Indian units of Hewlett-Packard Inc., Dell Inc., and Lenovo Group Ltd as also local heavyweight HCL Infosystems Ltd are aggressively expanding their distribution reach, investing heavily in branding and marketing programmes, and setting up specialist teams to address varying needs of multiple consumer segments in a bid to retain or increase their share in the highly competitive market for personal computers.
The Indian market for tech products—computers, servers and networking gear—is the world’s fastest growing and this explains the renewedinterest among the computer vendors.
Research firm Gartner Inc. estimates that about 8.8 million personal computers (both desktops and laptops) will be sold in India this year, a growth of 16% over last year. While about 7.3 million desktop units will be sold—a growth of less than one tenth over last year—notebook shipments will be 1.5 million units, a growth of 71%.
“All the top five computer brands are reporting double- digit growth and are looking at aggressive branding and marketing initiatives that will be their key differentiators,” says Diptarup Chakraborti, principal analyst at Gartner’s Mumbai offices.
Leading the market is Hewlett-Packard India Sales Pvt. Ltd, which, according to Gartner estimates, sold nearly 369,000 desktop computers and over 283,000 notebooks in the first six months of 2007. “HP will have to set the pace for the others and grow faster than the market to expand the base. They should increase their reach in terms of cities and channel partners and continue to increase the portfolio of their products,” says Chakraborti.
HP India leads desktop and notebook sales with a market share of 21.2%, followed by HCL Infosystems at 13.5%, and Lenovo India Pvt. Ltd at 9.5% in fiscal 2007.
HP India’s president of personal systems group Ravi Swaminathan says the company is doing precisely that to “cater to customers across all segments and at all price points”.
The opportunity in India, he adds, is to increase PC penetration to one for every 10 people from the current 1:50. The company uses a twin-brand approach to the PC market, using entry-level Compaq models, advertised by Bollywood star Shah Rukh Khan, and the premium HP-branded machines. It has also strengthened its focus on supplies and logistics in India.
It now has two factories in Bangalore and Uttarakhand, which have a capacity of 75,000 desktops a month and up to half a million a month (both desktops and laptops), respectively.
The company, which currently has a reach in 1,000 Indian cities and towns, will continue its focus on smaller towns.
“Today, we are probably in around 80-85% of the market and will continue to keep growing that,” Swaminathan says.
Rival brands, such as Lenovo and HCL, have varying strategies to increase their market share. HCL Infosystems, which is seen as a strong player in the desktop space, for instance, seems to have understood the importance of diversifying its product range. The company ventured into notebooks in early 2006 and is already among the top three notebook vendors in India by sales, says International Data Corp.’s local unit.
HCL Infosystems’ biggest strength, say experts, is its channel and distribution network: it has over 44,000 dealers and retailers spread across 4,500 towns and villages. “Over the years, we have taken advantage of India’s largest service and support network to retain our market leadership in multiple PC categories,” says J.V. Ramamurthy, director, operations at HCL Infosystems.
The company is looking to increase the number of both its retail outlets as well as resellers, with a focus on deeper penetration into rural India.
For Chinese rival Lenovo, operations in the last year have focused on making Indian customers aware of the brand. The company says it has spent “an arm and a leg” on having its logo used on popular TV programmes such as Kaun Banega Crorepati and having film actors Saif Ali Khan and sister Soha as its brand ambassadors.
Lenovo is now gearing up to beef up operations locally with a second manufacturing plant at Baddi in Himachal Pradesh. The managing director of South Asia, Neeraj Sharma, says this will help service customers in North India better.
Lenovo inherited International Business Machines Corp.’s computer assembly plant at Puducherry when it bought the Armonk, New York-based firm’s computer business in 2004.
Dell India, too, has set up a local unit on the outskirts of Chennai with the idea of shifting manufacturing closer to the customer replacing shipments from Penang, Malaysia. In addition to large companies, technology and back-office services — sectors in which Dell has a dominant 30% share — Rajan Anandan, vice-president and general manager at Dell India, says the firm has set its sights on the fast-growing government, education and consumer segments with computer models tailor-made for such customers.