Computers Industry Analysis-Marketing Synopsis Topic

Project Report on PC Industry in India-Personal Computers Industry Analysis-Marketing Topic Synopsis Tips

Dissertation Writing Help on Netbooks, Personal Computers and Market Analysis in India

Market Research Report and Industry Analysis on Computers in India

Market Overview - India -  Consumer Electronics

Market Overview

India's domestic consumer electronics devices market, defined to include computing devices, mobile handsets and video, audio and gaming products, was estimated to be worth about US$25.1bn in 2010 and this is expected to increase to US$50.6bn by 2015, driven by rising incomes and growing affordability of key products.

Computers

BMI projects double-digit growth in Indian market PC shipments in 2011, after a strong recovery in 2010 (albeit from a low base in 2009). Computer shipments were up by as much as one-third in the first half of 2010, compared with the same period of 2009. In Q310 the Indian PC continued its strong recovery, with y-o-y shipments growth estimated at close to 30%.

Table: Computer Sales
	2008	2009	2010e	2011f	2012f	2013f	2014f	2015f
Domestic computer hardware sales (US$mn)	7,303	6,680	8,021	8,948	10,591	12,840	15,434	17,787
Domestic PC sales (US$mn)	5,842	5,344	6,497	7,266	8,685	10,632	12,779	14,727
Desktops ('000)	5,708	5,048	4,960	5,277	6,066	7,166	8,224	4,374
Notebooks ('000)	2,571	2,601	5,373	6,760	8,922	11,946	15,705	9,696
e/f = BMI estimate/forecast. Source: BMI

BMI estimates that the Indian addressable market for PCs (including notebooks and accessories) will be worth around US7.3bn in 2011, up from US$6.5bn in 2010. Shipments were up by as much as one-third in H110, showing continued improvement as the rate of growth exceeded that recorded in Q409. Growth remained robust in the third quarter of the year thanks to new products and promotions.

The main driver was once again the consumer PC segment although business demand also contributed. Consumer PC demand was faster to recover from the economic slowdown, with much market growth coming from the consumer notebook segment. However, sales growth of desktops, which accounted for more than 60% of PC sales, also reached double digits.

PC sales were not only up y-o-y in Q210, but also broke with the usual seasonal pattern to grow sequentially compared with the first quarter of the year. This indicated that the market was on a strong upwards trajectory, which was expected to continue in H210. Business demand received a lift in 2010 from improving economic circumstances and tenders deferred from 2009.

The business PC segment saw growth in H110, with a surge in desktop procurements. Migrations to Microsoft's new Windows 7 operating system and new Intel core technology should continue to trigger new cycles of hardware upgrades. In Q409 major PC vendors rolled out a series of new models installed with Windows 7, and Microsoft said that it had cooperated with 100 original equipment manufacturers (OEMs) in India to achieve a target of having Windows 7 installed on more than 100 computer models. This may have contributed to a reported rise in PC shipments to large companies in the final quarter of 2009.
However, some businesses remained cautious in 2010, and going forward much will depend on business and consumer confidence in a sustained global economic recovery. New product releases and procurements deferred from earlier in the year enabled double-digit quarterly growth in Q309, and BMI correctly projected that annualised growth would return in the fourth quarter of 2009. Total PC hardware sales for the year were estimated at around 7mn.

In H109 growth was affected by weaker consumer and business confidence, as well as the rising price of components as a result of the stronger US dollar. The national elections of 2009 were also a contributory factor in that they led to delays in government computer hardware procurements and IT projects. In Q409, computer hardware vendors and retailers were expecting a much stronger festive season than the equivalent period of 2008. Government procurement had also picked up, with some big tenders in Q309.
Computer shipments grew in each of the first three quarters of 2009, after a double-digit percentage drop in Q408 due to the economic slowdown. Sales were down sequentially in Q409, due to seasonal factors, but, thanks to an improving economy and consumer sentiment, the PC market appears positioned for a strong recovery in 2010.

Drivers


BMI predicts that the market will grow at a CAGR  of 21% between 2011 and 2015, with unit sales resuming strong growth. The market has a number of potential strong growth drivers.

Only nine out of 1,000 people in India own a computer, one-fifth of the level in China. Another driver is that 45% of India's population is under 25, which should boost PC and IT usage.

