The quarterly industry performance study carried out by MAIT in collaboration with IMRB indicates flat PC sales in OND quarter. According to the report gray continues to be one of the major worries for the IT industry, which could only be tackled by a reduction in excise duty. On the positive side, the report projects Q4 (JFM) quarter to perform much better with annual PC sales in 2003-04 projected to cross two million mark. The quarterly study involved data collation from five major vendors and 420 resellers/vendors across 13 major cities in India.

MAIT, the apex body representing the hard ware, training and R&D services sectors of the IT industry in the country, recently announced the findings of its industry performance review for the OND quarter of FY 2002-03.

The quarterly study conducted by IMRB for October-December period involved data collation from five major vendors and 420 resellers/vendors across 13 major cities in India. The quarterly review covers the market size estimation for desktop PCs, notebooks, servers and peripherals - printers and UPS.

DESKTOPS DROOP SLIGHTLY
The desktop PC market grossed 4.31 lakh units, sales dropped by 2.3% over the previous quarter (JAS); however the sales are 50% of that in the second-half of FY 2001-02. With increased sales throughout the year and also, traditionally, the last quarter accounting for maximum sales, the industry is expected to comfortably cross the two million mark in PC sales.

While the first three quarters of the fiscal 2002-03 witnessed increased PC sales over the previous year, the marketshare of the branded PC came under severe pressure. The unorganized sector made a significant dent in the market share of the branded PCs - from 50% in Q1, the proportion of the locally assembled PCs has gone up to an astounding 63% in Q3 2002-03. During FY 2001-02, the overall market for PCs had declined over that of 2000-01, the organized sector gained market share as assembled players exited the PC business.

Further, the recent Union Budget 2003-04 did little to alleviate the problems of the organized sector, the excise duty on IT products was not brought down from existing 16% to the recommended 8%. MAIT had recommended that the excise be lowered to 8% for at least the next two years. This would have helped the industry to compete with the gray market. The Government also loses revenue to the tune of Rs 500 crore annually due to non-compliance to excise duty by the gray market. Lower excise duty would have helped graduate the players in the gray market to the organized.

HOUSEHOLDS PREFER ASSEMBLED
In one of the earlier MAIT-IMRB studies - the ITOPs; the findings indicated that in FY 1999-2000 nearly 29% of the households were willing to invest in a PC and that 64% of them were willing to purchase branded PC over assembled.

However, subsequent tracking studies indicated that though the preference of branded PCs was high in this segment, it ended up buying assembled PCs on account of the price differentials with the organized sector. This price difference is not only on account of evasion of excise duty and other local levies but is also due to rampant software piracy and IP infringement. The household segment accounted for 22% of the overall PC sales in the first-half of 2002-03.

The findings of the quarterly study for Q3 2002-03 lend themselves to identifying significant trends in buying and usage patterns.

In the PC market, among the business segment it was primarily the banks, educational institutes, IT sector and IT-related companies that have led the consumption. The textile and the printing industry also emerged as significant IT consumers, especially in the northern and the western parts of the country.

The break-up of the market size indicates that the Top four cities still account for a large portion of PC consumption. But the trend of smaller towns registering higher growth appears to continue during the third quarter as well.

POINTERS FROM THE REPORT
u Replacement demand in PCs is also expected to enhance growth in this market. New technology and new features, application better suited to run on latest machines are likely to drive replacement market.

u Notebook sales are still largely confined to business/establishment market and hence these segments would drive the current and future demand. The Corporate office, IT companies and financial service sector have emerged as the most sought after markets for notebooks.

u The server market, predictably, has been restricted to the corporate segment. The growth of the server market seems to be tapering in the major cities as most organizations are consolidating their investments in this area.

u For most peripherals, Q3 emerged as a flat quarter with purchases either comparable with the first quarter or lower. Inkjet printer is the only category where the Q3 purchase has registered a growth of 6% over Q2. A heightened level of purchase is expected for most of the peripherals in the last quarter (Q4).

u The dot-matrix printer market witnessed rapid replacement by inkjet printers. The dot-matrix printer is now being used mostly for specialized jobs and niche applications especially in banks, financial sectors and in the Government. The growth in demand for inkjet printers was led by increased consumption in the home market. Smaller offices and institutions also contributed to it. The replacement market for laser printers witnessed growth especially in the business establishments, due to requirements of higher printing capability and better quality.

Commenting on the findings of the study, Vinnie Mehta, Executive Director, MAIT said, "To ensure that IT reaches grass root levels in India, there is a pressing need to bring down the prices of IT products. MAIT would continue to press for reduction in excise duty, as it is the key to eradication of the menace of the gray Market.

Page(s)   1