Indian PC Market Down More Than 20 Percent

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PC shipments in India were down 22.7 percent in the fourth quarter of last year in comparison to the same quarter in the previous year, according to IDC.

The market is likely to remain depressed through this year, IDC India said on Thursday. Despite measures to stimulate the economy, shipments this year could be lower than last year, it added.

About 1.56 million PCs were shipped in the quarter, IDC said.

A number of PC companies have invested in sales and marketing and manufacturing in India, citing the country as one of the fastest growing markets.

The slowdown in the Indian PC market forecast by IDC is not likely to make them change their plans. A Dell spokeswoman, for example, said Thursday that the company remains committed to investing in India. The company has increased its market share in the fourth quarter, taking second place for the first time.

Demand from business customers has been the worst hit in India, with shipments to this segment shrinking sharply, said Kapil Dev Singh, country manager of IDC India.

Consumer demand, which had not been affected so far, is also beginning to slow down. The growth rates in sales to this segment has dropped to about 20 percent from earlier growth of around 80 to 90 percent, Singh said.

Shipments of desktop PCs saw the largest drop of 24.7 percent in the fourth quarter, while shipments of notebook PCs were down 17.4 percent.

Sales of lower-priced netbooks are growing strongly in consumer markets, because they meet the browsing and online social networking requirements of key market segments like students, Singh said.

Hewlett-Packard retained the top spot in the market during the quarter with a share of 15.6 percent of unit shipments. Dell dislodged local maker HCL Infosystems from the second spot with a 10.9 percent share. HCL was third with a 9.6 percent share of total PC shipments.

Dell is no longer perceived as a premium brand selling mainly to software companies and the Indian operations of multinational companies, Singh said. Dell's focus on a variety of new segments including small and medium-sized businesses and consumers has paid off, Singh said

For the entire calendar year 2008, PC shipments were flat at 7.98 million as against 8.06 million in 2007, IDC said.

India's mobile market in contrast is still booming. The country has been adding about 10 million new subscribers on an average every month, according to the Telecom Regulatory Authority of India (TRAI).

The number of new subscribers peaked at a record 15.41 million in January because of the aggressive rollout of GSM (Global System for Mobile Communications) services by Reliance Communications, a large mobile services provider that was earlier offering only services based on CDMA (code division multiple access).

New subscribers added in February were down to 13.82 million, but that did not indicate slowing growth, but a slackening in the rollout by Reliance, sources in TRAI said.

The slowdown in consumer buying in PCs has not showed up in mobile phones, because they are two different categories of products, Singh said.

Communications is seen as a necessity by Indians, unlike PCs which are seen as a discretionary expense, Singh said. Because of the aggressive pricing by both handset vendors and service providers, the budgetary outlay for a mobile phone connection, including the cost of handset, is far lower than that for a PC, he added.

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