PC sales set to zoom in fourth quarter

A day after the government announced several tax incentives for the computer hardware sector, personal computer (PC) manufactures in the country are expecting that the 8-10 per cent reduction in prices will further bolster sales in the fourth quarter of the current financial year.

The January-March period account for nearly 40 per cent of PC sales, when institutional buyers up spending to utilise their annual budgets.

Most PC manufacturing companies are busy working out new cost structures for their products.

"There are still some uncertainty on issues like countervailing duties on components. It will be a few days before we can finalise the exact price cuts," said Ravi Swaminathan, vice-president (personal systems group), Hewlett Packard India.

"The reduction in excise duty will bring down the price differential between the grey market and the organised sector. We estimate the reduction in PC prices to be in the range of 5 per cent as a result of the yesterday's notification," said Suresh Vaswani, president, Wipro Infotech.

Fully-imported PCs and notebooks are likely to cost nearly 15 per cent less with peak Customs duty rates coming down by 5 percentage points.

The prices of computers made and assembled in the country will come down by 8 to 10 per cent after the Customs duty was brought down from 16 per cent to 8 per cent.

"But it will take sometime to implement the price cuts as most companies will have to flush out the inventory," added Swaminathan of HP India.

According to the Manufacturers' Association of Information Technology (MAIT), the price cuts will help the PC market to close the financial year with a 37 per cent growth, compared to a steady 30 per cent growth over the past three years.

"A price reduction in the range of Rs 2,000-3,000 will help increase PC and Internet penetration in a big way," said Ajai Chowdhry, chairman and CEO of HCL Infosystems.

Another domestic PC major Zenith Computers has announced that the cost of entry level systems will be brought down to around Rs 16,000 from Rs 18,000. Laptop computers will cost around Rs 65,000, down from Rs 72,000.

"We are also planning to bring out variants in the sub-Rs 15,000 category," said Raj Saraf, CMD, Zenith Computers.

Looking up

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• PC companies busy working out new cost structures
• PC prices are likely to fall by 5 per cent
• January-March period account for 40% of PC sales
• PC market to close the financial year with a 37% growth