PC sales to touch 12.71 million in 2012

The India PC market is expected to see sales (shipments) of 11.15 million units in calendar year 2011. An industry study by market intelligence firm CyberMedia Research expects sales to accelerate further by 14.0% in 2012, leading to sales of 12.71 million units.

The study points out that with nearly 10 million unit sales in 2010, the combined installed base of desktop and notebook personal computers in India is estimated to have crossed 52 million units as of December 31, 2010.

The current installed base of personal computers translates into one computer for every 25 Indians, doubling the per capita PC availability in just four years. It may be recalled that at the end of 2006 there was approximately one computer for every 50 Indians.

"The future growth of the India PC market will be driven by adoption of new form factors such as LED monitors in the commercial desktop space, netbooks, ultra lightweight notebooks and tablet computers in the portable space,” stated Anirban Banerjee, Associate Vice President, Research and Advisory Services, CyberMedia Research.

"These four form factors--desktops, ultra lightweight notebooks, netbooks and tablet computers--will co-exist, leveraging on the increase in reach and penetration of mobile broadband data services, content and 'apps'", Anirban further added.

The first tablet computer was launched in India in November 2010. Since then, the market saw a slew of launches from both MNC and Indian players. While models like Cisco's Cius and RIM’s Blackberry Playbook tablets are focused on the enterprise user segment, the Samsung Galaxy Tab and Reliance 3G Tab are focused on the consumer segment. (Reliance 3G Tab manufactured by ZTE, retails at Rs. 12,999 per unit).

CyberMedia Research expects tablets to become the new battleground as major MNC and India vendors and operators race to capture a share of this emerging market.

"As telecom carriers started offering 3G services in India since early 2011, the enhanced connect speeds are expected to boost usage of data services by subscribers. For tablets to become a common man's device, the data usage tariffs for 3G services need to be brought down even further.” Anirban stated.

The first half of 2011 witnessed subdued sales in the India PC market on account of lower off take by the government, public and private sector. Lower consumer demand too added to this.

This situation is expected to correct itself in the July-September 2011 quarter as the new academic year commences witnessing strong demand from the Education sector. Consumer buying is also expected to be higher in the July-December period of 2011 on account of 'festive' season buying. Demand from the domestic large and SMB enterprise segments is expected to remain healthy.

A 'wait-and-watch' buying sentiment may continue in the corporate sector due to the ongoing uncertain economic environment in the US, Europe and Japan.

The other major development with a likely impact on leadership of the PC market was HP's announcement on August 18/19 to spin off its PC business.

"HP's strategic rethink of spinning off its US$ 40 billion Personal Systems Group may be attributed to the rapid commoditisation of the PC business in absence of any major differentiator, in the last few years. While this trend impacted every player in the market, HP's PC division recorded a significantly lower operating margin compared to its other businesses in the year ended July 2011", stated Sumanta Mukherjee, Lead Analyst, Computing Products, IT Peripherals and Channels, CyberMedia Research.

"HP also failed to leverage its $1.2 billion acquisition of Palm in 2010. An unsuccessful attempt to promote devices based on WebOS not only denied HP a leadership position in the smartphones and the tablets markets, it also seems to have underlined the need for a strategic shift. Given this background and the fact that HP is still the global leader in the PC market, the call to spin off its PC business is a bold but necessary step in the right direction. It is likely to yield business benefits in the long run", Sumanta further added.

Impact on India PC Market:

While HP's top global brand status will likely mean 'business as usual' at the moment, the global announcement would definitely play on the minds of local partners. As a result, HP's India partners could adopt a cautious approach, which may not augur well for HP before the impending festive season that typically witnesses the highest consumer PC sales in the year.

"While the spoils can be shared among Acer, Dell, Lenovo and Sony, Dell is better suited to reap the most of this opportunity because of their greater exposure to the consumer space. In the long term, both Microsoft and AMD could be impacted, since HP has been a major partner for both the world's No.1 software company and the No. 2 PC processor vendor. Whatever happens, Personal Computers are unlikely to die out in India in a hurry", concluded Sumanta.

Will Google-Microsoft war cut down PC prices?

Google Inc's bid to compete with Microsoft Corp's Windows operating system may help lower the cost of personal computers at a time when prices are already being pinched by inexpensive netbooks.

Google said it will offer its just-announced Chrome operating system for free when it is launched in the second half of 2010, a move that could force Microsoft into a price war.

