Special Focus
The mobile computer boom
 In Q3 FY2010-11, for the first time ever in the country, sales of notebooks crossed a million pieces sold in a single quarter
By Ramdas S
Analysts and industry pundits forecast that the notebook market, which has been growing faster than the desktop market for the past three years, is expected to overtake the desktop market by Q4 FY2011-12. A fall in prices, large deals from governments and institutions, and demand from consumers and sectors such as education are expected to help the notebook numbers.
According to both IDC and Gartner, Q3 FY2010-11 saw notebook volumes rise, and for the first time a million-plus notebooks were sold in India in a single quarter. The research agencies put the notebook numbers at around 1.11 million. As per Gartner, desktops grew by 5 percent in Q3 FY2010-11 whereas notebooks grew by 41 percent as compared to the same quarter last year.
“The last quarter has been historic in many ways,” states Gopal Swaminathan, Director, Sales and Marketing, Intel India. “I remember in 2006 we were striving hard to do a million mobile processors in India for the entire year. The market has grown nearly four times for notebooks. The demand is driven by all sectors and a very buoyant consumer market, which is preferring mobile computers.”
Enterprises in India, both small and big, are in the midst of a technology refresh cycle. “Notebook numbers are helped by the fact that many SMB and enterprise entities are replacing their desktops with notebooks,” says Rajeev Mehta, MD, Zest Systems, Delhi.
Entry-level notebook prices have dropped below the Rs. 25,000 mark; this has helped break the ice with new customers. Acer, which has driven new price-points in notebooks for nearly a decade, created a new price bracket of Rs. 20,000 with its e-machines brand. Explains S Rajendran, CMO, Acer India, “For every thousand-rupee bracket in the sub-Rs. 25,000 market, you are creating a new set of aspirants who want to buy a computer, or who are willing to buy a notebook instead of a desktop.”
The drop in notebook prices has been helped by the drop in the prices of the building blocks that make a notebook. According to Display Research, which tracks key components such as LCD screens, the average price difference between mobile and desktop TFT screens was down to 2 percent in Q2 FY2010-11 from around 16 percent in 2008. Even in hard disk drives and memory, the price difference is less than 20 percent now—three years ago it used to be nearly double. “It’s simple. With notebook volumes growing, the prices of the components are also bound to come down,” points out Rajesh Khurana, Country Manager, India and Saarc, Seagate.
All this has resulted in a noticeable change in a number of large government tenders; these were traditionally for desktops, or notebooks plus desktops, but now they are mostly for notebooks. For example, the Kerala IT Schools tender, which was originally drafted for 20,000 notebooks and 50,000 desktops, was changed to an all-notebook order. The first tender for 15,000 netbooks and 12,000 notebooks was opened in early November. The next round is for 50,000 notebooks, and is expected to be completed around early February 2011.
Similarly, 17 states have earmarked purchases that will end up in the sale of almost 6,00,000 notebooks to the government and education sectors over the next nine months.
Credit needs to be given to the PC vendors who tried to grow the market by introducing niche products and models targeting specific user communities. In addition, vendors have been positioning notebooks as a fashion accessory, and investing in promotional campaigns with fashion brands and events. HP was a sponsor of Miss India 2010, and Dell launched a series of notebooks with shades matching the colors of nail-polish maker OPI.
“The launch of multi-color models complemented by aggressive promotions and discounted bundling schemes augmented consumer PC spend, especially in the portables segment,” comments Sumanta Mukherjee, Lead PC Analyst, IDC India. “Vendors have been quick to introduce new models that appeal to a young generation of PC buyers who are purchasing notebooks.”
Despite the home desktop market getting a new lease of life with the introduction of all-in-one PCs a year back, the volumes are said to be far from inspiring. Vendors have noted that notebooks are being purchased in place of the traditional multimedia home desktop. “Many first-time buyers are comfortable buying notebooks, especially young urban couples who are sharing a notebook at home,” says Amar Babu, Managing Director, Lenovo India.
Vishal Tripathi, Principal Research Analyst, Gartner India, predicts that in the second half of 2011 the Indian PC market will witness more notebooks being shipped than desktops. “In 2010, the ratio between notebooks and desktops for the first two quarters was 34:66; by Q3 FY2010-11 it had become 40:60. In India many first-time buyers are buying a notebook as their first PC. With value products and competitive prices, vendors are able to meet the expectations of price-sensitive buyers, and this is accelerating the growth of notebooks.”
Technology to get ahead
Intel’s new processor lineup, Calpella, has so far met with a mixed response from channels. While the vast majority have provided rave reviews of Windows 7 on the new platform, some are quick to point out that the performance of Windows XP on the platform is poorer compared to its performance on the previous-generation Core 2 Duo processor.
Swaminathan of Intel admits he has heard about the complaint. “We do not believe this has anything to do with the processors, but with select models of some of our OEM partners which lack the right drivers to suit the performance capabilities of Calpella. I believe this is being sorted out. Anyway, Microsoft has discontinued support for Windows XP.”
Meanwhile, AMD has managed to pursuade most of its major OEMs to launch around 15 models on their new Danube platform, which the chip maker says is slowly gaining traction especially from the performance-savvy user.
In addition, more notebooks are being shipped with a dedicated graphics card, which means that consumers are increasingly taking interest in entertainment, gaming and multimedia. Says N Sivakumar, Country Manager, Toshiba India, “According to GfK Mode, a research firm which studies consumer buying patterns, one out of three notebooks sold through Indian retail channels had a discrete graphics chipset. We have also made such notebooks fairly affordable over past few quarters.”
Gaming notebooks is yet another small market that’s waking up. Dell recently launched its Alienware range of notebook products with price tags ranging from Rs. 70,000 to Rs. 1,32,500, and the company is eyeing channels to sell the range. “There are keen gamers who are looking at notebooks so that they can play on the move and away from their homes. The market is small, but the enthusiasts are growing,” says Sanjay Yadav, Country Head, Retail, Dell India.
But 3D screen and touch-sensitive screen-based notebooks have not found many takers though these products have been made available by vendors such as HP and Acer. “3D screen and touch-sensitive screen-based notebooks are not yet mainstream,” agrees Rajendran of Acer India. “Nevertheless, these products do have a market, although small, and they provide us with the opportunity to keep influential PC enthusiasts hooked to the brand.”
Meanwhile, the mobile workstation market is slowly picking up with strong pitches by Dell with its Precision range and HP with its Elitebook models. These products have started sporting Intel’s Core i7 processors.
Despite the tremendous growth in notebooks, vendors feel the promise of netbooks is largely unfulfilled. “The initial expectation of netbooks garnering a significant portion of the notebook market is largely not met. While there’s an interest in netbooks, growth rates are not as impressive as those of mainstream notebooks,” says Alex Li, Vice President, Transaction Business, Lenovo India.
There are hopes that the netbook market may revive after Intel launches its next-generation Atoms and AMD throws its hat into the ring with its Bobcat launch in early Q1 FY2011-12. “The next generation of Atom processors offer much better performance without compromising on battery usage, and will continue to find new customers,” says Swaminathan.
For the past three quarters Dell has been the market leader for notebooks in the country, followed by HP and Acer. Still, channels report that it’s the smaller vendors who are growing the fastest. “We are seeing Toshiba and Sony gaining steady market share. Even vendors such as Fujitsu, MSI and Asus are now visible in the market,” remarks Sampath Kumar MP of Positive Systems, Kochi. |