Southward spiral sucks in Indian PC sales

16th July 2009
Southward spiral sucks in Indian PC  sales

Anand Parthasarathy sizes up a gloomy scenario. 
Finally, the slow but steady success story of the Indian personal computer business has met a road block. Correction: make that a slippery slope that is seeing the market plummet in some sectors, to less than half its size, this time last year.
The bad news is that people are buying far fewer desktop and laptop PCs than they did a year ago. The annual Industry Performance Review just released by the Manufacturers Association of Information Technology (MAIT) based on research by IMRB, shows that PCs – desktop and laptop -- sold 6.79 units in 2008-2009 compared to 7.34 million in 2007-08. In 2009-2010, they might – just – get back to the 2007/8 number.
The fall of around 7 percent in the last fiscal hides an even sadder piece of statistics. Indians who helped notebook sales grow at a phenomenal 114 percent a year ago, now bought so few the growth in 2008-09 was minus 17 percent.
The good news is that Net books, mini notes, call them what you will, as long you are thinking of those power –efficient, lean-n-mean hand sized portable PCs with 7 to 10 inch screens and no DVD drive, are bucking the trend, and buoying the industry, like so many cavalry troops coming to the rescue of the beleaguered garrison, just when it was about to hoist the white flag.
It’s the only ‘ silver lining’ in this dismal cloud, says MAIT Executive Director Winnie Mehta : seems to have struck buyers’ fancy, and not just in India. Let’s pause to enquire why.
Largely fuelled by Intel’s power efficient Atom chip – the first really consumer friendly product to come from that biggie after many years of high performance gas guzzlers—the netbook has enabled makers to breach the unstated Indian lakshman rekha – Rs 15,000 for a portable computer. With Qualcomm’s Snapdragon platform and NVIDIA’s Tegra also on offer, we can expect such devices to be offered around Rs 10,000 in the not too distant future.
The tragedy is that the Indian PC industry could have weathered the domestic hardware crisis, as it seems to be doing in the outsourced services sector, where we are relatively less affected by the global downturn than so many more mature markets. But there’s a small difference: the outsourcing business is overwhelmingly driven by the grit and guts of the private sector. The domestic hardware industry is a market of razor thin margins, tight consumer pockets -- and a plethora of government controls.
It was in the giving of the ‘sarkar’ to chip in with its contribution to help neutralise the effects of the world wide recession by easing a wee bit on the taxes, excise duties, customs duties, additional duties, countervailing duties, special additional duties ( or SAD -- such an apt acronym!) that it chooses to impose on computer and communication hardware and software.
Many of these  impact its commitment to the ‘aam admi’ or common person – to help him or her  harness information technology for self empowerment. Its promise to gradually bring such taxes down to zilch on mass consumer PC and phone devices has been cynically jettisoned by successive finance ministers. Its few initiatives to create a ‘janatha’ or peoples’ computer have been either forgotten after displaying a few prototypes – like the Mobilis – or have been half backed and unprofessional announcements like the rightly derided so called ‘$ 10 laptop’.
No wonder PC sales particularly the standard feature notebooks, are plummeting. Who can afford them?
And given that platforms are so pricey, is it any wonder that the number of what MAIT calls ‘ active internet entities’ grew by just 1.4 million from 7.2 million to 8.6 million between 2007/9 and 2008/9? This in an environment where at least 12 million mobile phones are added every month. Great for messaging and talking – but where is the affordable mass user Internet access?
(MAIT’s entire study can be downloaded from : )
There is cold comfort in knowing – from iSuppli’s latest numbers --that the decline and fall of the Indian PC business is likely to be mirrored worldwide this year, though notebooks are expected to climb 11.7 percent even amidst the encircling gloom. But by 2010, the world is expected to recover its PC business and see as climb at just under 5 percent.
Will the Indian end climb back as well? One can’t see how that is going to happen unless government wakes up and does its bit to make a connected device affordable to at least half her people whose numbers are nearly 1. 2 billion. ( July 17 2009)