Annual PC sales grow 37%; touch 2.3 million units Increased corporate consumption drives sales Continued buoyancy to propel sales to over 2.7 million units in 2003-04 New Delhi: July 11, 2003: MAIT, the apex body representing the hardware, training and R&D; services sectors of the IT industry in the country, today announced the findings of its Industry Performance Review for FY 2002-03. The Desktop PC market grossed 22.9 lakh units registering a growth of 37% over the previous year. PC sales had clocked a negative growth of 11% in the FY 2001-02 over that of 2000-01. However, the buoyant IT consumption witnessed in the First-half of 2002-03 gained greater momentum in the Second half, resulting in the current growth. With robust growth prospects, the IT market is expected to grow at 18% in FY 2003-04 and PC sales are expected to cross 27 lakh units. The turnaround in PC sales can be largely attributed to increased IT consumption by Industry verticals and corporate sectors such as Telecom, Banking & Financial Services, Manufacturing and IT-enabled services. Major e-Governance and digital divide initiatives of the Central and State Governments are also driving IT consumption in the country. In addition, the domestic IT Industry has focused attention on producing and developing low-cost computing solutions and the trend of increased PC purchase in smaller towns and cities, witnessed last year, continued undiminished. MAIT's Industry Performance Review - ITOPs, conducted by the leading market research firm IMRB International, is bi-annual and aims to address the hardware sector's efforts to manage the business environment as well as, gauge the market potential and consumer trends. Apart from the half-yearly review, a module has also been introduced to monitor the Industry performance every Quarter, alternating with the half-yearly review, using the supply side estimation model. This round of the study for FY 2002-03 involved face-to-face interviews with over 14,000 respondents selected randomly from 16 cities in India. The MAIT-IMRB International study was initiated in 1996-97 and leading IT vendors subscribe to it. The study encompasses five broad product segments - computers, networking products, printers, other peripherals and Internet. However, with increased consumption of Hand-held devices, the study, for the first time ever, has attempted to gauge the size of market for PDAs. Yet another pioneering initiative is the study's attempt to estimate the usage of various kinds of Operating Systems (OS). As per the MAIT-IMRB International study the Assembled PCs - the smaller lesser known regional brands and unbranded systems, accounted for 46% of the PC sales in 2002-03. The proportion of the assembled PC had risen significantly to 63% in Q3(OND), however this was checked by increased consumption in the corporates from the organized sector in Q4(JFM), more than neutralizing the impact. Although the proportion of the assembled market remained constant compared to FY 2001-02, the sales witnessed an increase of 43%. Indian brands grew by 88% staging a dramatic comeback; garnering a market share of 26%, while MNC brands accounted for 28% of the overall market, registering a drop of 10% in sales. The drop in market share of the MNC brands from 35% in the previous year was made up by the gain in market share of the Indian brands. The MAIT-IMRB International Review reveals that PC sales, both to the Business Segment as well as the Households witnessed impressive growth compared to the sales in the last year. In the FY 2002-03, the business segment accounted for 81% of the total market growing at 37%, annually. In H2/2002-03 sales to Businesses grew by 40% over H1. Within businesses, the larger businesses (over 50 employees), medium business (between 10 and 50 employees) and the small (less than 10 employees) segments grew by 54%, 43% and 24% respectively. In H2/2002-03, sales were skewed towards large businesses, they accounted for 62% of the overall sales in the business sector. In terms of the Processor Configuration, PC sales in 2002-03 were dominated by P4, which accounted for 59% of the market share, followed by PIII accounting for another 26%. In H2/2002-03, 65% of PCs sold were P4 in contrast to 51% in H1. The households segment also witnessed an increased consumption of P4 in H2/2002-03 amounting to 45% of the sales in the households. This reflects the increased need for faster processing speeds for Internet and its applications. Sales of processors with lesser speeds e.g. P-III (up to 450 MHz) and P-II based systems witnessed a fall in the market share. In terms of installations of Desktop Operating System, nearly all the establishments have Microsoft operating systems (Windows 95/98, Windows 2000, Windows XP, Me etc put together). Around 78% of the establishments use Windows 95/98 as Desktop operating systems for most of the Desktop PCs installed in their establishments. This is followed by Windows 2000 which is used in 13% of the establishments as their principal operating system for desktops. Incidence of Linux installation was found in 2% of the establishments and 1% of them use it as their principal operating system for Desktop PC. In case of Server Operating systems Windows 95/98 is the most predominantly used o/s in 50% of the establishments followed by Windows 2000 (18% of the establishments) and Windows NT (14% of the establishments). Linux is used as the principal operating system for servers in 5% of the establishments. Printer sales, according to MAIT-IMRB International estimates, grew by 7% compared to that in 2001-02. Laser printers recorded an impressive growth of 54% while sales of inkjet printers grew by 14%. Line printer sales touched 6,909 units, registering an impressive growth of 78% over the previous year. However, sales of Dot-matrix printers declined by 9%. B & C level towns accounted for 42% of Inkjet printers and 21% of Laser printers respectively with consumption improving for Inkjets by 15% and that for Laser by 194% respectively. 