The total PC sales between April 2008 and March 2009, with desktop computers, notebooks and netbooks taken together, were 6.79 million (67.9 lakh) units, registering a decline of 7 percent over the previous year.
IT consumption in 2008-09 was severely impacted, especially in the second-half of the fiscal year, by the slowdown in the Indian economy. Impact on consumption of notebooks was most pronounced as growth plummeted to a negative 17 percent compared to a high of 114 percent in the previous year.
Sales of desktops declined 4 percent. The October-November-December quarter was the most adversely impacted, subsequent to which growth in PC consumption started to show signs of revival. With business sentiment gradually gaining momentum, PC consumption in fiscal 2009-10 is expected to cross 7.3 million units, registering a seven percent growth.
Commenting on the findings of the study, MAIT Executive Director, Vinnie Mehta said: "Consumer sentiment was subdued due to uncertainty in the economy in 2008-09 which impacted the consumption of IT in the country. While consumption in the first-half of the fiscal was satisfactory, less than expected offtake in sales in the second-half pulled down the overall growth into the negative quadrant.
"A silver lining in the second-half of 2008-09 was the emergence of a new product category, the netbook that took the fancy of the consumers. This new form-factor appeared to be better insulated from the prevailing market sentiments."
He further added: "Although the sales growth in both the enterprises and the households headed southwards, the overall consumption in the PC market was led by telecom, banking and financial service sectors, education and the e-governance initiatives of the Union and the state governments.
"Verticals such as BPO/IT-enabled services, manufacturing, retail and households, which traditionally account for significant proportion of the IT market, were very conservative in their IT spends in 2008-09.
"Sales of desktop clocked 5.27 million (52.7 lakh units) declining 4 percent, and that of notebooks, with netbooks taken together, another 1.51 million (15.1 lakh) units with a degrowth of 17 percent. Consumption of netbooks exceeded 70 thousand units in fiscal 2008-09.
"The year also witnessed deviations from the traditional downward trend in pricing for IT products as the dollar continued to be significantly strong compared to the rupee. This was mitigated, to an extent, by price drops due to technology reasons and also due to intense competition. Going forward, with signs of revival in the domestic economy, we expect positive growth for PCs and other IT products for the fiscal 2009-10."
Western India followed by the South, led PC consumption accounting for 37 percent and 23 percent of the market, respectively. Sales in the West grew by 12 percent over 2007-08, while in South it declined 22 percent. PC consumption in the East increased by 18 percent accounting for 22 percent of the market, a reflection of IT activities gaining ground in the region. The Northern states witnessed a decline of 34 percent in PC sales, they accounted for 18 percent of the market.
Unlike the trends in the previous years, where sales in the second half of the year have been significantly higher than those in the first-half, 2008-09 witnessed a rather subdued second-half as delineated below:
Source: MAITThe bi-annual MAIT Industry Performance Review – ITOPs, conducted by India’s leading market research firm IMRB International is a survey of the domestic IT market, its potential and trends.
This round of the study involved face-to-face interviews with over 25,000 respondents selected randomly across twenty-two cities in India. The MAIT-IMRB study was initiated in 1996-97 and encompasses five broad product segments -— computers, networking products, printers, other peripherals and Internet connections.
Apart from the half-yearly review, a supply-side estimation module has also been introduced to monitor industry performance every quarter, alternating with the half-yearly review.
Delineating his thoughts on the current policy environment and the need for spurring IT consumption in the country, especially in these challenging times, MAIT President, S.S. Raman said: "We are glad that the outcome of the Union Budget 2009-10 has been satisfactory. Stability in the rate of excise duty at 8 percent for all IT products and components augurs well for the IT industry. Further, the government has, to an extent, resolved the impasse regarding the classification of packaged software, which shall henceforth attract service tax on the licence portion.
"Issues that remain unresolved are the continuance of the 4 percent Special Addition Duty (SAD) which is a significant cost for the local manufacturers as also the low rate of abatement for MRP based excise duty assessment for IT products such as notebooks, printers, modems, etc. We have requested the authorities to resolve these at the earliest."
He further added: "It should be made mandatory for nationalised and PSU banks to earmark funds for easy and subsidised loans for purchase of IT products and solutions for the SMEs and the home consumers, especially for education. Similarly, Governments -– Central and State -- should extend interest free loans to all their employees for purchase of IT products.
"Further, as several e-governance projects are being rolled out, these need to be replicated across all the states in the country and completed at an accelerated pace. Providing for local-language interface will be critical for the success of such projects, especially those aimed at Government-citizen interface."
