India PC Market Performance Overview

I take this opportunity to present a brief preview of the India PC market performance in 2011 and share some pointers for how the market is expected to shape up in 2012

India PC Market Performance Highlights for 2011

1) Ultrabooks were introduced into the India PC market in 2011 by some of the leading vendors but shipments remained niche due to high price-points. As prices rationalize, ultrabooks are likely to become mainstream by end of 2012.

2) AIOs (All-in-One desktop PCs) are likely to see increase in adoption driven by demand from the BPO-ITeS segment due to the attractiveness of the form factor in terms of savings in real-estate cost and lower overall power consumption. Beyond this, aesthetics are expected to drive adoption in front-office and consumer settings.

3) HDD prices which were badly affected due to constrained supplies on account of the 2011 floods in Thailand are expected to regularize by JAS quarter of 2012. Hence, the assembled PC market is expected to remain subdued for the better part of 2012. As a result, branded desktops are likely to maintain an edge over their assembled counterparts in the current year.

4) With the Indian Rupee unlikely to get stronger against the US Dollar in the near future, there will be a continued pressure on margins. Hence, vendors will have little scope to bring down PC prices to augment adoption.

Competitive Strengths of Leading India PC Market Players

1) Dell continued to be strong in both the consumer PC and commercial PC segments through 2011 on account of new model launches as well as aggressive promotional activities.

2) Lenovo, keen to establish their leadership in the India PC market, expanded aggressively by opening more exclusive retail outlets, particularly in fast upcoming suburbs of large metros and Tier-II towns.

3) Acer was able to leverage strongly on sell-throughs to the SMB enterprise and public sector, and also registered some key wins in the large corporate segment.

4) HP is still smarting under the impact of the rapid changes in distribution strategy that did not allow the vendor or their partners to settle down to a rhythm. Going forward, it is particularly important that the company effects a smooth transition with respect to the merger of the PSG and IPG divisions; this will be a critical factor for success in 2012 and beyond.

Note: 2012E = estimates for 2012.

For further queries, please contact:

Vishaal Bhatnagar, Associate Vice President, +91-9810191634, vbhatnagar@cmrindia.com