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Poor broadband reach a drag on sales in first half

Poor broadband reach a drag on sales in first half
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First Published: Tue, Feb 05 2008. 11 48 PM IST

Updated: Tue, Feb 05 2008. 11 48 PM IST
Sales of personal computers, including notebook computers, touched 3.28 million units between April and September 2007, the first half of India’s current fiscal year, a rise of 11% over the year-ago period, but fell short of expectations of vendors.
An industry representative blamed low broadband penetration in the country and buying cycles of enterprises for the slow expansion.
Notebooks’ sales showed strong growth—at 59%—to 683,761 units in the first half of fiscal 2007 and accounted for 21% of the total personal computer sales. However, shipments of desktop versions expanded just 3%, to 2.6 million.
Slow growth: Customers at the bustling electronics market in Delhi’s Nehru Place where branded and assembled computers, software, hardware and multimedia kits are sold. (Photo: Madhu Kapparath/ Mint)
Total personal computer sales are projected to cross 7.25 million units in fiscal 2008, up 14% from 6.3 million, based on the findings of the industry’s performance review for the first half of 2007-08, conducted by the Manufacturers Association for Information Technology or Mait.
The trade body expects growth in the next fiscal year, ending March 2009, to be the 15-20%. Annual expansion rates in the past have been 26% in fiscal 2007 over the previous fiscal; 32% in 2005-06; and 20% in fiscal 2005.
Purchases were led by buyers in the telecom, banking and financial services, education, and information technology-enabled service industries, besides e-governance initiatives of the Union and state governments.
“The growth for the period was slow and not as expected primarily because of poor broadband connectivity in India. Also, buying by enterprises was slow. However, households, for the first time, contributed to 38% of the total desktop market, registering an impressive growth of 72% over the same period last year,” said Vinnie Mehta, executive director of Mait.
Broadband penetration in the country at end-March 2007 stood at around 2.34 million, up nearly three-fourths since a year before, according to the Telecom Regulatory Authority of India (Trai). But since then, the growth in additions of broadband connections have slowed. Trai recently estimated the number of broadband connections by the end of December last year had grown to 3.13 million—an increase of a third from March 2007, compared to the 52% jump in the comparable period of 2006.
Experts said historical purchase patterns suggest enterprises usually make fewer purchase decisions in the first half of a year. “The last date for spending most IT (information technology) budgets is 31 March and these can usually not be carried forward. So enterprise buying is generally good in the (last) three months of the fiscal year. Also, traditionally, depreciation (expense) is higher in the month of September and therefore there are lower purchases,” said Rajesh S. Kurup, associate vice-president and research services head, business and industrial research division, at IMRB International.
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First Published: Tue, Feb 05 2008. 11 48 PM IST
More Topics: Broadband | Computers | Connectivity | Notebook | Trai |