The Hindu Business Line : India, the big picture

Lenovo Group Ltd, among major PC makers of the world, is keen to tap new markets in the country, in urban, semi-urban and rural areas. The group draws from its strong roots in the Chinese market, where it has over 5,000 retail outlets. Anil Philip, Director of Transactions Business, Lenovo India, on the PC industry and trends unfolding in India.

The Indian PC market is poised for faster than projected growth given increasing affordability. How does Lenovo view this market?

We have seen the Indian PC market grow steadily over the years, especially in the consumer space. Strong growth in this space has put the Indian market parallel to global trends and adoptions. Post the launch of our consumer products in March this year, we have seen enormous traction in this space. We are doing well and our products have been well received in this segment.

Urban consumers are acknowledging the advantages of PC ownership and its value proposition.

The PC today is an infotainment product for the whole family. With new technologies coming into the picture and consumers being able to log on to the Web, watch TV, play games and utilise the PC for various other functions, it is gaining acceptance as a necessity in middle-class homes.

Desirability, coupled with affordability, is fuelling the growth for the consumer segment.

Has Lenovo visibility gone up in the market since the launch of brand in India?

Definitely. To reach the consumer segment, building a brand was our primary task. Therefore, when we launched the Lenovo 3000 family, we signed on the brother-sister duo Saif and Soha Ali Khan as brand ambassadors. We have placed products in popular television programmes such as KBC 2 and films such as Corporate, which enhanced our brand recall considerably.

The untapped rural market requires us to be local and focused on our audiences using mass media channels that play to mass interests such as cricket. Lenovo has gained brand awareness though product placement on the show Straight Drive during the India-West Indies cricket series this year. We continue to place Lenovo products in popular television shows.

Our series of branding initiatives have proved to be successful. The awareness for Lenovo went up from 38 per cent in February 2006 to 65 per cent in June 2006 (Source: AC Nielsen Omnibus Study). This was achieved by the brand in just four months of existence and is a great result for us.

Increasingly, laptops, due to affordability, are entering new business segments. What is the ground realty?

Notebooks have become well accepted in the corporate as well as the consumer space. Affordability and increase in productivity levels are driving this growth. Increasingly, more home users are opting for a notebook due to features such as integrated camera, fingerprint reader and widescreen monitors.

We are witness to high adoption rates for notebooks among SMEs and home users and are targeting the consumer and SMB segments with the Lenovo 3000 series of notebooks. Innovative features that add value to customers are being incorporated into notebooks.

The market is highly competitive today and innovation is important as a differentiator. The Indian PC market is more desktop-dominated. But notebooks are playing catch-up.

How are you making inroads into tier II and III cities?

The growth of the IT market in the next five years will largely depend on the ability to take technology to upcountry India. The urban market will provide a sustained demand, but the wide adoption of technology will depend on making technology — computerisation, telephony and broadband Internet — available to B, C and D class towns.

We are already experiencing tremendous success in these markets and have aggressive plans to further reach these upcountry locations through our retail stores. While the growth is higher in Tier I cities, we see faster growth rate in the Tier II cities.

Lenovo aims to reach these locations by increasing retail presence. Presently, we have 61 Lenovo Exclusive Stores across the country and aim to increase this to 100 by March 07. We also have 367 multi brand outlets across India and aim to increase this to 500 by March 07. Majority of these new stores are going to be in these upcountry locations.

As you expand, how do you manage support for Lenovo products?

Lenovo and IBM have a strategic alliance designed to provide customers access to IBM's world-class customer service organisation. It provides easy access to on-system and online information that reduces help desk calls. Lenovo's support centres are located across the country and are equipped to support customers anywhere in the country.

We cannot share market figures but we are very gung-ho about this market, especially the consumer segment. We hope to become a strong consumer brand in the country with growth above industry levels.

To achieve this, we have augmented our current line of `Think' products with the Lenovo 3000 product family line with offerings aimed at the consumer, SOHO (small office home office), Very Small Business (VSB) and Small Business segments. Innovation will be our USP (unique sales proposition).

With a more rationale tax regime now, is the grey market fading out?

While assemblers have an edge as far as the price is concerned, consumers have now become more aware of new innovative technologies that are available in the market. Consumers look for a trusted brand that can give them assurance for innovation, world-class customer support and operational excellence.

Lenovo is very strong in the retail space in China with approximately 5,000 retail outlets. We are translating that experience into our retail initiatives here in India. Over 60 per cent of our sales come from the Lenovo Exclusive and Multibrand stores in the transaction space. We are growing aggressively to reach our consumers across all locations. The Transaction Business in Lenovo has met with success with the consumer line of product, aggressive retail growth and successful branding initiative of the 3000 family.

vrishi@thehindu.co.in