however, laptops, and now netbooks and tablets threaten to put the desktop run to a grinding halt, and soon. By neha saraiya
The Indian PC market is now experiencing a strange phenomenon where growth in desktop sales is being cut midway by a striking rise in sales of notebooks. When you look at the 3Q 2010 PC Industry Tracker by IDC, the overall Indian PC market sales reached 27.9 lakh units during the July-September 2010 quarter recording a 27% growth on year-on-year basis. While desktop sales accounted for nearly 60% of total PC sales (16.7 lakh units) – representing a 15% increase yoy – the sales of notebook computers grew by 52% yoy and crossed the 11.1 lakh units mark. Over a period of time, the notebook market in the country has registered a growth of 148%, 108%, 81% and 85% for years 2005, 2006, 2007 and 2008 respectively; while desktops, on the other hand, have witnessed a downward curve with a fall of 19%, 12%, 7% and 5.4% respectively.
It is quite clear that notebooks are going strong with every quarter. But that was not the phenomenon in the late part of the last century, when desktops came at a price of Rs 5 lakh and were just restricted to corporate offices only. At that time, the desktop market kept growing at a moderate speed of around 35% on an annual basis. But what’s interesting to note is the fact that it almost took 17 years for laptops to reach the one million mark in terms of sales. Apple, on the other hand, sold a record-breaking 300,000 iPads on launch day itself.
Commenting on the changing scenario, S. Rajendran, CMO, Acer India says, “If you look at the penetration levels currently, the notebook market is growing at a fast speed. As of now, we also just have 30% of the notebook share in our portfolio but a crossover between the notebook and the desktop would surely happen in next three years time.” The company’s global shipments of PC products climbed by 43% over last year with 10.8 million units sold during the first quarter. Banking on this, the company is planning to flood the market with its entire family of Internet devices including smart phones, tablets, and 3D-enabled notebooks. Besides this, it is also basking on the server market and plans to garner revenue share of 4% from it by the end of this year.
One major reason why mobility devices (particularly notebooks) have picked up so instantly is primarily because of the strategy adopted by the companies. Hardware majors adopted the route of bulk manufacturing in unison by using low-margin processors and operating systems in order to bag a larger market share. This wave intensified at the time of recession when everyone was looking far more intent to cut into the competition. This offensive tactic adopted by the companies (primarily by Acer and Lenovo) lead to the outburst of a slew of portable products including the notebooks, netbooks and tablets.
Another factor that has led to the slow momentum of the desktops is the steep fall in its Average Selling Price (ASP) that has bucked the trend of the fall of 14% in 2009, 4.3% in 2008 and 1.3% in 2007 followed by an expected downward surge of 5% in 2010 and 6% in 2011. Even though the notebook segment is not so high on profits, the volumes are growing exorbitantly.
Yet another stimulus has been the interesting trend with respect to the increased consumer adoption of netbooks and tablets, which show that even the notebook market is up for grabs and not immune to changing trends. Though the market for netbooks in India is still at a nascent stage and the awareness level is limited, it is expanding with the pace of tablet products entering in the market. As worldwide market trends indicate, there will be an escalation in the demand for tablet PCs in the coming months. Sample this – the worldwide smartphone market is expected to escalate by 36% to reach 247 million units in 2010 from 182 million in 2009. The demand is expected to be driven by portability, connectivity, and compelling applications and services that are distinct from those found on PCs. As per Forrester, by beginning of 2012, tablets will outsell netbooks; by 2014, more consumers will use tablets rather than netbooks. By 2015, tablets are expected to constitute 23% of PC unit sales. Like the notebooks majors, even Asus is upbeat about launching its Tablet PC and the Eee Pad by early next year. Alex Huang, Country Manager for System business at ASUS India, avers, “We are very enthusiastic about the feedback and support gathered at their debut in Computex 2010. Hence we have a lot of hopes on this new genre of mobile computing device. Besides we plan to spend as much as Rs 50 million in India by 2012 to ensure that our products and brand find sufficient recognition among the masses in India.”
However, a section of industry experts also feel that the tablets getting big time in to the mobility segment would not be able to bring the kind of disruption which the cell phones had bought to the landlines. As Ramprasad, GM - Channel Sales, Fujitsu India echoes, “Currently the desktop forms 50-60% of the PC space, but it is growing at a slow speed. But at the same time my projection for the growth of tablets is flat largely because of its second fiddle utilities.” However, netbooks are in a much better position to disrupt the market in India at least. They crossed the one lakh mark in the second quarter of 2009-10 for the first time. Interestingly, they are driven primarily by households in India, which goes heavily in their favour. As far as tablets are concerned, they are still largely enterprise driven, and there is a concern that IT departments may not be too keen on their rapid deployment till they become a lot cheaper.
For the desktop market to keep growing, the players need to focus on capitalising on the opportunity of growing their desktop consumption in smaller towns and cities, which are now experiencing a wave of computerization. As per an IDC report, by 2013, small form factors like the All-in-one PC have the potential to make up for nearly 38% of the overall desktop market. But the fact is that pushing netbooks may become that much more easier for players owing to their low prices and ability to run basic applications that most first time users need. On the other hand, segments of the population, like the hardcore computer game addicts, may be one of the few groups to keep buying desktops that offer greater processing power for memory-intensive applications. So, there is a little hope. The desktop may not die out altogether but keep its presence in certain niches of the market. Otherwise, by virtue of the way the players are moving the market and the way customers are preferring the mobility aspect with declining prices, desktops seem well headed the landline way.
