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Computer sales sluggish, says MAIT study

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(From left) Mr Vinnie Mehta, Executive Director, MAIT; Mr Rajendra Kumar, President; and Mr Bhupendra Kumar, Vice-President, at a press conference in the Capital on Tuesday. - - Kamal Narang

New Delhi , July 5

EVEN as India positions itself as a hardware destination for global giants, the news back home is not too encouraging.

Falling short of the annual target of 4 million units, the computer sales in the country clocked 3.63 million units in 2004-05, compared to 3.03 million units sold in the previous year.

"The desktop market notched 3.63 million units in 2004-05 registering a growth of 20 per cent over the last fiscal. The lower-than-expected performance in FY05 is owing to the lull in sales witnessed in the January-March quarter following confusion just before the Union Budget and the implementation of Value-Added Tax (VAT) regime.

"Non-clarity over WTO's Information Technology Agreement also depressed sentiments, the Executive Director of MAIT, Mr Vinnie Mehta, said at a conference here.

According to MAIT, PC sales are expected to cross 4.25 million units in 2005-06, reflecting a growth of 17 per cent. "Our growth estimate is conservative based on statistical indicators. However, the industry remains upbeat that the growth in 2005-06 would be in the region of 25-30 per cent," he said predicting that in the next 4-5 years the sector would see a 25 per cent CAGR on the back of broadband and local content proliferation.

The growth rate in the PC market is witnessing a declining trend. From a high of 37 per cent in 2002-03, the growth rate slipped to 32 per cent in 2003-04, 20 per cent in 2004-05 and an estimated 17 per cent in 2005-06.

According to the findings of MAIT's Industry performance review for 2004-05, the PC sales in top four cities grew by 8 per cent accounting for 38 per cent of the total market. Interestingly, the sales of PCs in smaller towns grew 34 per cent, accounting for 51 per cent of total market.

"The growth in personal computer sales can be credited to significant use by industry verticals as well as major e-governance initiatives by Centre and States. Also, the drop in prices of the PC at the entry level saw the emergence of a strong household market. Entry-level prices of PC have dropped to Rs 13,000-15,000 from Rs 20, 000-Rs 25,000 last year," Mr Mehta said.

The proportion of the assembled PCs - the smaller lesser known regional brands and unbranded systems - reduced from 53 per cent of the total PC sales in 2003-04 to 41 per cent in 2004-05, registering a decline in growth by 7 per cent.

Aggressive pricing from the branded players cannibalised the market for the assembled PCs. Proportion of the Indian brands grew from 21 per cent in 2003-04 to 24 per cent, registering a growth of 37 per cent, while that of MNC brands increased from 26 per cent to 35 per cent for the same period.

The number of active Internet entities (establishments/individual with internet connection) increased to 2.92 million in March 2005, while the figure was 2.50 million in March 2004. The business segment witnessed a growth of 7 per cent, accounting for 44 per cent of the total active Internet entities while households with the annual growth of 26 per cent accounted for the remaining 56 per cent.

The study also showed that the overall printer sales grew 12 per cent in the fiscal year 2004-05. Notebooks witnessed highest growth amongst all product categories, with sales doubling to 0.17 million units in 2004-05.

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