PC-makers pull out all the stops to boost sales of these tiny computing devices

When Asus announced the launch of India’s first netbook — Eee PC — in July 2008, it was confident that the ultra-portable device would change the way computing is perceived among various user segments. Since then, a number of PC-makers have launched netbooks, expecting the device to catch the fancy of Indian netizens. However, contrary to their expectations, the consumer here has apparently shown a kind of indifference towards the product. And, the reason for this is a matter of debate.

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The votaries of the bundle sales model point to the fact that netbook sales peaked in the US and Europe because of this model as consumers switched to these cheaper devices to beat the downturn heat.

Bundle sales is a model wherein PC-makers sell netbooks along with 3G or broadband services.

“The growth of netbook has not been as fast as we had expected. One of the reasons for this is insufficient broadband service and the absence of 3G here in India,” says HCL Infosystems’ Chairman & CEO Ajai Chowdhry.

To boost sales, HCL has now decided to tie up with domestic telecom service providers and give consumers an internet-ready netbook. “We are in talks with some of the telcos to bundle broadband services with netbooks,” he says.

Asus, which claims to sell about 3,000 netbooks a month in India, is hoping to grow the number by 15 per cent this year. Stanley Wu, country head (notebooks & Eee PC) of Asus India, is already pursuing tie-ups with telcos to bundle mobile broadband solutions with Asus netbooks. Wu reckons that telecom operators too can benefit from such tie-ups by getting mobile data revenues from netbook consumers. This will help them at a time when prices of voice services are falling. “If we can establish a channel between the telecom operator and the consumer to sell netbooks, just like in other countries where operators subsidise the hardware cost, it would definitely help multiply the netbook market in India,” Wu says.

PC-makers argue that netbooks can justify the telcos’ massive infrastructure investments in mobile broadband. Industry estimates suggest that about 40,000 netbooks were sold last year, and the installed base of these devices in India could reach 300,000 this year. According to research firm IDC, for the first quarter of 2009, netbook shipments touched 35,000 units, and in the second quarter, the number rose to 41,000.

PC vendors like Dell believe that wireless mobility can help them overcome the netbook adoption barrier. And, by bundling netbooks with cheaper mobile broadband services, they can increase the perceived value of these devices.

Mahesh Bhalla, executive director and general manager (consumer) of Dell India, says: “We have tied up with MTNL to offer 3G wireless mobility solution on our Inspiron Mini 10 netbook.”

Dell’s internet-ready netbook costs Rs 30,000, and Bhalla adds that the company will offer special data plans along with MTNL’s 3G pre-paid mobile broadband data package, which could boost the uptake of Dell netbooks. Dell and Asus have also announced separate tie-ups with Reliance to offer wireless broadband to their netbook consumers.

Diptarup Chakraborti, principal research analyst, Gartner India, notes: “Partnerships with network carriers will definitely give the netbook market incremental sales, but vendors have to carefully tailor their broadband data prices.” He estimates that internet-ready netbooks will be 6.5 per cent of the 36-million domestic PC market, and could grow up to 12 per cent by 2012.

HCL Infosystems’ Executive Vice-President (Marketing) George Paul believes that besides the broadband issue, the other reason why netbook sales growth has been slow in India is its price. “The difference between the prices of a netbook and a laptop has shrunk. While a Windows netbook starts at Rs 20,000, a full-fledged laptop is on offer for Rs 25,000,”he reasons.

According to Dell, HCL and Asus, while there will be no significant price reductions for netbooks, they will launch more such ultra-portable computing devices after Microsoft unveils its Windows 7 in October 2009. These vendors are also testing Google’s Android operating system for netbooks.

For Lenovo, nearly 10-11 per cent of its consumer segment sales in the last two quarters have come from netbooks, and that makes Lenovo India Country Manager (Marketing) K Ramakrishnan optimistic. “We are in talks with a few telecom service providers to offer netbooks with broadband services, though it is too early to comment on the arrangement.” Once packaged with services that offer internet access, the scope for the adoption of netbooks by consumers will expand, he feels.

With internet and laptop penetration in India growing at a phenomenal rate of over 20 per cent per annum, PC-manufacturers are confident of selling more netbooks this year. Amar Babu, managing director of Lenovo, however, maintains that netbooks have done well in those markets where these devices are seen as a second PC.

“Netbook adoption has been faster in countries with 3G networks. Because, you know, internet connectivity and computing devices go hand-in-hand,” he concludes.

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