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The Indian PC market is now experiencing a strange phenomenon where growth in desktop sales is being cut midway by a striking rise in sales of notebooks. When you look at the 3Q 2010 PC Industry Tracker by IDC, the overall Indian PC market sales reached 27.9 lakh units during the July-September 2010 quarter recording a 27% growth on year-on-year basis. While desktop sales accounted for nearly 60% of total PC sales (16.7 lakh units) – representing a 15% increase yoy – the sales of notebook computers grew by 52% yoy and crossed the 11.1 lakh units mark. Over a period of time, the notebook market in the country has registered a growth of 148%, 108%, 81% and 85% for years 2005, 2006, 2007 and 2008 respectively; while desktops, on the other hand, have witnessed a downward curve with a fall of 19%, 12%, 7% and 5.4% respectively.
It is quite clear that notebooks are going strong with every quarter. But that was not the phenomenon in the late part of the last century, when desktops came at a price of Rs 5 lakh and were just restricted to corporate offices only. At that time, the desktop market kept growing at a moderate speed of around 35% on an annual basis. But what’s interesting to note is the fact that it almost took 17 years for laptops to reach the one million mark in terms of sales. Apple, on the other hand, sold a record-breaking 300,000 iPads on launch day itself.
Commenting on the changing scenario, S. Rajendran, CMO, Acer India says, “If you look at the penetration levels currently, the notebook market is growing at a fast speed. As of now, we also just have 30% of the notebook share in our portfolio but a crossover between the notebook and the desktop would surely happen in next three years time.” The company’s global shipments of PC products climbed by 43% over last year with 10.8 million units sold during the first quarter. Banking on this, the company is planning to flood the market with its entire family of Internet devices including smart phones, tablets, and 3D-enabled notebooks. Besides this, it is also basking on the server market and plans to garner revenue share of 4% from it by the end of this year.
One major reason why mobility devices (particularly notebooks) have picked up so instantly is primarily because of the strategy adopted by the companies. Hardware majors adopted the route of bulk manufacturing in unison by using low-margin processors and operating systems in order to bag a larger market share. This wave intensified at the time of recession when everyone was looking far more intent to cut into the competition. This offensive tactic adopted by the companies (primarily by Acer and Lenovo) lead to the outburst of a slew of portable products including the notebooks, netbooks and tablets.
Another factor that has led to the slow momentum of the desktops is the steep fall in its Average Selling Price (ASP) that has bucked the trend of the fall of 14% in 2009, 4.3% in 2008 and 1.3% in 2007 followed by an expected downward surge of 5% in 2010 and 6% in 2011. Even though the notebook segment is not so high on profits, the volumes are growing exorbitantly.
Yet another stimulus has been the interesting trend with respect to the increased consumer adoption of netbooks and tablets, which show that even the notebook market is up for grabs and not immune to changing trends. Though the market for netbooks in India is still at a nascent stage and the awareness level is limited, it is expanding with the pace of tablet products entering in the market. As worldwide market trends indicate, there will be an escalation in the demand for tablet PCs in the coming months. Sample this – the worldwide smartphone market is expected to escalate by 36% to reach 247 million units in 2010 from 182 million in 2009. The demand is expected to be driven by portability, connectivity, and compelling applications and services that are distinct from those found on PCs. As per Forrester, by beginning of 2012, tablets will outsell netbooks; by 2014, more consumers will use tablets rather than netbooks. By 2015, tablets are expected to constitute 23% of PC unit sales. Like the notebooks majors, even Asus is upbeat about launching its Tablet PC and the Eee Pad by early next year. Alex Huang, Country Manager for System business at ASUS India, avers, “We are very enthusiastic about the feedback and support gathered at their debut in Computex 2010. Hence we have a lot of hopes on this new genre of mobile computing device. Besides we plan to spend as much as Rs 50 million in India by 2012 to ensure that our products and brand find sufficient recognition among the masses in India.”
However, a section of industry experts also feel that the tablets getting big time in to the mobility segment would not be able to bring the kind of disruption which the cell phones had bought to the landlines. As Ramprasad, GM - Channel Sales, Fujitsu India echoes, “Currently the desktop forms 50-60% of the PC space, but it is growing at a slow speed. But at the same time my projection for the growth of tablets is flat largely because of its second fiddle utilities.” However, netbooks are in a much better position to disrupt the market in India at least. They crossed the one lakh mark in the second quarter of 2009-10 for the first time. Interestingly, they are driven primarily by households in India, which goes heavily in their favour. As far as tablets are concerned, they are still largely enterprise driven, and there is a concern that IT departments may not be too keen on their rapid deployment till they become a lot cheaper.
For the desktop market to keep growing, the players need to focus on capitalising on the opportunity of growing their desktop consumption in smaller towns and cities, which are now experiencing a wave of computerization. As per an IDC report, by 2013, small form factors like the All-in-one PC have the potential to make up for nearly 38% of the overall desktop market. But the fact is that pushing netbooks may become that much more easier for players owing to their low prices and ability to run basic applications that most first time users need. On the other hand, segments of the population, like the hardcore computer game addicts, may be one of the few groups to keep buying desktops that offer greater processing power for memory-intensive applications. So, there is a little hope. The desktop may not die out altogether but keep its presence in certain niches of the market. Otherwise, by virtue of the way the players are moving the market and the way customers are preferring the mobility aspect with declining prices, desktops seem well headed the landline way.
For More IIPM Info, Visit below mentioned IIPM articles.
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Management Guru Arindam Chaudhuri Dean Business School IIPM
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"Thorns to Competition" amongst the top 10 best sellers of the week.
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'Thorns to Competition' - You can order your copy online from here
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