Press release from Business Wire India
Source: MAIT
Tuesday, July 14, 2009 04:28 PM IST (10:58 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
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CORRECTING and REPLACING PC Sales Record 7% Negative Growth First Time Ever: MAIT
New Delhi, Delhi, India, Tuesday, July 14, 2009 -- (Business Wire India) -- -- Overwhelming impact of economic slowdown in second-half of the fiscal
-- Internet users cross 60 million
-- 7% growth expected in 2009-10 as business sentiment improves
MAIT, the apex body representing India's IT hardware, training and R&D services sectors, today announced the findings of its Industry Performance Review for fiscal 2008-09. The total PC sales between April 2008 and March 2009, with desktop computers, notebooks and netbooks taken together, were 6.79 million (67.9 lakh) units, registering a decline of seven per cent over the previous year. IT consumption in 2008-09 was severely impacted, especially in the second-half of the fiscal year, by the slowdown in the Indian economy. Impact on consumption of notebooks was most pronounced as growth plummeted to a negative seventeen percent compared to a high of one-hundred-and-fourteen percent in the previous year. Sales of desktops declined four percent. The October-November-December quarter was the most adversely impacted, subsequent to which growth in PC consumption started to show signs of revival. With business sentiment gradually gaining momentum, PC consumption in fiscal 2009-10 is expected to cross 7.3 million units, registering a seven percent growth.
Commenting on the findings of the study, MAIT Executive Director, Vinnie Mehta said: "Consumer sentiment was subdued due to uncertainty in the economy in 2008-09 which impacted the consumption of IT in the country. While consumption in the first-half of the fiscal was satisfactory, less than expected offtake in sales in the second-half pulled down the overall growth into the negative quadrant. A silver lining in the second-half of 2008-09 was the emergence of a new product category, the net book that took the fancy of the consumers. This new form-factor appeared to be better insulated from the prevailing market sentiments."
He further added, "Although the sales growth in both the enterprises and the households headed southwards, the overall consumption in the PC market was led by telecom, banking and financial service sectors, education and the e-governance initiatives of the Union and the state governments. Verticals such as BPO/IT-enabled services, manufacturing, retail and households, which traditionally account for significant proportion of the IT market, were very conservative in their IT spends in 2008-09. Sales of desktop clocked 5.27 million (52.7 lakh units) declining four percent, and that of Notebooks, with netbooks taken together, another 1.51 million (15.1 lakh) units with a degrowth of seventeen percent. Consumption of netbooks exceeded 70 thousand units in fiscal 2008-09. The year also witnessed deviations from the traditional downward trend in pricing for IT products as the dollar continued to be significantly strong compared to the rupee. This was mitigated, to an extent, by price drops due to technology reasons and also due to intense competition. Going forward, with signs of revival in the domestic economy, we expect positive growth for PCs and other IT products for the fiscal 2009-10."
Western India followed by the South, led PC consumption accounting for thirty-seven per cent and twenty-three per cent of the market respectively. Sales in the West grew by twelve per cent over 2007-08, while in South it declined twenty-two percent. PC consumption in the East increased by eighteen per cent accounting for twenty-two per cent of the market, a reflection of IT activities gaining ground in the region. The Northern states witnessed a decline of thirty-four per cent in PC sales, they accounted for eighteen per cent of the market.
Unlike the trends in the previous years, where sales in the second half of the year have been significantly higher than those in the first-half, 2008-09 witnessed a rather subdued second-half as delineated below.
The bi-annual MAIT Industry Performance Review - ITOPs, conducted by India's leading market research firm IMRB International is a survey of the domestic IT market, its potential and trends. This round of the study involved face-to-face interviews with over twenty-five thousand respondents selected randomly across twenty-two cities in India. The MAIT-IMRB study was initiated in 1996-97 and encompasses five broad product segments - computers, networking products, printers, other peripherals and Internet connections. Apart from the half-yearly review, a supply-side estimation module has also been introduced to monitor industry performance every quarter, alternating with the half-yearly review.
Delineating his thoughts on the current policy environment and the need for spurring IT consumption in the country, especially in these challenging times, MAIT President, S S Raman said: "We are glad that the outcome of the Union Budget 2009-10 has been satisfactory. Stability in the rate of excise duty at 8 percent for all IT products and components augurs well for the IT industry. Further, the government has, to an extent, resolved the impasse regarding the classification of packaged software, which shall henceforth attract service tax on the licence portion. Issues that remain unresolved are the continuance of the 4% Special Addition Duty (SAD) which is a significant cost for the local manufacturers as also the low rate of abatement for MRP based excise duty assessment for IT products such as notebooks, printers, modems, etc. We have requested the authorities to resolve these at the earliest."
He further added, "It should be made mandatory for nationalised and PSU banks to earmark funds for easy and subsidised loans for purchase of IT products and solutions for the SMEs and the home consumers, especially for education. Similarly, Governments - Central and State should extend interest free loans to all their employees for purchase of IT products. Further, as several e-governance projects are being rolled out, these need to be replicated across all the states in the country and completed at an accelerated pace. Providing for local-language interface will be critical for the success of such projects, especially those aimed at Government-citizen interface."
