PC sales growth plummets from 45% to 26% in H1

Global giants like Hewlett-Packard, Gateway, Dell, Apple and IBM had already issued profit earnings indicating how sharply the worldwide PC market has slowed amid flagging economic growth in the United States and across the globe. "This is a general market slowdown that is affecting IT (information technology) spending plans, rather than a deterioration in our competitive position," said an industry source.

Mehta said the compounded annual growth rate (CAGR) of HI of the current fiscal had also been revised to 32 per cent against 34 per cent last year. Expressing concern over the increasing presence of the unorganised market, he said the grey market share had grown to 59 per cent in the H1 of current fiscal from 57 per cent in the same period of previous year, while for the last four years, the segment had captured 58 per cent of the overall market.

The market share of MNC brands increased from 22 per cent to 24 per cent. However, sales of Indian brands reduced from 21 oper cent to 17 per cent. The share of the Indian brands has significantly decreased in the past two years from 25 per cent in 1998-1999 to the current 17 per cent. “These are warning bells for the Indian companies to put their act together fast and increase value addition to their products,” he said.

On the segment-wise split, Mehta said that PC sales to the businesses grew by 19 per cent while in households, it grew by 53 per cent compared to the first half last year, he said.

However, MAIT president Vinay Deshpande said IT Minister Pramod Mahajan has assured that "the government was very keen on developing India into a hardware manufacturing destination and pushing reforms to further develop the market." "This will help bring the manufacturing industry back on track. If the budget is favourable we expect sales of 2.5 million units in this year,” Deshpande said.

PC sales in 1999/2000 (April-March) totalled 1.4 million units. MAIT, which represents the IT hardware industry, in its recommendations to the government for the forthcoming budget and the Exim policy says the customs duty on all imported parts and components must be brought to nil (especially items of dual usage).

There should be a minimum 10 per cent differential between `input parts and components’ and `finished goods’. MAIT has also urged to simplify procedures to increase velocity of business through process of `self declaration’ based on clearance for all it imports and exports. MAIT has also urged the government to abolish special additional duty (SAD) on all IT products, reduce local levies — excise duty to 8 per cent and sales tax to nil to make it affordable. It said the budget should also exempt IT export earnings from corporate tax and amend the bilateral treaties to exempt withholding tax.

PC sales in the first half of 2001-01 were marked by the shift from Celeron and P2 (Pentium 2) to P3 (Pentium 3). Sales of P3-based systems increased from 37.7 per cent in the first half of 1999-00 to 66.1 per cent in H1 of 2000-01. Sales of P2-based systems witnessed a fall in the market share from 26.5 per cent in the first half of 1999-2000 to 14.3 per cent in H1 of 2000-01. The networking market witnessed an impressive growth: over 440,000 network interface cards, over 80,000 hubs and 323,000 modems were sold in H1 of 2000-01 registering a growth of 26 per cent, 36 per cent and 51 per cent respectively.

Printer sales registered a 31 per cent growth over first half of last year, sales of DOT-matrix grew by 31 per cent, laser printers by 12 per cent and inkjet printers by 35 per cent. However, the laser printer registered a negative growth over the second half of 1999-2000.

It is estimated that the household market would account for over 50 per cent of the total PC sales by 2004 — up from current little over 20 per cent. First time buyers of PCs in the first half of 2000-01 continued to constitute more than half the the market. Of the total customer base in the business segment, 35 per cent were first time buyers in H1 of 2000-01 accounting for 28 per cent of the sales where as in H1 of 1999-2000, 27 per cent of the business cutomers were first time buyers accounting for 25 per cent of the PC sales.

Notebooks sales remained concentrated in the larger business segment accounting for 66 per cent of the sales to the business segment. The proportion of the sales to the small and medium business segments came down to 34 per cent from earlier 66 per cent in H1 of 1999-2000. The server market grew by 22 per cent over first half of 1999-2000 when compared to H2 of 1999-2000 the market fell by 14 per cent.