Home > Media Room Media Room Second-half PC sales grow 8%; Annual sales decline 11% small towns emerge as the fastest growing market recovery in FY 2002-03; sales volumes to touch 19 lakh, to grow 12% New Delhi; July 05, 2002: MAIT, the apex body representing the hardware, training and services sectors of the IT industry in the country, today announced the findings of its Industry Performance Review for FY 2001-02. The Desktop PC market grossed 16.7 lakh units registering a negative growth of 11% over the previous year. PC sales had clocked a growth of 34% in the FY 2000-01 over that of 1999-2000. The severe recessionary trend in the Indian economy has adversely impacted the domestic hardware market. The market witnessed significant slow-down in IT consumption in general manufacturing, banking & finance and media & professional services sectors. However with imminent recovery in the Indian market, the IT market is expected to grow at 12% in FY 2002-03, with projected PC sales of 19 lakh units. 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, gauge the market potential and consumer trends. The first mid-year report evaluates the industry's performance between April-September and the second, between October-March. This round of the study involved face-to-face interviews with over 14,000 respondents selected randomly from 16 cities in India. The study was initiated by MAIT in 1996-97 and leading IT hardware vendors subscribe to it. The study encompasses five broad product segments - computers, networking products, printers, other peripherals and Internet. 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 2001-02. The proportion of the assembled PC sales shrunk from 53% in the previous year - a negative growth of 22%. The poor performance reflects the fact that price sensitive market segments deferred their IT purchase plans in 2001-02. However, the MNC brands maintained a robust performance - a market share of 35%, up from 27% in 2000-01 despite registering a negative growth of 17%. The Indian brands accounted for 19% of the market. The share of the Indian brands in 2000-01 was 17%. The MAIT-IMRB International Review reveals that PC sales, both to the business segment and to the Households declined by 11% as compared to the sales in the last year. In the second-half of 2001-02, the market recovered, but not sufficient enough to result in positive growth. Business Segment registered a growth of 7% and the house-holds 12% over the first half, thus taking the overall growth to 8%. In the FY 2001-02, the business segment continued to account for 78% of the market. Within businesses, the larger businesses (over 50 employees) and the medium business segments (between 10 and 50 employees) witnessed sales fall by 10% and 18% respectively. The sales in the small sector (less than 10 employees) also declined by 18%. In terms of the processor configuration, PC sales in 2001-02 were dominated by P-III 550 MHz, which accounted for 46% of the market share, followed by P4 accounting for another 24%. In H2/2001-02, 28% of PCs sold were P4 in contrast to 19% in H1. The households segment also witnessed an increased consumption of P4 in H2/2001-02 amounting to 27% 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. Printer sales, according to MAIT-IMRB International estimates, grew marginally by 1% compared to that in 2000-01 - sales of Dot-matrix grew by 6%; sales of Laser printers declined by 15% while that of Inkjet printers remained flat. Large establishments that accounted for 36% of the Dot-matrix sales registered a positive growth of 57%. Medium sector accounted for 33% consumption and grew 6%, while small sector witnessed negative growth of 17%. Sales of Line Printers declined by 30% registering 3,885 units in sales down from 5,540 units in 2000-01. Summing up, Dot-matrix printers accounted for 41% of the market share; Inkjet printers for 52% and Laser printers for 7%. One of the most notable findings of the study this year has been the increased consumption of IT products in smaller towns and cities. 30% of total PC sales was accounted for by Class B and C class cities - a phenomenal growth of 106%. In the last fiscal smaller towns had accounted for only 13% of the overall PC sales. Likewise notebooks sales grew by 200% in small towns whereas sales to Top 4 cities declined by 28%. Smaller towns accounted for 9% of the total server sales, growing 4%. Server sales recorded a negative growth of 21% in fiscal 2001-02, with sales in top 4 cities declining 23% and 21% in the next 4. In Inkjet printers also the same trend was witnessed. Sales to smaller towns accounted for 41% of the total sales, growing 91%, while sales to top 4 cities dropped by 33% and in the next 4 by 23%. Sales of UPS to smaller towns also witnessed a significant growth of 23% although total UPS sales in FY 2001-02 declined by 6%. Since the study is in its tenth 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: Overall the PC purchases in the Top 4 metros accounted for 56% of the total PCs purchased. This is down from 68% observed in 2000-01 representing a decline in purchases by 26%. Similarly PC purchase in the next 4 metros accounted for 14% of the total PC purchases, indicating a decline of 35% over last year. In other smaller towns the PC purchases increased by 106%. In the business segment, although the Top 4 Metros accounted for the maximum PC sales, their share declined from 67% in 2000-01 to 60%. The proportion of sales to smaller towns increased significantly from 18% in 2000-01 to 29% in 2001-02. Sales to the household segment also came under severe pressure - sales to SEC A declined by 20% over 2000-01, although SEC A continued to dominate the market with 59% market share in 2001-02. For the first time SEC C emerged as a consumer for IT products accounting for 7% of the market share in 2001-02. Notebook sales declined by 15% clocking a CAGR of 12% over the past five years. Larger business segment accounted for a major proportion of Notebook sales - although