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73% consumption growth in small towns boost PC sales aim 4-mn-mark in FY 04

73% consumption growth in small towns boost PC sales aim 4-mn-mark in FY 04

Author | exchange4media News Service | Thursday, Dec 23,2004 8:28 AM

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73% consumption growth in small towns boost PC sales aim 4-mn-mark in FY 04

Growth in PC sales in smaller towns and cities continued undiminished in the first-half of financial year 2004-05, claimed a recent IT industry review. Class B and C cities have accounted for 65 per cent of total PC sales – registering a growth of over 73 per cent, clocking 50 per cent proportion increase over the first-half, last fiscal.

As per the industry review from the house of MAIT – the apex body representing the hardware, training and R&D services sectors of the IT industry in the country, and conducted by IMRB, Desktop PC market has grossed 1.71 million units, registering a growth of 37 per cent over the same period, last year. The buoyant IT consumption beginning in the second-half of 2003-04 continued unabated in the first-half of 2004-05, resulting in significant market growth. With sound macroeconomic condition and buoyant buying sentiment in the market, PC sales are expected to touch four million units in the running fiscal year, the study observed.

The high growth in PC sales can be attributed, on one hand, to the increased consumption by industry verticals such as telecom, banking and financial services, manufacturing, retail and BPO and other IT-enabled services as well as major e-Governance initiatives of the Central and State Governments. On the other hand, the highly price-sensitive Indian market has responded positively to the drop in prices, especially at the entry-level.

The excise duty reduction on PCs – from 16 per cent to eight per cent, reduction in peak customs duty from 15 per cent to 10 per cent, and the removal of four per cent Special Additional Duty (SAD) in early-January 2004, resulted in price drops ranging from eight to 12 per cent. This has certainly helped in driving growth in comparatively low PC penetration areas like B and C-category cities and smaller towns and cumulatively carried forward the buying momentum resulting in a high 8.9-lakh unit sales in the first financial quarter of FY 2004-05.

However, the disruption in business for close to three weeks after the Budget 2004-05 and the subsequent truckers strike, adversely impacted the sales resulting in 8.24 lakh units in PC consumption in the second financial quarter. The southward trend in pricing continued during the year due to technological reasons. And, significant consumption in the small and medium enterprises and in the home market added to the industry numbers.

In the assembled PC segment, the smaller and lesser known regional brands and unbranded systems accounted for 44 per cent of the PC sales in the first half of the running fiscal year, with Indian brands claiming 23 per cent share of the market, 57 per cent to assembled segment and the rest 33 per cent lying with MNC brands. In absolute terms, Indian brands have grown by 57 per cent and MNCs by 96 per cent, while assembled PCs record only five per cent growth.

The MAIT-IMRB Review reveals that PC sales to the business segment have improved by 27 per cent, accounting for 69 per cent of the total consumption. Interestingly, households have registered 66 per cent growth, marking a significant improvement in consumption compared to the last year.

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