Stressing the need for redoubling efforts by the Government and the industry to accelerate growth of the domestic IT market in the country, MAIT Vice President, Ravi Swaminathan said: "MAIT has set for itself an ambitious target, 'Goal 511', 500 million internet user, 100 million broadband connection and 100 million connected devices by 2012. This calls for strengthening of the national IT infrastructure along with the physical infrastructure on a priority basis. In this regard, we need early roll-out of 3G and Wi-Max networks.
"These will not only enable consumption of front-end devices, CPEs and other back-end devices, but will also create a new economic paradigm through various applications, services and other avenues created through the network-multiplier effect. Urgent and significant efforts are also needed to build efficiency and reduce wastage in all industry verticals through deployment of green and energy efficient IT products."
Some salient findings of MAIT Industry Performance Review 2008-09:
The Desktops Market:
Organised vs. unorganised segments: Multinational brands accounted for 51 percent of the total desktop market in 2008-09, registering a growth of 8 percent over the 45 percent share last year. The proportion of Indian brands fell from 22 percent to 18 percent, registering a decline of 22 percent. Assembled desktops and unbranded systems witnessed a degrowth of 10 percent in absolute units accounting for 31 percent, down from 33, of total desktop sales in 2008-09.
The establishments segment accounted for 66 percent of the desktop sales, registering a growth of 5 percent on a year-on-year basis although consumption of notebooks in establishments declined 27 percent. Owing to conservative attitude, establishments do not seem to have shifted preference in favour of notebooks. The consumption in small, medium and large enterprises grew by 3 percent, 17 percent and 2 percent, respectively.
Household consumption of desktops fell by 18 percent, accounting for 34 percent of the total desktop market, with sales crossing 1.78 million (17.8 lakh) units. Within the Households segment, SEC A and SEC B each accounted for 39 percent of the market although consumption in these declined by 26 percent and 19 percent, respectively. Sales to SEC C at 22 percent market share remained flat.
Market segmentation by processor sales: Desktop consumption in 2008-09 was dominated by P4 based units, which accounted for 59 percent of total sales. However, the market was quick to adopt other next generation processors such as Core-duo, Core2duo and Core2quad accounting for 2 percent, 22 percent and 2 percent of the market, respectively. Other processors like the AMD, Cyrix etc. accounted for 10 percent of the market.
Market segmentation by town-class: Consumption of desktops in towns and cities outside the top four metros has been progressively increasing over the years. In 2008-09, these accounted for more than three-fourth of the total desktops purchased. The top four metros accounted for 25 percent of the total desktop market with a sales growth of 5 percent.
The Notebooks Market:
Notebook sales recorded a degrowth of 17 percent due to decline in consumption in both the establishment and the households with sales declining 27 percent in the establishments and another 3 percent in the households. The decline in consumption in the second-half of 2008-09 was more pronounced as sales of notebooks fell 35 percent compared to the same period last year. Towns and cities outside the top four metros contributed to nearly 80 percent of the notebook sales.
The establishment segment accounted for 49 percent of the notebook consumption, the small and large establishments recorded a decline of 53 and 47 percent, respectively in 2008-09, while consumption in medium enterprises grew 27 percent. The SMEs accounted for 68 percent of the total notebooks consumption in the country.
The household segment, accounting for 51 percent of the overall notebook sales in the country, registered a decline of 3 percent in the last fiscal. The SEC A and SEC B households, together, contributed to over 90 percent of the notebook sales in the household segment. Notebooks have also started to make rapid inroads into the SEC C as well.
The Server Market:
Sales of servers declined 2 percent in FY 2008-09. Bangalore, Pune and Hyderabad, the key centres of IT/ITES witnessed a decline of 78 percent in consumption of servers. However, driven by the need for consolidation, server consumption in large enterprises grew by 35 percent. Sales to small and medium enterprises declined 1 percent and 29 percent, respectively.
The Internet entities:
The number of active Internet entities increased to 8.6 million (86 lakh) subscriptions by March 2009, while the figure was 7.2 million (72 lakh) units in March 2008. With this, the number of Internet users exceeds 60 million. Internet penetration by entities in the top 22 cities was 47 percent among businesses and 24 percent among households. The businesses segment now accounts for 28 percent of the total active Internet entities and households account for the remaining 72 percent.
DSL/cable remains the most commonly used means of Internet connectivity among businesses: 45 percent of businesses were found to use DSL/cable, 31 percent dial-up connections, 7 percent leased-line, 4 percent used data cards, 1 percent used VSAT, and 11 percent ISDN services.
Source: MAIT
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