform that they can use to work while traveling.”

3G: benefits galore

3G offers seamless Internet connectivity without having to search for hotspots. As a technology, it has the potential to change the way that we access the Internet and do things online. It provides mobile access to different Internet-based services be they online transactions (billing, payment) or faster data downloads (video, music and other files). It also enables faster Web browsing and 3D gaming.

“Equipped with a 3G laptop, a user can enjoy seamless Internet connectivity. The best part is that you do not have to search for Wi-Fi hotspot or worry about signal stability,” said Kao.

Merwe added, “3G will offer three bonuses—mobility, speed and time. These are the bare essentials that users look for while working on the Internet using a notebook. Simply put, it is a more rewarding, high quality wireless experience.”

Besides this, a 3G laptop user can look forward to multimedia services with streaming audio and video, e-mail with full-fledged attachments such as PowerPoint files, fast downloads of large files, and above all, always-on connectivity.

“Wireless network today are bound to hotspots, hotels or campuses. Therefore, when a user is on the move, he cannot access the Internet. What 3G essentially does is give the user a platform from where he can access the Internet while on the move. A user will then be capable of handling heavy files and voluminous data. This will essentially increase productivity,” said Raghuraman.

What vendors think

As 3G is not yet available in the country, not much can be speculated on 3G laptops, say vendors. However, the technology cannot be ignored completely. As of now, it is only telecom operators who are pushing for release of spectrum, in order to offer various services including Internet access, instant messaging and e-mail with multimedia attachments, location-based services and real-time data sharing; services offering some combination of voice, video, data, etc. which fall under the ambit of 3G services.

Vendors on the other hand are adopting a wait and watch strategy. They realize the potential that such a technology offers, and how it can give a boost to the laptop market in the country. Therefore during this waiting period, they are readying their arsenal, and some already have products that they plan to launch once 3G comes to India.

“As 3G is not available in India at present, the potential cannot be calculated in numerical terms. What can be said instead is that 3G will address the most important need of users, i.e., mobility. Since mobility is exactly what users are looking for, one can benefit a lot from it,” said Merwe.

Sahara Computers is geared up to address demand for 3G laptops once the technology comes to India. It has plans to bring its 3G enabled range of laptops that it has in South Africa to India. In fact the company is already selling 3G compatible Sahara Ej02 laptop in the Indian market.

Similarly ASUS also has 3G enabled notebooks that it will introduce in India once the infrastructure is there. Kao said, “Not much can be said in terms of potential at this moment, since there is not much 3G infrastructure development in India and government regulations are still awaited. The road to launching 3G laptops is still unclear. Besides, the huge initial investment and low average revenue per user (ARPU) of India market will hamper the development of 3G in India. However, as soon as Indian operators provide 3G services, 3G laptops can be launched in India by ASUS at any time.”

The ASUS 3G product lineup includes the R2HE which is a 7” ultra mobile PC with an embedded 3G antenna and GPS solution targeted at reporters and photographers who need an Internet connection more than anyone else. Another on-the-line product is the ASUS U3 13.3” laptop which also comes with 3G and GPS in-built.

Similarly HP has the HP Compaq Business Notebook, which provides WWAN support in a 3G network. Almost six or seven models of these notebooks are already available in the Indian market.

Merwe said, “ Stress should also be given toward creating awareness of these technologies and how the user can benefit from them. The awareness is low at present. Once awareness is created, it will be easier for users to understand what benefits 3G can offer them. Then, probably, the integration between 3G and notebooks will be successful.”

For the moment though vendors are looking at business users who travel frequently as potential customers for such laptops. Raghuraman said, “Corporate customers will be the key. Frequent travelers who need mobile e-mail and have data transfers of large size files will definitely value this.”

Kao said, “Anyone who feels the need for accessing information anytime is a prospective customer. Considering the cost of a 3G device and the subscription fees, business travelers should be the priority target of this segment.”

According to Merwe, even SMBs can be potential customers since the technology could well help this segment save money. He said, “SMBs can benefit a lot from these laptops. Once this technology is available, it will help people work from home. This, in turn, will lead to cost cuts on the enterprise side, increase productivity and make working more convenient.”

As things stand now, there is a lot of deliberation happening at the vendor’s end. Not all are vocal about their strategies with regards to 3G-enabled laptops. What can be said is that they are closely watching the developments taking place. Some agree that the potential is there, but are waiting for 3G’s debut. “There is potential in the market but the penetration speed will depend on the launch of the technology,” said Kao.

For end users this could result in an unique computing experience, once the blend between notebooks and 3G is achieved. That said, how much then would a consumer have to shell out in order to possess such a machine? “About Rs 1 lakh in the initial stages,” said Kao.

Merwe disagreed saying, “The price should be between Rs. 45,000-50,000. Much depends upon the rates charged by service providers.”

Then, of course, there are competing technologies. WiMAX is ramping up and wireless broadband offerings are already available in cities such as Bangalore. By the time 3G turns up it may well be a case of too little, too late.