CMYK

Trends 2000

Market Trends India

L Whether it’s PC
et me begin with a poser—what the PCs marketplace, it’s fairly obvious
does Indian IT mean to you? that PCs are fueling growth in the
Chances are that you’ve already hardware market. shipments, Inter net
Internet
started thinking about our successes in the PC shipments crossed the million
software exports arena. Amid all the mark in the last fiscal and are likely to
usage, or the ser ver
server
applause for Indian software exporters, shoot beyond two million in the next. That market, the IT industr
industryy
achievements in the domestic market tend makes India the fastest growing PC
to get sidelined. Agreed that software and market in the Asia Pacific region. If the
seems poised for
ser vices exports from the countr y have Indian market continues to grow at this impressive growth ahead
been growing at an enviable pace, but the pace, which it certainly will, we’re slated
domestic IT market can also boast of to become the second largest PC market
impressive facts and figures. Consider this. in the region by 2003.
India is one of the fastest growing IT Perhaps the single largest contributor
markets in the world, the fastest growing to this impressive growth is the
PC market in the Asia-Pacific region, and burgeoning home segment. Today, more
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 im-
provement 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 industr y 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
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

PC QUEST DECEMBER 2000 49

CMYK
 CMYK
Trends 2000
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 me-
ans 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.
The last two years have seen an explosive growth in
Internet usage in India. We already have more than
a million subscribers. And this growth shows no
signs of slowing down
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. Ano-
ther important finding is that while the
chief wage earner of a household is the
primar y 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
Ser vers—both Standard Intel Archi-
tecture Servers (SIAS) and RISC/Unix—is
another categor y that’s showing impre-
ssive 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 industr y, will be the future
CMYK
drivers of the ser ver market. In other
words, ser vers 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 require-
ments, especially in the SME segment, the
entry-level RISC/CISC Server (non-SIAS)
space will see the most activity in the
ser ver market. All vendors are investing
heavily in channel build-up, training, and
motivation to reach out to the SME seg-
ment and dot-coms. These factors, cou-
pled 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 segme-
nt will also contribute to growth in this
class.
Internet Usage
The last two years have seen explosive
growth in Internet usage in India. We
already have more than a million subscri-
bers. 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 promi-
nence of the Internet, there’s been a lot
PC QUEST DECEMBER 2000 50
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 informa-
tion 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.
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 enab-
ling devices. It’s the content and ser vice
that consumers will value. This implies
that vendors must ensure availability of
ser vices and content in order to promote
the adoption of new information applia-
nces. 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