The Hindu Business Line : PC sales grow 37 pc in first half

THE report card for computer sales is out. Fuelled by attractive price points and an increased consumption among verticals and in smaller towns and cities, PC sales have grossed a record 1.71 million units in the first half of the current financial year, notching a growth of 37 per cent over the year-ago period.

What's more, the sales may even exceed the targets set earlier and touch four million units at the close of the current fiscal, on the back of strong macroeconomic condition and buoyant buying sentiments in the market, according to hardware association MAIT.

"The growth in PC sales can be attributed, on the one hand, to increased consumption by industry verticals such as telecom, banking and financial services, manufacturing, retail and BPO and IT-enabled services as well as major e-governance initiatives of the Central and State Governments.

On the other hand, the highly price-sensitive Indian market has responded positively to the drop in prices, especially at the entry level," Mr Vinnie Mehta, Executive Director of MAIT, said at a news conference here.

Lower prices attract: The PC installed base, including the H1 figures (April to September) now stands at 12 million, he added.

It may be recalled that the mini-budget in January 2004 resulted in price drops ranging from 8-12 per cent. This carried forward the buying momentum resulting in a high 8.9 lakh units sale in Q1 (April-June) of 2004-05.

However, the disruption in business for about three weeks post-budget and the subsequent truckers' strike adversely impacted the sales resulting in 8.24 lakh units in PC consumption for Q2 (July-September) 2004-05.

"The southward trend in pricing continued during the year due to technological reasons. Significant consumption in the small and medium enterprises and in the home market added to the industry numbers," MAIT said.

The PC market data for the H1 has thrown up some interesting trends. The share of households in the total PC consumption has gone up.

The share of assembled PCs — the smaller known regional brands and unbranded systems — has shrunk to 44 per cent during the period in reference against 57 per cent in H1 of 2003-04.

The share of Indian brands increased to 23 per cent from 20 per cent earlier, while that of MNC brands improved to 33 per cent from 23 per cent.

In absolute terms, the sales of the Indian brands grew by 57 per cent, MNCs by 96 per cent and that of the assemblers' by only 5 per cent.

Notebooks impressive: Notebook sales recorded a high growth of 119 per cent and found their way into homes. In H1, about 14,103 notebooks were sold to the households segment accounting for 18 per cent of the total market.

Internet: However, even as the growth of PC market continued unabated, the number of active Internet subscribers (entities) marginally dipped to 21.4 lakh in September 2004 against 22.8 lakh in March 2004.

"In September last year, 71 per cent people used dial-up and today it is 64 per cent. In home segment, there are people who are not renewing their accounts. This is partly due to the fact that services such as pay-per-use without a permanent account, and cybercafes have come up as an alternative, and also because of the poor dial-up service," Mr Mehta said.

He highlighted the need for affordable broadband services and generation of local language content in the country.

The server market registered a growth of 7 per cent over the first-half of last fiscal despite negative growth in top four and the next four cities.

In the networking market, sales of modems improved by 7 per cent and of network interface cards (NICs) by 1 per cent while sales of hubs declined by 82 per cent.

Printers up: As per the study, overall printer sales grew by 6 per cent over that in H1 2003-04 on year-on-year basis.

"The buoyancy witnessed in the consumption of dot-matrix printers in the second half of 2003-04 was not sustained as sales of dot-matrix printers declined 14 per cent primarily due to low consumption in retail and outlets," MAIT said.

MAIT seeks uniform 8% duty: With the zero duty regime on the anvil, MAIT has sought a uniform 8 per cent excise duty on all IT products, 100 per cent depreciation on all IT products, besides a quick and smooth implementation of VAT ensuring that all the IT products are at the lowest rate of 4 per cent so that the consumer is not unduly burdened with higher taxes.

It has also called for making electronic hardware technology parks (EHTP) as the platform for viable domestic manufacturing.

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