The government's ultimate goal is for 1bn internet-connected computers in India, equivalent to the total estimated number of PCs in the world today. Annual PC sales were forecast at around 10.3mn units in 2010 and could rise to more than 20mn by 2015. Attention is on the lower end of the market, which is expected to power market growth over the next few years.

The average price of a PC has nearly halved over the past few years, and rising incomes and greater credit availability will continue to bring computers within the reach of lower income demographics. The government's policy of providing tax breaks and subsidies for hardware manufacturers should help keep prices down and support growth. However, the rate of growth will depend on other government policies, such as its level of spending on computers for schools.

The potential certainly exists for India to outdo China over the next couple of years in growth of PC adoption and usage. As the Indian computer hardware market has grown, vendors have increasingly sought to produce 'made for India models'. These are now becoming a growing focus for the main vendors such as HCL Infosystems, HP and Intel. Typical features suited for Indian conditions include the ability to be operated on a 2V battery, or to withstand extreme weather and dust.

Investments of more than US$18bn in hardware manufacturing in India (including telecoms hardware) have stoked expectations of a sectoral boom. However, a high tax regime means that around 25% of the retail price of an average computer goes to the government, and there are fears that this may delay growth. Moreover, it will be difficult for India to catch up with Taiwan and mainland China, given the strong lead these two territories have.

Segments

In the recent past, desktops still accounted for more than 80% of India PC market sales, a higher ratio than for many countries in the region. However, that share has now dropped to around 60% as notebooks recorded strong growth in 2010. In H110 demand for desktops bounced back with double-digit growth, albeit slower than that recorded by notebooks, and desktops accounted for close to two-thirds of sales.
Sectors such as education and government still have significant demand for desktops, and desktop sales were estimated at more than 5mn in 2009. In Q310, desktop shipments grew by around 15%, according to an estimate by market research firm IDC, but the share of total sales dipped to around 60%. Meanwhile, demand for storage hardware is growing in sectors such as oil and gas, banking and telecoms, with growing amount of customer data to process.

H110 saw notebooks continue to make a rapid advance, faster than that of desktops, as notebooks increased their share of total PC sales to around 40%. 2010 growth built on 2009 when sales of portable computers recorded double digit y-o-y growth, while desktops recorded single-digit declines. In the third quarter, notebook sales growth exceeded 50% as drivers included telecoms bundling schemes, new models, and retailer promotions.

The education sector represents a significant potential segment of PC demand going forward. IT has been estimated that of India's 1.3mn schools, only around 14% have access to ICT, defined as having at least one PC per school. The government is determined to improve this ratio, and tends to purchase computers for 1,000 schools at a time, with a typical order for a public school being two or three computers. It will obviously take many years before bigger aspirations, such as one computer per student, can be achieved, but procurements by private schools are unsurprisingly more aggressive.

Business schools are also a significant segment of PC demand, with an estimated 2,000 or so such institutions that place annual repeat orders for new intakes of students ranging from a few hundred to several thousands.

Netbooks

Netbook sales were estimated to have approached 4mn in 2010, up from more than 1.8mn in 2009. The new breed of netbooks with lower price points is likely to provide a hot growth segment, although sales initially fell short of expectations. In 2009 netbooks were one of the few growth areas of the Indian PC market, but sales remained at a low level in absolute terms, at a nationwide average of less than 15,000 units per month.

One factor is that Indian telecoms operators have been relatively slow to launch bundling offers, compared with their counterparts in many other markets, where telecoms companies have emerged as a major channel for netbook sales. Nevertheless, the growing availability of fixed and mobile internet connectivity across India is likely to be an important driver of netbook sales, with, particularly, opportunities in tier B and C cities.
However, netbooks have come to feature increasingly in the market with more than 25 different models now available from leading vendors. Falling prices have also helped to drive growth, with prices now as low as INR15,000, or around half the price of many notebooks.

Vendors such as Dell, Asus and HCL have announced cooperations with mobile telecoms service providers on bundling deals. The Indian netbook market has several price segments, with the entry level comprising models from domestic vendors such as HCL, which retail for INR18,000-21,000. High-end products will retail for more than INR25,000, which merges with the price-bracket of a low-end fully featured notebook.
In 2011 it is expected that the line between netbooks and lower-cost notebooks will become increasingly blurred. Netbook purchasers are primarily from the consumer segment, with limited corporate interest in the product category to date. At the lower end, many customers are purchasing a second or third computer and look primarily for mobility. However, vendors also see SMBs as a potential market for netbooks in India.

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