Financial Daily from THE HINDU group of publications
Monday, Aug 08, 2005
Marketing - Trends
Info-Tech - Marketing
Entry-level PC prices now at one-third of 2002 rates Duty cuts, tech advancement, competition cited as reasons
Moumita Bakshi Chatterjee
New Delhi , Aug. 7
A BRANDED PC at the price of a lower-end colour TV may have sounded unbelievable sometime ago.
But a mix of duty cuts, rapid advancement in technology and intense competition in the market has ensured that you can now go for that long-deferred PC purchase for under Rs 10,000 - a third of what you would have paid four years ago.
"The entry level PC price stood at Rs 29,000-30,000 in 2001-02, Rs 25,000-27,000 in 2002-03, Rs 20,000-23,000 in 2003-04 and Rs 13,000-16,000 in 2004-05. While the drop in overall levies from about 40 per cent in 2001-02 to about 11 per cent now clearly impacted the prices, competition amongst players too played a major role in crashing of PC prices. India and China are the largest markets and extremely price sensitive and players have realised that volume game matters here," Mr Vinnie Mehta, Executive Director of MAIT, said.
For instance, HCL Infosystems announced its `PC for India' at Rs 9,990 recently.
The PC, that runs on a Linux operating system, has 1 GHZ processor, 128 MB RAM, 40 GB hard disk, 15 inch colour monitor, 52X optical drive, keyboard and scroll mouse.
The HCL Infosystems Chairman, Mr Ajai Chowdhry, attributes the PC price cuts in the market to the downward movement of component prices.
"The utility of PC technology in areas such as LCD TV, notebooks and MP3 has increased the volumes, and decreased the prices of components such as disk drives, microprocessor and flash memory," he said.
He recalls that duty reductions announced in January 2004 had allowed HCL to go to the "next level in PC pricing". "We introduced Rs 14,990 PC, breaking the Rs 15,000 barrier. Within one year, our home market share shot up to 15 per cent from 3.7 per cent," he said.
Mr S. Rajendran, GM (Sales & Marketing), Consumer Products Group, Acer India, said that mindset regarding entry-level PCs seems to be changing.
"Earlier top of the pyramid had Pentium solutions, but now Celeron and AMD are gaining acceptability amongst Indian consumers. Home, small and medium businesses buyers, even shops are going for PCs that meet their requirements, with the reseller acting as a consultant," Mr Rajendran said.
Acer's entry-level price point starts with Acer Power S210 on AMD platform, bearing a price tag of Rs 16,999.
Acer product on Pentium 4 (Acer Power Series S111) starts at Rs 19,999.
In the last 12-18 months, Acer prices have dropped by 20-25 per cent, he added.
The bad news, however, is that players do not foresee a further price reduction in entry-level PCs.
"We have hit the bottom end of the pricing. To launch the sub-Rs 10,000 PC, we gave major commitments to suppliers on volumes," Mr Chowdhry said.
Agrees Mr Raj Saraf, Chairman and Managing Director, Zenith Computers Ltd.
"While the prices may not reduce, players will offer more value to consumers at the same price point," he said.
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