Local Assemblers To Rule Pc Market

Household and small business segments exhibit highest growth rates

Market pundits attending IDCs annual computer fair Directions 98 have predicted a bad time for MNCs in the personal computer (PC) market as they believe the domestic assembler will rule the roost.

There is a marked growth in the purchasing power of the household and small business segments in the last couple of years, said Ravi Sanyal, vice president, IDC (India) Ltd.

These sectors are extremely price sensitive. Thus to a large extent the domestic and local assembler will gain,he added.

The household and the small business segments are predicted to be two of the fastest growing segments in the domestic PC market.

According to IDC, in 1996-97 the household segment comprised about 13.7 per cent of the entire domestic PC market.

This year it is predicted to account for about 15.7 per cent of the domestic market and by the turn of the century it is likely to be around 20 per cent.

Similarly, the small business segment (having less than 50 employees on its rolls) accounted for 23 per cent of the domestic PC market in 1996-97 and is predicted to comprise about 30 per cent of the domestic PC sales by the year 2000.

What will give further impetus to the domestic assemblers is the high percentage of PC purchases made through direct sales. Almost all the assembled PCs are sold through this channel.

Though lower as compared to in previous years, direct sales still account for a large chunk of the Indian market.

In 1995-96 about 61.4 per cent of PCs sold were through direct sales. In 1996-97 this declined to 56 per cent. Unofficial sources predict it will still comprise of about 50 per cent of the market in 1997-98. With the domestic assembler already holding a large marketshare it is unlikely the MNC brands will be able to make a major dent here.

The MNCs also have little or no control over the distributors and dealers. In case the distributor decides to walk out of the deal and not market their brand there is very little the vendor can do to stop him, said Sangal.

Thus in an industry where the margins are already low and the distributors and dealers are not exclusive, brand pull is the only mode of survival the vendor is left with, he said.

But the problem is with so many branded players already in the PC arena, brand pull is something they all have in common.