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IT Industry Performance Annual Review: 2007-08

Press Conference
New Delhi: July 08, 2008

About ITOPS…
An Introduction

Industry
Validation of
the Market
Figures

Only DemandSide Study on
the Indian IT
Hardware
market

ITOPS
Largest
Tracker Study
on the Indian
IT Hardware
market

Longest
Running Tracker
Study on the
Indian IT
Hardware
market

Only Demand-Side
Hardware Market…

Study

on

Indian

IT

Designed to deliver the much needed demand-side
insights
Data is collected
after ‘Last Mile’

S
P
O
IT

• No undercounting/over
counting stock in
pipeline
• Includes direct imports
by customers
• Accurate estimation of
assembled market

Market/ Customer
Sentiments
• Factors in the market/
customer sentiments and
opinion
along
with
industry level indicators

Accurate assessment
of Buyer Profile
• “Who bought”, “Where
used”…Not dependent on
‘perceptions’ of reseller/
channel member/ vendor

Identification of
Emerging Segments
• Need to monitor changes
in user’s perspective to
obtain cues for innovative
marketing

Identify and observe
Market Trends

000+ entities per round  The study is conducted on a bi-annual basis covering the following time periods  H1 of FY: April to September  H2 of FY: October to March  … across the Top 22 cities Greater than 1 Million Pop Towns except Bhubaneshwar & Guwahati  .000+ Estabs 14.000+ Households 24.Largest Study on Hardware Market… Indian IT Coverage in 22 Cities 10.000+ Entities  The Study covers a sample of around 24.

Longest Study on Hardware Market… Indian IT Existence of over 11 Years 2005-06 ITOPS completes its 10th year. thus being the longest running IT tracking study 2003-04 Coverage scaled up to 22 cities from 16 cities 2002-03 1998-99 Launch of supplementary channel survey for in between quarters ITOPS becomes a Bi-annual study 1996-97 Launch of ITOPS as an annual Study .

Industry Validation… Two Pronged Validation Process Validation Findings on Market-size Various MAIT projected to IT Players All .  Information used by Govt. the nodal body for IT hardware industry in India. of India for all IT & allied planning. .India Urban market Validation  The findings from ITOPS is accepted as the official market performance of Indian IT hardware market by Manufacturers Association for Information Technology (MAIT).

a new framework called Ace Grid was developed by the ITOPS team This Grid stratified the establishments by Principal activity performed at the establishment classified by number of employee. Principal Activity defined: Manufacturing/ Office Outlets Government factory/ Warehouse No. of employees defined: < 10 employees (Small establishments) 11-50 (Medium establishments) 50 + (Large establishments) The Ace Grid has found application across researches involving business segment across geographies 7 .Sampling & Projection…  Sampling & Projection  Household   Using SEC A-C household population as obtained in the National Readership Survey – the largest household survey in the country Establishment    No framework for sampling and projection were available Thus.

Some Insights that ITOPS has provided … .

9 . WiFi adoption in the country is expected to take time! – ITOPS 2002 Pro Though many WiFi zones have come up in major cities of the country.Insights on IT market from ITOPS Our Insights What happened? IT market moving towards the smaller cities – ITOPS 2001 Pro Today. PC usage not restricted to upper and upper middle class households only. It is increasingly percolating to middle and lower middle class – ITOPS 2002 Pro Increased targeting of the segments through price reduction. it is still not very popular among the Internet users. Vendor targeting a wider canvass benefiting the most. Students a key target segment in the households – ITOPS 2002 Pro IT players launched PCs targeted at the students community. Universities a key focus for most Notebook vendors. the smaller cities constitute close to 50% of the households. Education the key reason for purchasing PC in a household – students the main focus – ITOPS 2002 Several PC vendors launched PCs targeted specifically at students and running special promotions for students. interest free loan schemes helping in targeting the segment.

Notebooks.Monitors. keyboard. Modems 10 . Print server  UPS .Desktop PC.Active internet subscribers. Servers  Printers .DMP. scanner. of nodes)  Networking products .NIC. Hubs  Internet .Incidence. zip drive. size of networking (no. IJP.ITOPS: Comprehensive coverage  Product coverage:  Computers . CD writer.UPS  Networking . LJP  Peripherals .

