Notebook PCs set for double-digit growth; Tablets to emerge as new marketing battleground
Chennai, August 31, 2011: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.
Table 1. India PC Market Shipments (millions of units): Forecast for 2011 and 2012
Source: CyberMedia Research, 2011
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.
Table 2. India Tablet Market Shipment Estimates for November 2010-March 2011
Source: CyberMedia Research, 2011
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.
Table 3. India Tablets Market FY 2011-12: New Brands Launched in April-June 2011
Source: CyberMedia Research, 2011
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 commoditization 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 US$ 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 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.
Notes to Editors:
1. CyberMedia Research Definition of Tablet: CyberMedia Research defines the tablet as a mobile device, positioned to satisfy the mobile Internet and computing needs of a user. It is a slate or can be converted into a slate form factor, larger than 5-inch screen size, touch screen as primary input method and uses either a mobile network like GSM/CDMA/WiMAX/LTE or WiFi or, both for enabling internet connectivity.
In addition to this a tablet may also include a detachable keyboard and voice capability as in mobile phones. A tablet may run on a specially designed Operating System (OS) such as Android 3.0 (Honeycomb) or RIM’s QNx or, a PC/Smartphone OS like Windows 7/8, Android 2.2 (Froyo) and iOS 4, which may be modified. A tablet uses processors based on ARM or Intel’s x86 architecture.
Tablets provide touch based user experience with a screen size convenient enough for web surfing, content consumption and entertainment. Moreover, portability, ease of use and wireless connectivity ‘on-the-go’ all combine to make the tablet an even more attractive buy.
2) For more details and related CyberMedia Research analyst viewpoints about the India tablets market and industry developments such as Micosoft’s acquisition of Skype for US$ 8.5 Billion (May 2011), Google’s acquisition of Motorola Mobility for US$ 12.5 Billion and HP’s announcement to hive off its PC business or Personal Systems Group (both August 2011), please refer, http://www.cmrindia.com/BLOG