Stressing the need for redoubling efforts by the Government and the industry to accelerate growth of the domestic IT market in the country, MAIT Vice President, Ravi Swaminathan said: "MAIT has set for itself an ambitious target, 'Goal 511', 500 million internet user, 100 million broadband connection and 100 million connected devices by 2012. This calls for strengthening of the national IT infrastructure along with the physical infrastructure on a priority basis. In this regard we need early roll-out of 3G and Wi-Max networks. These will not only enable consumption of front-end devices, CPEs and other back-end devices, but will also create a new economic paradigm through various applications, services and other avenues created through the network-multiplier effect. Urgent and significant efforts are also needed to build efficiency and reduce wastage in all industry verticals through deployment of green and energy efficient IT products."
Some of the salient findings of the MAIT Industry Performance Review 2008-09:
The Desktops Market:
- Organised vs. unorganised segments: Multinational brands accounted for fifty-one per cent of the total desktop market in 2008-09, registering a growth of eight per cent over the forty-five per cent share last year. The proportion of Indian brands fell from twenty-two percent to eighteen percent, registering a decline of twenty two per cent. Assembled desktops and unbranded systems witnessed a degrowth of ten per cent in absolute units accounting for thirty-one per cent, down from thirty-three, of total desktop sales in 2008-09.
- The establishments segment accounted for sixty six per cent of the desktop sales, registering a growth of five per cent on a year-on-year basis although consumption of notebooks in the establishments declined twenty-seven percent. Owing to conservative attitude, establishments do not seem to have shifted preference in favour of notebooks. The consumption in small, medium and large enterprises grew by three percent, seventeen percent and two per cent respectively.
- Household consumption of desktops fell by eighteen per cent, accounting for thirty four per cent of the total desktop market, with sales crossing 1.78 million (17.8 lakh) units. Within the Households segment, SEC A and SEC B each accounted for thirty-nine percent of the market although consumption in these declined by twenty-six percent and nineteen percent respectively. Sales to SEC C at twenty-two percent market share remained flat.
- Market segmentation by processor sales: Desktop consumption in 2008-09 was dominated by P4 based units, which accounted for fifty-nine per cent of total sales, however, the market was quick to adopt other next generation processors such as Core-duo, Core2duo and Core2quad accounting for two per cent, twenty-two per cent and two per cent of the market respectively. Other processors like the AMD, Cyrix etc. accounted for ten per cent of the market.
- Market segmentation by town-class: Consumption of desktops in towns and cities outside the top four metros has been progressively increasing over the years. In 2008-09, these accounted for more than three-fourth of the total desktops purchased. The top four metros accounted for twenty-five per cent of the total desktop market with a sales growth of five percent.
The Notebooks Market:
- Notebook sales recorded a degrowth of seventeen percent due to decline in consumption in both the establishment and the households with sales declining twenty-seven percent in the establishments and another three percent in the households. The decline in consumption in the second-half of 2008-09 was more pronounced as sales of notebooks fell thirty-five percent compared to the same period last year. Towns and cities outside the top four metros contributed to nearly eighty percent of the notebook sales.
- The establishment segment accounted for forty-nine percent of the notebook consumption, the small and large establishments recorded a decline of fifty-three and forty-seven percent respectively in 2008-09 while consumption in medium enterprises grew twenty-seven percent. The SMEs accounted for sixty-eight per cent of the total notebooks consumption in the country.
- The household segment, accounting for fifty-one per cent of the overall notebook sales in the country, registered a decline of three percent in the last fiscal. The SEC A and SEC B households, together, contributed to over ninety per cent of the notebook sales in the household segment. Notebooks have also started to make rapid inroads into the SEC C as well.
The Server Market:
- Sales of servers declined two percent in FY 2008-09. Bangalore, Pune and Hyderabad, the key centres of IT/ITES witnessed a decline of 78% in consumption of servers. However, driven by the need for consolidation, server consumption in large enterprises grew by thirty-five percent. Sales to small and medium enterprises declined one percent and twenty-nine percent respectively.
The Internet entities:
- The number of active Internet entities increased to 8.6 million (86 lakh) subscriptions by March 2009, while the figure was 7.2 million (72 lakh) units in March 2008. With this, the number of internet users exceeds sixty million. Internet penetration by entities in the top twenty-two cities was forty-seven per cent among businesses and twenty-four per cent among households. The businesses segment now accounts for twenty-eight per cent of the total active Internet entities and households account for the remaining seventy-two per cent.
- DSL/cable remains the most commonly used means of Internet connectivity among businesses: forty-five per cent of businesses were found to use DSL/cable, thirty-one per cent dial-up connections, seven per cent leased-line, four per cent used data cards, one per cent used VSAT while eleven per cent ISDN services.
Definitions:
- SEC- Socio Economic Class
- CAGR - Compound Annual Growth Rate
- Top four cities/Metros/Class A cities - Delhi, Mumbai, Chennai, Kolkata
- Next four cities - Bangalore, Hyderabad, Ahmedabad, Pune
- Internet entities - Entities are establishments/individuals with Internet connection; an entity could house multiple users.
To download the entire presentation, visit: www.mait.com/downloads/maitann2009.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 since 1996-97. The study is based on over 25,000 face-to-face interviews with end-users spread over 22 cities, with data projected to the 'all India urban market'.
The MAIT-IMRB 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 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 several 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 upgradation/ 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 IT hardware, training, R&D, and associated services in India, MAIT's charter is to develop a globally 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.
To view the table along with the press release, please click on the link given below:
Press Release IT Industry Annual Review 2008-09
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http://www.BusinessWireIndia.com/attachments/Press Release IT Industry Annual Review 2008-09.doc
Press Release IT Industry Annual Review 2008-09.doc
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KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, IT, STOCK EXCHANGES, TECHNOLOGY
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