Laptop makers see great year ahead

THE BIG PICTURE/ Households, SMBs take to it as wireless becomes 'compulsory'

Several factors will converge in the year ahead to make it a lucrative one for laptop makers, say industry sources.

The numbers show that while enterprise buyers continue to dominate the laptop market, the buying power of homes and the truly small businesses is increasing. Improvements in technology will also boost the popularity of laptops.

On top of the laptop sales doubling for two years in a row, the industry is forecasting a growth of over 50 per cent this year in India.

International Data Corp, a United States "" based market research firm, reports that 1,95,000 laptops were sold in 2004, more than twice the 84,000 sold in 2003. It forecasts that laptop sales this calendar year will touch 3,15,000, up 61.5 per cent over last year, and 4,19,000 in 2006, up 33 per cent on this year.

Sales this year will be driven by a combination of wireless technologies becoming mainstream, custom duty cuts and aggressive hiring by enterprises which are extensive users of laptops, says Arun Bhaghat, a general manager with Acer India.

Figures from the Indian Market Research Bureau (IMRB) for the six months to September 2004 show that the business segment accounted for 82 per cent of laptops bought during the period and households 18 per cent. Within the business segment, enterprises accounted for 64 per cent and small businesses, 17 per cent.

A year ago, enterprise customers accounted for some 80 per cent of sales of branded laptops. Now, small businesses and professionals are increasingly taking to them.

"I am not talking about IDC's definition of small enterprises, but small businesses in the Indian context," says Bhagat, "which can be small sole propietorships for instance."

Among enterprise buyers, "even the staff are being given laptops to take their work home. That is why laptop sales have really grown," he said.

"After the cut in 2004 we are hoping that custom duty, on products like laptops and the components that go into them, will be further brought down to zero," which could bring down the cost of laptop further.

This will boost sales to the other segment that has emerged in the year gone by "" home users, especially those who were thinking of high-end branded desktops.

Wireless enablers, never happier, point out that laptop-toting executives are cramming the hotels in cities like Bangalore.

"This is good for our business," says N V Krishna, whose Chennai-based company Microsense sets up wireless hotspots. Wireless enabling entire hotels has been the mainstay of our revenues till now," Krishna says.

Then there is the businessman travelling in a car hooking his laptop to the net using a mobile phone and a hi-fidelity data cable. A Reliance Infocomm spokesperson said that the company had some 5,000 such customers.

Such users will only increase, as innovations in laptop design itself have made them more amenable to wireless use, says Rajesh, a product manager with Acer.

"Our 'signal up' technology which comprises better design and placement of the wireless antenna in the laptop has been found to be 25 per cent more efficient", by an independent study of several makes of laptops by RMIT, a university in Melbourne, Australia.

Laptops with in-built wireless capability, such as those using Intel's Centrino platform, are now the international norm, says Bhagat. Soon, wireless capabilities will become mandatory on most of the products the company sells, except the very basic entry level ones, he says.

Intel claims the Centrino platform, built around its Pentium IV M processors, extended the laptop's battery life by up to 80 per cent and overall efficiency by up to 15 per cent, compared with a regular Pentium IV. Intel is also pitching this to the rich household as a solution to convert boring laptops into exciting home theatres and gaming consoles.

The laptop era in India really started in the last quarter of 2003 with price cuts announced by MNCs, large Indian companies and even regional players. Entry-level laptops became available in the Rs 50,000 range, local taxes extra. Some, running on less powerful processors and loaded with Linux instead of Windows, cost even less.

IMRB, which does a quarterly survey for the Manufacturing Association for Information Technology, the industry lobby, said laptop sales grew 119 per cent in the six months to September 2004 on the same period in 2003, and also found their way into the homes. About 14,103 were sold to the household segment, IMRB said.

Consumption in the small businesses grew 90 per cent accounting for 17 per cent of the total laptop sales to the business segment; sales to medium-sized businesses grew 3 per cent to account for 19 per cent. But the biggest buyer remained emphatically the enterprise segment.

Compared to the first-half of fiscal 2003, sales to large enterprises grew 277 per cent and the proportion grew from 39 per cent to 64 per cent of the total sales in the first half of fiscal 2004. Globally, laptops accounted for about 25 per cent of all computer sales in 2003. Some forecasts say this will double by 2007 or 2008.