Strategic management Report
The Laptop Industry in India
By: Abhishek Dutta
Ravinder Pal Singh
A brief Introduction on the Laptop Industry of India
One industry which continues to hold its head high even in an environment of industrial slowdown is information technology (IT) - with annual growth rates of software value hovering between 20% and 30%. Growth rates for the industry earlier were as high as 40% to 60%. The soft-ware industry is supported, on the one hand, by the hardware industry - computers, peripherals and components, and on the other, by IT-related services. Software exports have been a source of strength for the economy as a whole and for the hardware segment.
The industry recorded an exponential annual growth rate over 24% in the years from Rs 801 bn in 2001-02 to Rs 2,911 bn in 2007-08. IT and electronics exports at Rs 305 bn in 2000-01 were up 64% from Rs 185 bn in 1999-2000. During the period 2001-02 to 2007-08, exports of software increased from Rs 365 bn in 2001-02 to 1630 bn in 2007-08, recording a CAGR of over 28%.
At the time when Indian PC market is experiencing slowdown, market players are focusing on new growth drive through low price laptops 'notebooks'. While the average price of a PC is Rs 20,000, the price of an entry level notebook starts from Rs 35,000.
With several sectors reeling under the impact of global slowdown, expenditure on IT is ex-pected to decline 3.7% in 2009. A survey by research firm, Gartner says that budgets for IT hardware will bear the brunt of cuts of almost 14.9%.
The advent of the sub-Rs 10,000 PC, it is expected, will help India achieve the 80 mn PC usage target by 2010 from 15 mn right now. Taking into account the annual population growth, this means PC sales as well as penetration in the country will more than double every three years. From 3.77 mn in 2004-05, PC sales in the country increased by 32% to cross the 5 mn mark in 2005-06. In the following year, 2006-07, the number rose to 6.34 mn. The PC sales - notebooks and desktops - registered a growth rate of nearly 16% in 2007-08 over 2006-07 registering sale of 7.34 mn.
The market was led by high growth in notebook segment at 114% with sale of over 1.8 mn units, while desktop increased by a slightly over half a per cent with sale of 5.52 mn units in 2007-08. Desktops accounts for less than 75% of total personal computer market while laptop had 25% share. The ratio of desktop-to-note book sale has declined from 10:1 in 2005-06 to 3:1 in 2007-08. Note book vendors like Lenovo, HP, LG, Acer, HCL, Dell and Toshiba have launched new models with value added features.
According to IDC, over the next five years, India's laptop market is expected to grow at a CAGR of 30%. By 2010, India will have 1.75 million laptops market in unit terms. In value terms, it would translate into nearly three fold growth to USD 1.87 bn or 24% of the market, up from USD 671 mn which is about 20% of the total desktop in 2005.
HP commands 41% of the laptop market. In PC segment, Dell accounts for a market share of 7.3% while HP has 20.3%, HCL has 13.9% and Lenovo 9.4 The business segment accounted for about 74% of the total PC sales, registering a growth rate of 18% year-on-year. The home PC market expanded at a growth rate of 23%. The sales to large enter-prises witnessed a growth of 69%. The implementation of various e-governance projects led to an increase of 126% in government usage. The young segment aged between 18-30 years constitutes 50-60% of the market. By 2009-10, the young buyers are expected to account for 70-80% of the overall market. The emergence of user segments like the household professionals are driving the growth. Household professionals accounted for 40% of the total demand in the segment. While SMEs (small and medium...