Advertisment

Market Trends India

author-image
PCQ Bureau
New Update

Let me begin with a poser–what does Indian IT mean to you?

Advertisment

Chances are that you’ve already started thinking about our

successes in the software exports arena. Amid all the applause for Indian

software exporters, achievements in the domestic market tend to get sidelined.

Agreed that software and services exports from the country have been growing at

an enviable pace, but the domestic IT market can also boast of impressive facts

and figures. Consider this. India is one of the fastest growing IT markets in

the world, the fastest growing PC market in the Asia-Pacific region, and also

the country with the fastest growth in Internet usage in this region.

It was in the last fiscal (1999-00) that domestic IT spending

bounced back after three years of slowdown. And what a revival it was. A 12

percentage-point improvement in annual growth rate is no mean achievement, after

all. IDC believes that there is tremendous momentum in the domestic IT market

today, which will help the industry tide over the minor slowdown being predicted

for the economy in the current fiscal. Over the next five years, the domestic IT

industry is predicted to grow at a CAGR (Compound Annual Growth Rate) of 28

percent, which is among the highest in the world.

Personal Computers

Advertisment

What drives the Indian IT market? As is the case with most

nations in the early stages of the IT maturity curve, the Indian market is

primarily hardware driven. The hardware sector currently accounts for around 56

percent of total IT spending and is growing faster than other sectors of this

industry. Looking at the frenzy in the PCs marketplace, it’s fairly obvious

that PCs are fueling growth in the hardware market.

PC shipments crossed the million mark in the last fiscal and

are likely to shoot beyond two million in the next. That makes India the fastest

growing PC market in the Asia Pacific region. If the Indian market continues to

grow at this pace, which it certainly will, we’re slated to become the second

largest PC market in the region by 2003.

Perhaps the single largest contributor to this impressive

growth is the burgeoning home segment. Today, more than a third of all PCs

shipped in a year make their way to the home segment; and the way things are

moving, this share will only improve in future. This obviously means that no

vendor can afford to neglect this segment. The winners of the future will be the

ones who have in place a focused consumer strategy to address the home segment.

Advertisment

IDC’s "Millennium Home" study reveals that the

most important reasons for purchasing a home PC revolve around enhancing the

family’s computer skills. In an era where people have realized the importance

of being IT literate, this finding springs no major surprises. Another important

finding is that while the chief wage earner of a household is the primary

decision-maker insofar as PC purchase is concerned, family and friends play an

important role in influencing the decision. The survey also reveals that the

average home PC user is around 28 years old–however, IDC believes that as

computer education in schools becomes more widespread and more children start

using PCs at home, the average home PC user of the future might be younger.

Servers

Advertisment

Servers–both Standard Intel Architecture Servers (SIAS) and

RISC/Unix–is another category that’s showing impressive growth. New areas–such

as ISPs, Web hosting, and CRM–besides the more established applications such

as ERP contribute to this explosive growth. Data centers and Application Service

Providers (ASPs), the latest buzzwords doing the rounds in the industry, will be

the future drivers of the server market. In other words, servers will transform

themselves as engines to hosted applications.

One expected development is the blurring of the defining line

between SIAS and RISC Unix servers. While SIAS will continue to cater to the

bulk of requirements, especially in the SME segment, the entry-level RISC/CISC

Server (non-SIAS) space will see the most activity in the server market. All

vendors are investing heavily in channel build-up, training, and motivation to

reach out to the SME segment and dot-coms. These factors, coupled with further

drop in prices of the low-end models of this class, will see this class

increasingly fighting in the same space as the SIAS. Increasing acceptance of

Unix for Web-related activity in the SME segment will also contribute to growth

in this class.

Internet Usage

Advertisment

The last two years have seen explosive growth in Internet

usage in India. We already have more than a million subscribers. And this growth

shows no signs of slowing down, thus making India the fastest growing Internet

market in the Asia-Pacific region. The Internet boom has had a positive impact

on the IT industry. While Internet access is slowly emerging as an important

purchase decision criterion for the home segment, investments by Internet

Service Providers (ISPs) and other Internet companies to set up their

infrastructure will remain an important accelerator for domestic IT spending.

In the wake of the growing prominence of the Internet, there’s

been a lot of debate on the future of PCs, with people spelling out doom for

them. The rise of thin clients and information appliances (or alternate Internet

access devices) have led to this debate. IDC believes that while all this makes

good copy, the truth is further away. The PC is not dead and buried, it still

has a lot of life. The PC will maintain its dominance in the commercial segment,

and will continue to have a place in homes. There’s been an increase in

activity in the Information Appliances arena, but IAs will not eat into PCs.

Rather, they would complement PCs in a digital home.

There are a number of interrelated issues that will limit the

adoption of information appliances in India. For one, we have to consider

whether users are ready to choose specialized products over a general-purpose

product. Most information appliances will perform only one function, whereas a

PC is a powerful multifunctional device that can do a host of other stuff apart

from Internet access.

Advertisment

Price and availability are other important issues. Till these

products become available in the market, users will remain confused about their

real benefits and the price associated with them. Another crucial factor that

might limit the adoption of information appliances is the development and

proliferation of supporting technologies such as broadband and wireless.

One must also keep in mind that information appliances are

merely enabling devices. It’s the content and service that consumers will

value. This implies that vendors must ensure availability of services and

content in order to promote the adoption of new information appliances. That, we

believe, will take some more time, thus ensuring a prominent place for the PC as

an access device in the Indian marketplace.

Aditya Pant



heads research operations at IDC India

Advertisment