PC Sales Record Seven Percent Negative Growth: MAIT

MAIT, the apex body representing India’s IT hardware, training and R&D services sectors, has announced the findings of its Industry Performance Review for fiscal 2008-09. The total PC sales between April 2008 and March 2009, with desktop computers, notebooks and netbooks taken together, were 6.79 million (67.9 lakh) units, registering a decline of seven percent over the previous year.

IT consumption in 2008-09 was severely impacted, especially in the second-half of the fiscal year, by the slowdown in the Indian economy. Impact on consumption of notebooks was most pronounced as growth plummeted to a negative seventeen percent compared to a high of one-hundred-and-fourteen percent in the previous year. Sales of desktops declined four percent. The October-November-December quarter was the most adversely impacted, subsequent to which growth in PC consumption started to show signs of revival. With business sentiment gradually gaining momentum, PC consumption in fiscal 2009-10 is expected to cross 7.3 million units, registering a seven percent growth.

Vinnie Mehta, executive director, MAIT, said, “Consumer sentiment was subdued due to uncertainty in the economy in 2008-09, which impacted the consumption of IT in the country. While consumption in the first-half of the fiscal was satisfactory, less than expected offtake in sales in the second-half pulled down the overall growth into the negative quadrant. A silver lining in the second-half of 2008-09 was the emergence of a new product category, the netbook that took the fancy of the consumers. This new form-factor appeared to be better insulated from the prevailing market sentiments.”

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He further added, “Although the sales growth in both enterprises and households headed southwards, the overall consumption in the PC market was led by telecom, banking and financial services sectors, education and the e-governance initiatives of the Union and state governments. Verticals such as BPO/ IT-enabled services, manufacturing, retail and households, which traditionally account for significant proportion of the IT market, were very conservative in their IT spends in 2008-09. Sales of desktops clocked 5.27 million (52.7 lakh units) declining four percent, and that of notebooks, with netbooks taken together, another 1.51 million (15.1 lakh) units with a degrowth of seventeen percent. Consumption of netbooks exceeded 70,000 units in fiscal 2008-09. The year also witnessed deviations from the traditional downward trend in pricing for IT products as the dollar continued to be significantly strong compared to the rupee. This was mitigated, to an extent, by price drops due to technology reasons and also due to intense competition. Going forward, with signs of revival in the domestic economy, we expect positive growth for PCs and other IT products for the fiscal 2009-10.”

Western India followed by the South, led PC consumption accounting for thirty-seven percent and twenty-three percent of the market respectively. Sales in the West grew by 12 percent over 2007-08, while in the South, they declined 22 percent. PC consumption in the East increased by 18 percent accounting for 22 percent of the market, a reflection of IT activities gaining ground in the region. The Northern states witnessed a decline of 34 percent in PC sales, they accounted for 18 percent of the market.

Unlike the trends in the previous years, where sales in the second half of the year have been significantly higher than those in the first-half, 2008-09 witnessed a rather subdued second-half as delineated below.

Some of the salient findings of the MAIT Industry Performance Review 2008-09:

The Desktops Market

The establishments segment accounted for 66 percent of the desktop sales, registering a growth of five percent on a year-on-year basis although consumption of notebooks in the establishments declined 27 percent. Owing to conservative attitude, establishments do not seem to have shifted preference in favour of notebooks. The consumption in small, medium and large enterprises grew by three percent, 17 percent and two percent respectively.

The Notebooks Market

The establishments segment accounted for 49 percent of the notebook consumption; small and large establishments recorded a decline of 53 and 47 percent respectively in 2008-09 while consumption in medium enterprises grew 27 percent. SMEs accounted for 68 percent of the total notebooks consumption in the country.

The Server Market

Sales of servers declined two percent in FY 2008-09. Bangalore, Pune and Hyderabad, the key centres of IT/ ITeS witnessed a decline of 78 percent in consumption of servers. However, driven by the need for consolidation, server consumption in large enterprises grew by 35 percent. Sales to small and medium enterprises declined one percent and 29 percent respectively.

The Internet Space

DSL/ cable remains the most commonly used means of Internet connectivity among businesses: 45 percent of businesses were found to use DSL/ cable, 31 percent dial-up connections, seven percent leased-line, four percent used data cards, one percent used VSAT while 11 percent ISDN services.