42% of the Inkjet consumption was accounted for by the small enterprises where consumption grew by 21%, however, sales for Laser printers were driven by the Large Business segment, which accounted for 55% of the market and grew at 60%. The slow down in consumption of Dot-matrix printers was on account of poor sales to the Households as well as the small and medium enterprises. Sales to smaller towns and cities continued undiminished in FY 2002-03 as was witnessed in the previous year. 35% of total PC sales was accounted for by Class B and C class cities, registering a growth of 63%, the proportion increased from 30% in the last fiscal. Smaller towns accounted for 9% of the total notebook sales, growing 44%. Further, smaller towns, registering a growth of 27%, accounted for 10% of server sales. Sales of UPS to smaller towns also witnessed a significant growth of 24% accounting for 40% of the total UPS market. Since the study is in its twelfth round using identical methodologies in each round, the findings when compared across consecutive six-month and annual periods, lend themselves to identifying significant trends in buying and usage pattern: PC purchase in the Top 4 metros accounted for 53% of the total PC market. This is down from 56% observed in 2001-02; however, in absolute terms the sales grew by 30%. Similarly PC purchase in the Next 4 Metros accounted for 12% of the total PC purchases, with a growth of 11% over last year. In other smaller towns the PC purchases increased by 63%. In the Business Segment, although the Top 4 Metros accounted for the maximum PC sales, their share declined from 60% in 2001-02 to 52%. However consumption in this segment grew by 24%. The proportion of sales to smaller towns increased significantly from 29% in 2001-02 to 39% in 2002-03. Sales to the Household Segment also witnessed growth of 16% - SEC A continued to dominate the market with 45% market share in 2002-03. SEC C, which emerged as a consumer only in 2001-02, accounted for 24% sales in the households market. SEC B accounted for 31% of the sales. Notebook sales grew by 14% clocking a CAGR of 12% over the past six years. Large business segment accounted for a major proportion of Notebook sales - 53%; while medium business accounted for 26% and small businesses for 21%. Notebook sales remained concentrated in the Top 4 Metros, which accounted for 78% of the total notebook sales. The overall installed-base of PDAs in the country is 13,892 units; while 3,734 units were sold in H2 2002-03. PDA consumption is concentrated in the top 4 cities, accounting for 57% of the total market. Consumption of PDAs was highest in the services sector, which accounted for 81% of the market, manufacturing sector accounted for another 18%. The Server market grew 11% in 2002-03. The Top 4 Metros accounted for 78% of the total server sales while their consumption increased by 15%. Sales of servers to the smaller businesses grew by 46%, they accounted for 28% of the overall server sales. Large Businesses accounted for 41% of the sales, however the sales declined by 14% over the previous year. Medium enterprises accounted for 31% of the sales, growing 36%. Consumption of Networking products witnessed an impressive growth. Sales of NIC (Network Interface Cards) grew by 50% and that of Hubs by 151%. Consumption of modems, however, declined by11%. The UPS market had been growing at a CAGR of 33% over the past 6 years, and in 2002-03 the sales of UPS grew by 24% over the last year. Consumption in Business segment grew by 60% accounting for 66% of the market, however, the offtake was slow in the household, sales dropped by 14%. Household accounted for 34% of the UPS market. The number of active Internet entities1 increased to 1.43 million in March 2003 indicating an increase of 11% over March 2002. The business segment contributed 46% of the total active Internet subscribers and households accounted for the remaining 54%. The penetration of Internet in the Business segment is 41%, while in the households it is 12%. Dial-up remains the most commonly used means of accessing the Internet among businesses with 68% of the business subscribers using it. Cable, leased line and DSL are yet to catch-up, and accordingly account for only 12%, 8% and 1% respectively of total access means. Releasing the findings of the study, Mr. Vinnie Mehta, Executive Director, MAIT said, "The growth in the IT market that we witnessed in 2002-03 continues undiminished well into 2003-04. This will help bolster the confidence of the IT industry in India, especially the domestic players. With the recent, increased focus of the Government on the hardware sector, we are hopeful that the industry will flourish. The Ministry of Communications & IT recently announced a draft Policy for the IT manufacturing Industry which attempts to address most of the challenges currently faced by the hardware industry in India. The policy aims to set right the existing anomalies in the duty structure, incentivising manufacturing and growing the domestic market. We are hopeful that the Government will work towards a speedier implementation of the same."   Total installs Total Revenue (in Rs Crores) Product April 01 – March 02 April 02 – March 03 % Growth April 00 – March 01 April 01 – March 02 April 01 – March 02 Computers Desktop PCs 1,670,878 2,293,643 37% 4,846 6,292 30% Notebooks 44,742 50,974 14% 350 369 5% Servers 50,880 56,544 11% 871 920 6% Printers Dot matrix 346,408 316,554 -9% 320 307 -4% Inkjet 428,732 486,968 14% 210 191 -9% Laser 60,982 93,909 54% 213 262 23% Line 3,886 6,909 78% 60 107 78% Other Peripherals Key boards# 1,706,504 2,380,608 40% * * * Monitors 1,704,481 2,387,518 40% 1,053 1,327 26% UPS systems# 375,458 465,501 24% * * * Networking Products Network Interface Card# 1,057,001 1,582,151 50% * * * Hub# 206,604 518,264 151% * * * Modem# 470,423 420,673 -11% * * * An Entity is an establishment or an individual with an Internet connection. An entity may house multiple users.