Although Windows is the dominant operating system -- installed on 90 percent of the world's PCs, Microsoft won't take Google's challenge lightly, analysts said. Its new Windows 7 operating system will be available in October.

"Microsoft's strategy is likely to be to compete on price," said Brent Williams, an analyst with the Benchmark Co. "Now there's a competitor with the muscle and the brand recognition. Google is that company."

Google said Chrome OS, which is based on the open-source Linux code, is being designed for all PCs but will debut on netbooks. It makes sense for Google to initially target the stripped-down, Web-centric netbooks, one of the only segments showing any growth in a PC market that is contracting.

Netbooks generally sell for $300 to $400, but prices are dropping as new offerings flood the market and wireless carriers offer subsidies with the purchase of a data plan.

Kaufman Bros analyst Shaw Wu noted that while the prices on nearly all PC components have been falling, "the one thing that has not been coming down is the cost of the operating system. This is going to put some pressure on Microsoft."

Microsoft doesn't say how much it charges PC brands for Windows, but analysts estimate it gets $20 to $40 for the older XP system used in the vast majority of netbooks, and at least $150 for the current Vista system.

Wu said price competition could ultimately give a bump to PC makers' margins.

"I think overall it should improve the profitability for PC vendors. It's really a question of how much they pass on to the customers," he said.

REWRITING THE RULES

Between 20 million and 30 million netbooks are expected to be shipped this year, and the devices continue to rewrite the rules for the PC industry.

Even as heavyweights such as Hewlett-Packard Co and Dell Inc roll out new netbooks, analysts expect new players, including Taiwan-based equipment manufacturers and carriers such as AT&T Inc, to release branded netbooks running on either Intel Corp's x86 chip platform or ARM chips.

Google said Chrome will work on either architecture.

Agencies

New lighter, power-saving Intel chips for laptops

Intel Corp has launched a lighter, power-saving microprocessor intended for use in ultra-thin laptops, a move by the top chip
maker to shore up its lead in mobile computing.

The new processor, dubbed the Pentium SU2700, comes amid investors' fears that cheaper processors such as the Atom, designed for use in ultra-cheap netbooks, are cannibalizing the market share for higher-margin, more expensive chips.

Acer and Asustek have said they will build laptops with the chip, and Microsoft will ensure its software supports it.

Intel expects that by the fourth quarter of 2009, about a fifth of its consumer shipments will be for the new-generation laptops, slimmer and more energy-efficient.

Intel is upbeat on the ultra-thin market and expects "explosive growth in 2009, very similar to the netbook growth," Intel's director of mobile platforms product marketing Uday Marty said on a conference call.

Asutek, which in 2007 pioneered the successful low-cost, no-frills netbook PC in 2007, is expected to unveil five new laptop models based on the technology this year.

Analysts say Intel's CULV platform may offer a cheaper - but virtually as powerful - alternative to the traditional processors it makes for laptops, while enabling laptops to begin to approach the diminutive size of netbooks.

Intel released three new Core 2 Duo processors and a new mobile chipset.

Agencies

AT&T outlets to sell netbooks across USA

AT&T Inc plans to expand sales of netbook computers to all its stores in an effort to expand wireless services beyond cell
phones.

Ralph de la Vega, the head of AT&T's consumer business, said on Tuesday that the US phone company would directly sell netbooks from Dell Inc, Acer Inc and Lenovo Group Ltd starting this summer.

Until now, only AT&T stores in Atlanta and Philadelphia, and consumer electronics retailers RadioShack Corp and Costco, have been selling the netbooks, which come with AT&T mobile data connections.

"We're taking broadband and really making it mobile," de la Vega said at the Reuters Global Technology Summit in New York.

While sales of netbooks are expected to be boosted by promotions from carriers, some analysts have said that consumer enthusiasm could be muted by the requirement to sign up for two-year wireless service contracts and the $60-a-month data connection fees that come with the devices.

AT&T said in April it was testing a $40-per-month fee for 200 megabytes of data downloads to netbooks, or about 1/25th of the downloads allowed under the $60 service.

AT&T's bigger mobile rival Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, started selling netbook computers from Hewlett-Packard Co earlier this week.

Agencies

Have computer sales dipped by 12%; As cos cut IT spends

Personal computer (PC) sales in India fell about 11.7% during the first quarter of the calendar year to about 2.1 million units as enterprises slowed down IT spending, according to research firm Gartner.

