HP pips Dell as leader in personal computers in India

Focuses on premuimisation as competition intensifies

US personal computer (PC)-major Hewlett-Packard (HP) is turning its attention towards premium and innovative products to beat competition in India. “HP, which has faced competition in the domestic PC market, would gain from superior brand value and aspirations the initiative might be able to create among consumers,” Ketan Patel, director, HP India said.

The firm recently regained the top position in the domestic PC market. Its share in the PC market stands at 25.1 per cent compared to Dell’s 23.6 per cent, according to International Data Corporation (IDC). During October-December, 2015, the market share dipped to 23.9 per cent and Lenovo was the top brand with a 25.3 per cent market share.

In the March quarter, while HP managed to regain the top slot, Dell is close enough to overtake HP within a quarter, market analysts said.

Moreover, declining sales in the PC market in India and globally led to a price war in 2015. Companies could not increase prices in India since total sales declined. In the March 2016 quarter, total PC sales fell by a fifth to 1.99 million from 2.4 million in December 2015 quarter, IDC reported.

According to experts, the market in India is a low-margin business compared to mid-range smartphones. Thus, premium products are a better bet for higher profitability.

“Premiumising the portfolio would help HP become an even bigger brand,” Patel added. “Our focus is currently on bringing innovative offerings in the premium segment, where we hold 36 per cent market.”

According to IDC, the premium PCs — priced at more than Rs 50,000 ($800) — forms 15 per cent of the market. Premium PCs continue to grow at mid-single digit (four-six per cent).

“PCs, being a product used for more than two decades in India, have reached a stage where consumers can identify with it and are willing to buy. However, demand had not picked up in 2015 due to a slowdown in consumer spending and emergence of smartphones,” the analyst said.

PC usage, however, are unlikely to go down further, he said, as smartphones cannot replace PCs when it comes to official work.
TOUGH ROAD AHEAD

• PC sales are declining in India – down 20% to 1.99 million in Mar quarter
   
• Stiff competition among top players and subdued consumer sentiment kept PCs a low margin business in India
   
• With an eye on increasing market share, HP is focusing more on premiumisation
   
• HP currently leads the Indian PC market in the above-Rs 50,000 price category with 36% share
   
• After slipping to the second spot in end-2015, HP regained the top slot from Lenovo in the Jan-Mar quarter, 2016