The 1.6-million free laptop programme of the Uttar Pradesh (UP) government has the Indian and global personal computer (PC) makers vying with each other to bag the lucrative contract. And, this is just for the first phase of the free laptop programme, the demand for which is expected to cross about 10 million units when it is finally executed.
According to some estimates, the UP government may have to shell out at least Rs 2,650 crore on its programme for Class XII pass-outs in the first phase.
This is the single largest order for personal computers in India. Last year, the Tamil Nadu government had awarded a contract to six vendors to supply of 914,000 laptops under the first phase of its free laptop programme to students.
According to sources, Indian PC maker HCL Infosystems and global majors Acer, Lenovo and HP have qualified to the technical evaluation phase of the contract, which is expected to be finalised on December 1.
“In terms of government contract, one has to be very excited because you don’t see this kind of volume elsewhere. It is only in projects like these, that you can reap the benefits of volumes of scale,” said an executive with one of the PC manufacturers.
Sources, however, said the government contracts for supply of PCs were not quite profitable, especially for bulk supplies. This is the reason why Dell has publicly stated that it would be very selective in participating in government contracts.“Though it gives the players big volumes, it usually has lower margins. Decision to participate in a government project can be very vendor-specific. It depends on their overall strategy—whether they want to gain market share at the cost of margins or play in the high-margin segment only,” said Vishal Tripathi, principal research analyst at Gartner India.
The ambitious project comes at a time when slowing consumer demand is casting a shadow over the Indian PC market. According to the Manufacturers’ Association for Information Technology (Mait), only 10.8 million units of notebooks and desktop computers were sold in 2011-12 in India, 8.5 per cent less than Mait’s projection.
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“The government tenders become problematic when you don’t have the infrastructure required to execute large projects. In that case, it may add up to the costs. But as far as Acer is concerned, we already have the infrastructure and the processes to take care of immediate and faster dispatch, and also to take care of the after sales support thereafter,” said Harish Kohli, managing director of Acer India.
UP has also floated a separate tender to procure 2.6 million units of tablet PCs, which will be distributed to class-X students, in the first phase.