Peripherals

Still growing

The peripherals market that includes TFT monitors, flash drives, projectors et al will see an uptick in 2009. By Nivedan Prakash

PC penetration has increased over the years and it has a direct correlation with peripheral shipments. As a result, the peripherals market had also witnessed considerable growth in the past few years. Peripherals like keyboards, mice, flash drives, Web cams, or even MP3 players not only address the basic function that each performs, but also offer additional features making the computing experience easier than ever.

Demand for peripherals is increasing day by day and the industry has witnessed huge growth during 2008. There is a lot of potential and latent demand in the PC peripheral market in India, which will steadily rise after the demand from tier III and tier IV cities also picks up.

According to MAIT, market for keyboards and monitors grew by 14% each over H1 2007-08. With respect to keyboards, the number of units sold between April 07 to September 07was 2,605,425; October 07 to March 08 – 2,973,575; and April 08 to September 08 – 2,962,889.

As far as monitors are concerned, the number of units sold between April to September 2007 was 2,604,517; October 07 to March 08 – 2,985,433; and April 08 to September 08 – 2,970,578. There was growth in the consumption of 20/21-inches, 17-inch, and 14-inch by 138%, 1%, and 128% respectively. However, there was a decline in consumption of 15-inch monitors by 28%.

Rajesh Goenka, Vice President-Sales and Marketing, Rashi Peripherals, pointed out, “Overall there has been a jump of 30% to 40% in peripherals business and slightly more in terms of the revenue. This is basically because consumers prefer mid-level products rather than entry-level. As a result of this, the average selling price (ASP) is going up. Besides the mid-level, even the high-end products in peripherals segment are also gaining ground, especially through the Large Format Retailers (LFRs).”

Growth drivers

In the past, the growth of PC shipments played a major role in the increase of peripherals market. The last financial year (2007-08) was an exciting year for PC/notebooks market. This market witnessed rapid growth, which in turn acted as a growth driver for the peripherals market. The main reasons for this were broadband penetration into rural areas and increasing awareness, adoption of new technologies, more disposable incomes and changing lifestyles.

The current market conditions are favorable to the growth of the replacement market with more and more people opting to replace their old peripherals with the new ones instead of buying a new computer. Even though this might be unfavorable for the growth of the PC market, the peripherals market would surely benefit from it.

Subrotah Biswas, Country Manager, India & SAARC, Logitech, asserted, “We estimate the replacement market to be around 30% of the total PC market (2.19 million). This in addition to the assembled PC market of 1.095 million (15% of the total PC market) and new PC buyers market of 0.73 million (10% of the total PC buyers) gives us a market size of about 3 million for peripherals. “

Besides, increased spending by the government sector and the corporate world in the ICT sector, along with a boom in education and gaming segment, have given the necessary impetus to the rise of the peripherals market in the country.

Rajnesh Sinha, DGM and Head - Computer Peripheral, Intex Technologies, said, “The growth is related to growth in the PC segment, which has crossed 3.6 million in first half of 2008-09 and is expected to close in at 7.3 million. There is a remarkable progress in the usage of PC for computing, information and entertainment. Also, though the present day situation speaks of low consumer buying sentiment due to recession but in the past few years, there has been tremendous growth n the market owing to many factors like large base of young consuming population, rising disposable incomes, booming retail market, increasing technical quotient, growth in ITES, BPO, call centre industry, etc.”

As peripherals are products that are prominently on display, in addition to the increased efficiency and productivity of these products, aesthetics also plays an important role. Hence, the look and the feel of the product is also one of the important drivers of growth in this segment.

According to market trends tapped by Zenith and going by the current market scenario, consumers will prefer to buy technology, which is not only affordable but also eliminates space constraints. Keeping this in mind, India offers a huge market for small and slim products. With many international firms setting up shop in India, the demand for stylish technology will rise. Therefore, the company sees rising demand for high-end lifestyle technology solutions in the country.

“The growth of peripherals is basically dependent on the computer device or PC and so the growing ratio of the peripheral industry is directly proportionate to the growth industry. It is assumed that 90% of the sales in peripheral segment are dependent on PC sales. The rest is the replacement market,” added VP Sanjeevan, Assistant Director – Consumer System Products Division, Canon India.

Although an increase in the growth of PC shipments and reductions in prices of PCs are driving the growth of the peripherals segment, decrease in price does lead to an increase in demand for short-term only. Indian consumers are no longer only price conscious, they have become value conscious too. Therefore, here we can say that price has not been a major driver for growth.