.And the findings are…..

Units Total PC (Desktops & Notebooks) sales: 2002-2008 • CAGR 2002-08: 26% • Growth over 2006-07: 16% 12 .

in East it grew by 10% while in North it declined by 13% Figures in the brackets represent the growth in 2007-08 over 2006-07 13 .306 Units (-13%) (39%) (39%) (10%) 2006-07 • 2007-08 PC consumption in both West and South grew by 39% each.Total PC (Desktops & Notebooks) market: Regional spread 6.341.344.451 Units 7.

CAGR: 104% • Households accounted for 44% of the market growing 150%.Units Notebook sales: 2002-2008 • Annual sales grew by 114%. Businesses accounted for 56% of the market growing 93% 14 .

Notebook sales: City-spread • Notebooks are fast penetrating beyond the top 4 metros. growth rate 152% 15 .

by employee size • Overall consumption in the business grew by 93% • Consumption in large and medium enterprises grew by 51% and 123% respectively. in small enterprises it grew 174% 16 .% Units Notebook Consumption in Businesses .

Units Desktop sales: 2002-2008 • CAGR 2002-08: 19% • Growth over the 2006-07: 1% 17 .

522.167 Units (-14%) 2006-07 • (10%) (4%) (7%) 2007-08 Desktop consumption in West grew by 10%.Desktop market: Regional spread 5.490. in South it grew by 4% while in North it declined by 14% Figures in bracket represent the growth in 2007-08 over 2006-07 18 .591 Units 5. in East it grew by 7% each.

Desktop Market: Share of Indian. MNC & Informal 2006-07 2007-08 • Consumption of Indian brands decreased 4% in absolute terms • Sales of MNC Brands grew by 16% however that of Informal sector PCs declined by 12% in absolute terms 19 .

Desktop sales: City-spread • Consumption in Top 4 metros declined by 28% while sales outside the Top 4 metros grew by 14% 20 .

in Businesses it declined 18% 21 .Desktop sales: 2002-08 74% 60% Units 75% 77% 72% 40% 81% 19% 23% 28% 25% 26% • Desktop market growth over 2006-07: 1% • Consumption in households grew by 55%.

% Units Annual Desktop sales: Business by employee size • Overall sales to the Business segment declined by 18% • Sales to small and medium enterprises grew by 25% and 8% respectively. however in large establishments it declined 33% 22 .

% buyers Profile of Desktop buyers: Principal activity of the establishment • Consumption in Government grew by 7% and in factory locations by 47% • Consumption declined in office locations by 21% and in retail outlets by 29% 23 .

% buyers Profile of PC buyers in Households by Socio-economic class • Overall Households consumption grew by 55% • Consumption in SEC A grew by 50%. in SEC B by 68% and in SEC C by 43%. 24 .

CAGR (for 6 years): 17% 25 .Units Server sales: 2002-2008 • Annual sales increased: 35%.

however in large establishments it declined 37% 26 .% Units Server sales: Business by employee size • Overall sales increased by 35% • Sales to small and medium enterprises grew by 127% and 121% respectively.

Server sales: City-spread • Consumption in Top 4 metros declined by 17% while sales outside the Top 4 metros grew by 64% 27 .

Active Internet entities: March’99 – March’08 ’000 Units Translate s to 52 million internet users (Entities are establishments/individual with internet connection. an entity may house/ be multiple user/s) • Overall entities with internet grew by 20% over March 2007 • Businesses accounted for 29% of the entities growing 6% while Households accounted for 71% of the market growing 27% 28 .

Internet penetration: March 2008 • Internet Penetration by Town class and Socio-Economic Classification (SEC) among Top 22 Cities Business Segment Internet penetration by Town class Overall Top 4 Metros Next 4 Metros Other 8 Metros Remaining 6 Metros Internet penetration among households by SEC 46% 50% 42% 46% 28% Home 21% 25% 17% 16% 11% SEC A SEC B SEC C- 43% 16% 6% 29 .

Mode of Internet access in Businesses: March 2008 DSL inching ahead. Data Card DSL Data Card fast growing in popularity 30 .

The Market of 2007-08 Vs 2006-07 31 .

The expected Market for 2008-09 32 .

Thank you! 33 .