Both desktop PC and laptop sales declined about 11% during the period, as both large enterprises and small and medium businesses delayed their IT hardware purchases.

“Cost pressure seems to have kept away enterprises from spending on IT hardware during the first quarter of 2009, while there are signs of some turnaround in the consumer sentiment,” Gartner principal analyst Diptarup Chakraborti said.

Hewlett-Packard continued to lead India’s PC market, selling about 300,000 PCs in the quarter. The PC maker, however, saw an year-on-year decline in both desktop and laptop sales during the period. HCL Infosystems (200,000) and Dell (158,000) were ranked second and third, respectively. Acer was ranked fourth.

Gartner said it expects PC sales in India to decline 3.7% year-on-year to 8.98 million units this year. The firm had projected sales of 11 million units for the calendar year in the beginning of January, but the first quarter made it revise its projection downwards.

“Production of desktops and laptops has come to near a halt in manufacturing destinations such as Taiwan,” Mr Chakraborti said. PC makers say they saw some growth in new categories, such as netbooks and higher retail sales, in the first quarter but the good news is limited to the consumer space.

“Large enterprises and small and medium businesses are not buying. The e-government projects are also in a limbo with the Model Code of Conduct in place,” Acer India chief marketing officer S Rajendran said.

With the slowdown in enterprise spending, corporate buyers are expected to account for 69% of total PC sales in 2009, down from 71% last year.

The economic slowdown has resulted in a slump in PC sales across the globe. Worldwide PC shipments declined 6.5% in the first quarter of 2009 to 67.2 million units. As per Gartner, the decline could have been steeper but for low-priced laptops such as netbooks.

Agencies

Is HP top PC maker in US?

Global shipments of personal computers fell 7.1 percent in the first three months of the year, but the decline was smaller than expected and research group IDC on Wednesday said the industry could turn around by the end of the year.

A second research group, Gartner Inc, calculated first-quarter PC shipments fell 6.5 percent from the same period in 2008. The two groups use different methods to track PC shipments.

IDC had predicted worldwide shipments would fall 8.2 percent in the quarter. The US market was also much stronger than IDC forecast, with PC shipments falling 3.1 percent from a year ago, compared with an expected 8.9 percent drop. By Gartner's count, US shipments dipped less than one percent.

"Based on the U..being the center of the financial crisis, and looking at trends of last recession, we were concerned that demand and growth would continue to decline," said Loren Loverde, an IDC program director.

Instead, the US PC market, which took a beating in the fourth quarter, benefited from intense price competition among PC makers as well as the growing demand for netbooks, or small, cheap, low-powered laptops.

Both groups reported that Hewlett-Packard Co used the trend to overtake Dell Inc as the top PC maker in the US HP's lower prices and more established brand among shoppers helped push its market share to 27.6 percent. Dell's share fell to 26.3 percent as it struggled to reorganize its consumer business, according to IDC.

Taiwan's Acer Inc, the No 3 PC maker in the US and a force in the netbook market, snagged 10.5 percent of the market. Apple Inc's share edged up to 7.6 percent, and Japan-based Toshiba Corp, the fifth-largest, took 6.6 percent.

Worldwide, HP's market share crept up to 20.5 percent while Dell's slipped a few points to 13.6 percent, IDC reported. HP's shipments rose 2.9 percent as Dell's plunged 16.7 percent.

No 3 Acer captured 11.6 percent of PC shipments worldwide. China's Lenovo Group's share was flat at 7 percent, and Toshiba's share edged up to 5.4 percent.

Chipmaker Intel Corp. on Tuesday said personal computer sales "bottomed out" in the first quarter. Neither IDC nor Gartner wanted to match Intel's bold assessment, but IDC took a more optimistic stance.

"I don't think Intel's comment was meant to say we're going to come roaring back next quarter," Loverde said. "It's likely we won't see growth deteriorate from here."

Before the release of Wednesday's numbers, IDC had forecast an 8.4 percent decline in the second quarter and a 4.5 percent drop in the third before seeing growth in the fourth quarter.

George Shiffler, research director at Gartner, said in a statement that retailers may be restocking inventory, but "this restocking should not be interpreted as a recovery in PC end-user demand. It's still unclear if the global PC market has hit the bottom."

Agencies