IT consumption in 2008-09 was severely impacted, especially in the second-half of the fiscal year, by the slowdown in the Indian economy. Impact on consumption of notebooks was most pronounced as growth plummeted to a negative seventeen percent compared to a high of one-hundred-and-fourteen percent in the previous year. Sales of desktops declined four percent.
The October-November-December quarter was the most adversely impacted, subsequent to which growth in PC consumption started to show signs of revival. With business sentiment gradually gaining momentum, PC consumption in fiscal 2009-10 is expected to cross 7.3 million units, registering a seven percent growth.
Western India followed by the South, led PC consumption accounting for thirty-seven per cent and twenty-three per cent of the market respectively. Sales in the West grew by twelve per cent over 2007-08, while in South it declined twenty-two percent. PC consumption in the East increased by eighteen per cent accounting for twenty-two per cent of the market, a reflection of IT activities gaining ground in the region. The Northern states witnessed a decline of thirty-four per cent in PC sales, they accounted for eighteen per cent of the market.
Unlike the trends in the previous years, where sales in the second half of the year have been significantly higher than those in the first-half, 2008-09 witnessed a rather subdued second-half as delineated below.
Percentage of Total Consumption
Some of the salient findings of the MAIT Industry Performance Review 2008-09:
The Desktops Market:
Organised vs. unorganised segments: Multinational brands accounted for fifty-one per cent of the total desktop market in 2008-09, registering a growth of eight per cent over the forty-five per cent share last year. The proportion of Indian brands fell from twenty-two percent to eighteen percent, registering a decline of twenty two per cent. Assembled desktops and unbranded systems witnessed a degrowth of ten per cent in absolute units accounting for thirty-one per cent, down from thirty-three, of total desktop sales in 2008-09.
The establishments segment accounted for sixty per cent of the desktop sales, registering a growth of five per cent on a year-on-year basis. Owing to conservative attitude, establishments donot seem to have shifted preference in favour of notebooks. The consumption in small, medium and large enterprises grew by three percent, seventeen percent and two per cent respectively.
Household consumption of desktops fell by eighteen per cent, accounting for forty per cent of the total desktop market, with sales crossing 1.78 million (17.8 lakh) units. Within the Households segment, SEC A and SEC B each accounted for thirty-nine percent of the market although consumption in each declined by twenty-six percent and nineteen percent respectively. Sales to SEC C at twenty-two percent market share remained flat.
Market segmentation by processor sales: Desktop consumption in 2008-09 was dominated by P4 based units, which accounted for fifty-nine per cent of total sales, however, the market was quick to adopt other next generation processors such as Core-duo, Core2duo and Core2quad accounting for two per cent, twenty-two per cent and two per cent of the market respectively. Other processors like the AMD, Cyrix etc. accounted for ten per cent of the market.
Market segmentation by town-class: Consumption of desktops in towns and cities outside the top four metros has been progressively increasing over the years. In 2008-09, these accounted for more than three-fourth of the total desktops purchased. The top four metros accounted for twenty-five per cent of the total desktop market with a sales growth of five percent.
The Notebooks Market:
Notebook sales recorded a degrowth of seventeen percent due to decline in consumption in both the establishment and the households with sales declining twenty-seven percent in the establishments and another three percent in the households. The decline in consumption in the second-half of 2008-09 was more pronounced as sales of notebooks fell thirty-five percent compared to the same period last year. Towns and cities outside the top four metros contributed to nearly eighty percent of the notebook sales.
The establishment segment accounted for forty-nine percent of the notebook consumption, the small and large establishments recorded a decline of forty-seven and fifty-three percent respectively in 2008-09 while consumption in medium enterprises grew twenty-seven percent. The SMEs accounted for sixty-eight per cent of the total notebooks consumption in the country.
The household segment, accounting for fifty-one per cent of the overall notebook sales in the country, registered a decline of three percent in the last fiscal. The SEC A and SEC B households, together, contributed to over ninety per cent of the notebook sales in the household segment. Notebooks have also started to make rapid inroads into the SEC C as well.
The Server Market:
Sales of servers declined two percent in FY 2008-09. Bangalore, Pune and Hyderabad, the key centres of IT/ITES witnessed a decline of 78% in consumption of servers. However, driven by the need for consolidation, server consumption in large enterprises grew by thirty-five percent. Sales to small and medium enterprises declined one percent and twenty-nine percent respectively.
The Internet entities:
The number of active Internet entities increased to 8.6 million (86 lakh) subscriptions by March 2009, while the figure was 7.2 million (72 lakh) units in March 2008. With this, the number of internet users exceeds sixty million. Internet penetration by entities in the top twenty-two cities was forty-seven per cent among businesses and twenty-seven per cent among households. The businesses segment now accounts for twenty-eight per cent of the total active Internet entities and households account for the remaining seventy-two per cent.
DSL/cable remains the most commonly used means of Internet connectivity among businesses: forty-five per cent of businesses were found to use DSL/cable, thirty-one per cent dial-up connections, seven per cent leased-line, four per cent used data cards, one per cent used VSAT while eleven per cent ISDN services.