the proportion of sales to this segment has been progressively decreasing every six months - from 56% in H2/2000-01 to 47% in H1/2001-02 to 41% in 2001-02. Notebook sales remained concentrated in the Top 4 Metros, which accounted for 68% of the total notebook sales although the sales to this segment fell by 41%. The server market declined 21% in 2001-02. Top 4 Metros accounted for 75% of the total server sales although consumption declined by 23%. Sales of servers to the Larger Businesses declined by 1% while they accounted for 54% of the sales. Server sales in small and medium enterprises sharply declined by 29% and 40% respectively. The networking market also reflected poor consumption in the domestic market. The Networking market had been one of the fastest growing segments in the industry, however in 2001-02 the Networking market declined considerably. NIC (Network Interface Cards) sales declined 18%, that of hubs declined 3% while the modem market declined by 34%. In H2/2001-02 only 2.15 lakh modems were sold compared to 2.55 lakh in H1/2001-02 and 3.86 lakh in H2/2000-01. Modem consumptions in Businesses declined by 37% while in households it declined by 51%. The UPS market had been growing at a CAGR of 35% over the past 5 years, however in 2001-02 the sales of UPS declined 6% over the last year. UPS sales witnessed a steep fall of 26% in the Business segment while it grew 33% in the households segment. The number of active Internet entities increased to 1.29 million in March 2002 indicating an increase of 15% over March 2001. The penetration of Internet among businesses grew to 39% from earlier 36% and while a marginal increase led to 11% penetration in the households. The business segment now contributes 48% of the total active Internet subscribers and households account for the remaining 52%. Dial-up remains the most commonly used means of accessing the Internet among businesses, 73% of the business subscribers use dialup. Cable and DSL are yet to catch-up, they account for only 6% and 1% of access means. Access through leased lines dropped from 12% in March 2001 to 8% in March 2002. Releasing the findings of the study, Mr. Vinnie Mehta, Executive Director, MAIT said, "The slowdown in IT market is of immense concern to the industry but increased sales in smaller towns and cities brings a ray of hope. There is an increased need to support this market and grow it further. However, it can only happen if applications, tools and content are made available in local language to create a pull effect. To this effect the MAIT Consortium on Innovation and Language Technology (COILTech) is doing a credible job of establishing computing standards in local language. Our long-term agenda in this space would be to support and incubate virtual R&D; centres for development of language computing tools." Commenting on the findings of the study, Mr. S Devarajan, President, MAIT said, "Though the entire country witnessed an economic slowdown last year, with signs of economic recovery this year, the IT market is also expected to perform better. However, to ensure IT reaches grass root levels in India, we need to seriously contemplate developing products for the Indian market. Fortunately, the growing market in sub-urban India will help us validate and prove such products. While there have been some admirable efforts in the industry in this direction, the Government needs to facilitate and encourage this process by creating simple mechanisms for quick access to low-cost finance for product development and pilot production, with only the technology, materials, and components as security, regardless of whether the product development is in the public or private sector. Also, our government could think of awarding R&D; grants for proactively developing new products. It is innovation that must be encouraged and nurtured. For, without innovation, economic growth is limited by the available physical resources." Download the entire presentation : www.mait.com/demo/maitann2002.zip About the study: ITOPS is a syndicated end-user based study on the IT hardware market conducted by the eTechnology Group of IMRB International. ITOPS has been an annual exercise since 1996-97 and for the last three years the study has been conducted on a bi-annual basis, as well. The study was based on over 14,000 face-to-face interviews with end-users, with data projected to the 'all India urban market'. The MAIT-IMRB International study involves data collection after the 'last mile' that the product travels, i.e. from the premise where the product is finally installed. It is therefore an accurate estimate of 'what' was bought, 'by whom', and for 'what purpose'. Since the MAIT-IMRB International study is based entirely on data collected from 'users', it is able to accurately estimate the large unorganised market as well as direct imports. It does not suffer from shortcomings of estimates based on shipment or supply which in addition to under or over-counting, may also reflect biases in perception of vendors and resellers. With five consecutive years of ITOPS data, the study is now able to closely track emerging segments such as small offices, home users, first time buyers, etc. and identify the role of key drivers for purchase such as the internet. By virtue of tracking the installed base built over the years, and monitoring the extent of upgradations/ replacements taking place in the market, the study has been able to identify emerging business opportunities that promise to expand the market for IT products in India. About MAIT: Set up in 1982 for purposes of scientific, educational and IT industry promotion, MAIT has emerged as an effective, influential and dynamic organisation. Representing hardware, training R&D; and associated services sectors of the Indian IT Industry, MAIT's charter is to develop a global competitive Indian IT Industry, promote the usage of IT in India, strengthen the role of IT in national economic development and promote business through international alliances.