The Hindu Business Line : 2006 - an encouraging year for hardware

A promising domestic market driven by the rising technology adoption across all industry segments attracted several hardware manufacturers to the country in 2006 and pushed India closer to becoming a hardware hub.

Overall, 2006 turned out to be an impressive year for the electronic hardware industry.

Greenfield investments by PC makers such as Dell and capacity expansion through new units by Hewlett-Packard and HCL characterised the growth in the PC market, which is seen at 6-6.5 million units.

The notebook market almost doubled during the year, with shipments hitting two lakh a quarter.

With this, the associated hardware peripheral manufacturing also got a major boost.

Almost all segments of the electronic hardware such as networking products, PCs, monitors, printers, circuit boards grew during the year.

Telecom manufacturing also got a significant boost with major players such as Nokia, Motorola and Cisco deciding to manufacture their products in the country.

$1.5 b-investment

The Manufacturers' Association for Information Technology (MAIT) has estimated that investments of over $1.5 billion were pumped into the country during the year.

The hardware ecosystem is evolving with component vendors tracking the original equipment manufacturers into the country. But India still has a long way before emerging as an IT hardware hub. With a vibrant domestic market, the defining moment may arrive over the next 2-3 years.

The current installed base of PCs stands at a little over 18 million in a population exceeding 1.2 billion, which leaves significant room for growth.

Favourable factors

The price cuts effected by chip vendors, a strong demand from SMEs, education and Government and from B and C class cities contributed to the PC market growth during the year.

Prices of PCs and peripherals have declined considerably in recent years and are likely to stay at current levels for some more time. As a result, people are getting much better technology for the same price.

The PC market continues to lag behind that of China, where growth is 4-5 times more.

But it is expected to sustain a growth of 25-30 per cent in the next few years.

The hardware sector may get a further push once the Government unveils its proposed policies for semiconductor, electronics and IT hardware manufacturing.

The industry is riding high on the growth potential in the domestic market. It is estimated that consumption of electronic equipment is set to increase to $363 billion in 2015 from around $30 billion at the beginning of 2006.

With the Government declaring 2007 as the year of broadband, the hardware sector is to get a further push. The Government is targeting Internet user base of 40 million, of which 50 per cent is to be accounted for by broadband users.

India is uniquely positioned in the global market, where the price of a PC or a broadband connection and the average revenue per user of telecom subscribers continue to be one of the lowest in the world.

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2006 - an encouraging year for hardware