The Hindu Business Line : `Desktop market grows 34% in Q1'

FUELLED by installations in consumer segment and strong buying from finance and banking sectors, desktop market witnessed a 34 per cent year-on-year growth in unit terms during April-June quarter of 2004, although low price was not the only accelerator for growth.

"It is important to note that the desktop market has grown year-over-year for the ninth quarter in a row," Mr Rishi Ghai, Senior Analyst, Computing Products Research Group, IDC India, said in a statement.

Citing that the average selling values of desktops had witnessed a drop of 19 per cent since 2000, IDC said, "instrumental to the wave of low-cost PCs has been the aggressiveness shown by branded PC vendors in introducing alluringly low price points."

The AMD-Linux combination has worked well for nearly all vendors who experimented with it, emerging as one of the favourite product offerings in the entry-level segment, it pointed out.

The price-sensitive consumer market accounted for 39 per cent of shipments and dominated sales in the sub-25,000 market for desktops. IDC, however, viewed price drops in the desktop segment as a small subset of the larger positioning game that the PC market is set to witness.

"The drop in average selling values of PCs has been triggered primarily by vendors' identification and addressing of untapped markets, besides other extraneous factors such as duty rationalisation and price cuts by component (especially microprocessor) manufacturers," says Mr Ghai.

While overall prices posted a drop, it was not the entry-level price bracket alone that contributed to the bulk of shipments.

The Rs 25,000-Rs 35,000 price-bracket accounted for nearly 41 per cent of overall desktop shipments in India in 2003, with unit shipments growing by 43 per cent over 2002.

IDC said that 2004 began on an appealing note as the market was caught in a surprise January announcement of duty cuts by the Government.

"The impact of the announcement has been significant as we estimate a stronger than expected second half of 2004 that will be primarily led by increase in run rate business and several small deals within the finance and banking segments."

The price cuts would not be as big in 2004, although it would impact the market significantly.

Furthermore, in line with WTO guidelines, the tariffs on IT products should be reduced to zero in 2005, IDC said adding that this would create a rapid accelerating effect in the Indian PC market from second half of 2005 into 2006.