However, the past few months have witnessed the prices of peripherals going up and this will hamper the growth of the peripherals market to a small extent.

TFTs: gaining momentum

One of the biggest trends in the peripherals market in 2008 was the high adoption of TFT monitors. Higher resolutions, wide screens, multi-functional solutions and integration of other computing peripherals such as speakers, Web camera, and iPod amongst others revolutionized this segment. According to Gartner, the highest sold peripherals in 2008 were TFT monitors. The industry witnessed a surge in desktop PC sales but the consumers preferred TFT over CRT monitors because the prices of TFTs have come down drastically. Even the consumers who were initially having CRT monitors were switching over to TFT monitors.

Vinay Shetty – Country Head Component Products, Asus India, commented, “Wide screen and 16:9 ratio is slowly gaining momentum which would help reduce the downfall seen in the 16:10 ratio monitors. Other than that, technological innovations like anti glare technology, touch panel for controls, etc., would help to attract customers. We are optimistic about the market for LCD monitors in 2009 and that is precisely why we are launching LCD products in this market, as we see definite growth in this segment. Also, because of the depleting market of CRT monitors, LCD monitors have moved from being a lifestyle product to a necessity and hence we see this as a positive sign for the LCD business in India.”

On the TFT front, the average size has moved up from 15-16-inches to 18.5-19-inches. In addition, the prices of TFT have fallen during the last few quarters. Vendors need to make products that are affordable for the value conscious Indian consumer. One could see huge demand for high-end TFTs with integrated Web camera picking up pretty well, which is quite encouraging for the market.

Moreover, size and style are both important for a TFT user. 19-inchers are the most popular ones followed by 17-inchers. Monitors being the most visible part of a computer unit, there is a lot of style inherent in them and this is driving the market. Not only space saving functions, higher resolution, display, TV functions, speakers and other entertainment options are making them popular.

Vinnie Mehta, Executive Director – MAIT, added, “TFT monitors have been growing robustly. In the PC industry, almost 50% of the market has moved to TFT. Organizations like Samsung and LG have even stopped manufacturing CRT monitors.”

Going by the current trend, TFT market share is progressively increasing and LCD monitors market share is about 70%. CRT monitor sales are decreasing and consumers now prefer LCD monitors. Moreover, 17” is the most preferred with monitors below 17” slowly being phased out. Most buyers prefer Widescreen displays. New technologies like HD monitors and 3D gaming monitors will revolutionize the gaming and home entertainment space. Green is the next wave in the flat panel displays.

Meanwhile, looking at current scenario it is quite evident that CRT is on the verge of extinction, so TFT is the choice by default. Also, the existing base of 15-20 million PCs have CRTs, which people are replacing with LCD monitors. The LCD addressable market is growing rapidly not only due to desktop business growth but also because the replacement market is huge and growing fast.

Flash drives

Flash drives have seen an exponential jump, since vendors have cut the prices to almost one third during the course of 2008. The products are affordable. Besides, USB devices are gaining in popularity, therefore, sales of flash drives are booming. While the business is increasing, the capacities are scaling up towards 4 GB and 8 GB. In fact, now 16 GB and 32 GB drives are also available from companies like SanDisk.

According to MAIT, the basic trends in flash drives are that the capacities have increased immensely. From the storage perspective, devices will in some time move towards solid-state storage devices. There are certain brands of computers and laptops in the market that do not have any kind of memory that is based on physical movement. Their storage is solid-state storage, which makes them very light. However, it is expensive at this point of time.

SSD is one of the applications of flash memory that is gaining market demand and hence is expected to perform as a key growth driver in the near future. NAND based SSDs will grow in capacity and will be put to use with netbooks and laptops increasingly making these devices more efficient and lighter.

Manisha Sood, Country Manager, SanDisk India & SAARC region, said, “USB drives are turning out to be a powerful tool this season and we will see a continuous rise in popularity going forward as we keep introducing higher capacities. A USB drive today goes beyond just data storage and is the key to ‘lifestyle storage’. A USB drive plugged into a DVD player lets consumers watch movies, plugged to the car audio it is an MP3 player and plugged into the laptop it becomes a reservoir of information and backup data. Non-volatile, faster read access times, efficient, durable and portable—USB flash drives are seeing an upswing especially in the Indian market. A USB drive allows a consumer to save any kind of data and use it anywhere they want it. SanDisk is the inventor and the world market leader in USB flash drives.”

Projectors

Amongst the peripherals, one category that saw steady growth was that of projectors. As per the industry estimates, the market for projectors grew by over 30% on a year-on-year basis. Education and institutional customers have been the biggest buyers for the projector market. There is an increasing use of projector in classrooms as quality and quantity of relevant content have improved a lot in the last couple of years.

Sanjay Dhuria, Country Head – MMPG, NEC India, pointed out, “There is a brief slowdown in large projects, where organizations have reduced the spending or put projects on hold for the time being. But, the market is expected to improve in March with the financial year ending.”

As per Gartner reports, projectors’ prices have also come down to Rs 45,000 to Rs.50,000. Earlier, they were mainly used in boardrooms of offices but projectors are now being used as entertainment devices as well for home entertainment. Smaller companies are also adopting these devices. Because of the fall in prices, initially, there used to be one projector but now there are multiple projection systems in these offices. Projectors are also being used for collaboration, presentations, etc. However, the fact is that since most of the communication is happening over the PC and sharing information in a team meeting, projection system is becoming a necessity in service industries.

“The digital projector, from being an obscure boardroom device, has now become a mainstream product in the peripherals market. Until a couple of years ago, the digital projector market was a small niche market in the peripherals space. That is history now. With a boom in industry verticals like gaming, home entertainments and the availability of affordable, portable, innovative projection options, the projector market is on a growth track to cater to the diverse needs to customers,” commented Gautam Ghosh, Country Manager, ViewSonic Technologies.

Education, IT/ITES, and financial segments have invested heavily due to their reliance on providing quality education and training. Service exports would be a key factor that will affect the spending along with the requirement from the government segment. NEC believes that H1 growth would be slow and the market is expected to pick up in H2 of 2009. On a yearly basis, the company expects the market to grow more than 20% in terms of units.

According to Shiladitya Sarkar, Senior Manager – Peripherals and Channels Research, IDC India, PC vendors like Samsung, LG, HP, Acer, Lenovo and others are entering this market in a bid to extend the strong franchise enjoyed by their respective brands amongst large enterprise and SMB customers.

Other peripherals

There has been a shift in the peripherals market during the last couple of years with high-end mouse and keyboards (wireless, multimedia-enabled, Bluetooth) being introduced. The market is experiencing a growth for desire-based peripherals due to a shift in consumer aspirations and preferences. The two most important reasons for adoption of wireless peripherals are space constraints and mobility coupled with ease-of-use.

Today, consumers are becoming savvier by the day and increasingly demanding features like comfort, convenience, hassle-free and neat looking working environment for which they are willing to pay a premium and opt for a wireless environment. Inevitably, wireless peripherals are becoming more popular in the Indian market and are likely to become affordable as volumes go up.

The last few years were extremely conducive to the growth of wireless peripherals. More people were adopting technologies like Wi-Fi and Bluetooth due to the increased familiarity with the technologies and better understanding of the same. Hence, there was a rise in demand for products using these technologies.

Wireless peripherals would surely continue to attract more demand due to the comfort and convenience offered by these devices. Companies like Logitech are also exploring new methods to optimize the use of wireless technologies.

Ergonomically designed keyboards and mice are not far behind in attracting users and especially from the enterprise segment and, to be more specific, the medium and low-end users. It is because the market is maturing and these users are more aware of the benefits on offer with ergonomically designed products.

This concept has slowly picked up momentum in the replacement segment and with users working long hours on their PCs and demand for comfort computing. The demand for these devices will pick up as more consumers become health conscious. Consumers are increasingly demanding features such as comfort, and convenience and are willing to pay a premium for value-additions.

Ergonomic products have a niche market. Considering that the concept behind them is quite futuristic, they will gain a foothold in the future. They score high on utility and convenience and there is a gradual shift in consumer preferences. With more and more companies venturing into the segment, soon the cost factor will lose its significance too.

Asus recently launched its Vento series keyboards and mice to cater to this segment. This will be one of the segments to watch out for in 2009.

What to look for in 2009

The replacement market will act as one of the growth drivers. Traditional verticals like the automobile and real estate sectors will contribute little or no percentage to the growth of peripherals market in 2009.

Raj Saraf, CMD, Zenith Computers, said, “While government spending is likely to support computer sales during the January-March quarter, consumer spending is expected to lead growth through the year.”

Overall, since this is a product, which is outside the box and has that aesthetic value, the demand will go up in line with human desire to improve their lives. Assuming that desktop sales to be stagnant (as most reports suggest), peripherals by virtue of its show value and replacement market, is poised to grow by 30% year-on-year.

nivedan.prakash@expressindia.com