Indian Laptop Industry Essay Example

to the availability of affordable sub-Rs 10,000 PCs. Considering annual population growth rates, this could result in a twofold increase in PC sales and usage every three years. Currently, there are only 15 million PC users in India.

During 2004-05, the sales of PCs reached 77 million and grew by 32% to exceed 5 million in the subsequent year. The number further increased to reach up to 6.34 million. By 2007-08, both desktop and notebook sales had risen by approximately 16%, resulting in an overall sale of around 7.34 million units.

In the year 2007-08, there was a significant increase in notebook sales by 114%, exceeding over 1.8 million units sold. However, desktop sales only experienced a small growth of slightly more than half a percent with 5.52 million units sold. Despite this difference, desktops still make up less than three-fourths of the overall personal computer market while laptops hold one-quarter share.

Between 2005-06 and 2007-08, the proportion of desktop sales compared to notebook sales declined from 10:1 to 3:1. Popular manufacturers like Lenovo, HP, LG, Acer, HCL, Dell and Toshiba have released new laptop models that come with additional features. According to IDC's forecasts, the Indian laptop market is expected to grow at a rate of 30% annually over the forthcoming five years which will result in an estimated market size of approximately 1.75 million units by the year 2010.

Since 2005, the value of the laptop market has grown significantly to USD 1.87 bn, representing 24% of the total market and nearly triple its worth in 2005 when it was valued at approximately USD 671 mn and comprised around 20% of the desktop market. HP is currently

the top brand in laptops with a commanding share of 41%, while Dell and HCL combined only make up 20.3% of the PC segment.

In terms of PC sales, the business sector made up 74% of the total and saw an 18% year-on-year growth rate. The home PC market also grew by 23%. Large enterprises experienced a 69% increase in sales, while government usage surged by 126%, driven by various e-governance projects. Lenovo contributed to these figures with a share of around 9% each.

The market is mainly composed of 18-30 year olds, representing 50-60% and expected to increase to 70-80% by 2009-10. This growth is driven by emerging user groups such as household professionals accounting for 40% of total demand. Sales are divided between SMEs (43%) and large organizations.

The proportion of laptops owned by major corporations declined from 56% in 2006-07 to 44% in 2007-08. Meanwhile, high-income households maintained their dominance, accounting for a total household share of 55% with a growth in demand for laptops by 21%. The middle level segment experienced a sales growth of 16%, representing 29% of the market. However, households with lower incomes saw a decline in market share with a decrease in sales by 14%.

Intel, the leading supplier of computer chips, has introduced a new processor that can transform a personal computer into a multimedia center for the living room. Along with this, Intel has announced collaborations with several electronics manufacturers such as Microsoft and content providers to provide an enhanced internet experience. Moreover, Intel plans to release affordable laptops called 'Eduwise' particularly designed for Indian students in early 2008. These laptops will feature flash memory rather than hard

drives and support wired or wireless network connectivity.

It is anticipated that Eduwise will cost less than USD 400. Intel has recently invested USD 700 million in India and plans to invest more for research and development and other investments. Additionally, Apple is expected to introduce their first Mac with Intel processors and integrate Media Centre-like features into their iMac series through the use of Front Row software.

In approximately nine months, Big Apple Manufacturing has sold roughly 1300 computers priced at approximately Rs 7000. The 14in color monitor has all necessary hardware features integrated, including a Celeron 300 microprocessor (similar to a low-end Pentium II), 810E motherboard, 1GHz processing speed, 64 MB RAM, 10 GB hard disk drive, a 56 kbps modem with LAN card, sound card, built-in stereo speakers with mike (sensitive up to 20 feet), and three USB ports. The keyboard included also features a touch-pad mouse similar to those found on laptops.

Included in this bundle is a complimentary Intel phone, intended for online communication and compatible with web cameras. Additionally, Big Apple's computer occupies approximately 1.5 square feet and is accompanied by a one-year warranty. It was created with BPOs and internet browsing centers in mind, but has also been useful in the contexts of schools and hotels.

More and more schools are purchasing large quantities of computers. Flextronics Corporation, a manufacturing company based in Singapore, intends to produce computers in the SEZ in Chennai using chips from its joint venture partner, SemIndia. The estimated value of the PC contract manufacturing market in India is $20 billion USD. Patni Computers System and Sahara Computers have both selected Flextronics as their contract manufacturer.

The manufacturing of

PCs and laptops, including the body and mouldings, is a field the company specializes in. Chennai has been selected by Dell as its inaugural manufacturing location in India. The company has pledged to invest USD 60 million with USD 30 million to be contributed over five years. The initial focus will be on producing desktop computers, which comprise 70% of the sales made in India. Dell first entered the Indian market in September 2000 and achieved a sales turnover of Rs 18 billion with an annualized growth rate of 60% in 2005-06. Rs 2 is the amount Dell was planning to invest.

Dell has invested 8 billion in its manufacturing facility close to Chennai and has entered the small business and home segment in India, which already accounts for 15% of its revenues. It is one of the top 5 PC vendors in the country and launched the sleek Dell Adamo in 2009.

Lenevo has introduced the Ideapad Y650, a sleek multimedia notebook complete with the latest features. Apple also entered the notebook market with powerful Intel processors. Hewlett-Packard (HP), Fujitsu, Lenovo, and Sony have all released notebooks in the sub-Rs 70,000 category.

HP India has released a new notebook named HP Pavilion which comes equipped with HP's Imprint Finish technology. Another notable contender in the notebook market is Lenovo, with its N100 model. The N100 boasts impressive processing power thanks to its Intel core duo processor, as well as a 4-in-1 multi-card reader capable of downloading digital pictures from various types of memory cards. Furthermore, it includes multiple USB ports, a 4-pin Fire Wire port and an S-Video port - all side mounted for convenience.

Lenovo's Think Pad line, which includes desktops under the name Think-Center, is now geared towards small and medium enterprises, self-employed professionals and individuals.

The Think Pad is designed primarily for business purposes, while the Lenovo series is geared towards mail and chat communication, as well as entertainment. In order to expand its production capabilities, Lenovo intends to increase its unit capacity from 0.6 to 1 million. Additionally, they plan to establish a second manufacturing unit in northern India.

With a production capacity of up to 370,000 units and a revenue of Rs 6 billion in 2005-06, Lenovo's Puducherry facility has launched an updated version of its Thinkpad line, the Thinkpad 52, to cater to SMBs. Dell has also introduced two new models targeting the same sector.

A report by MAIT, the IT hardware industry representative, reveals that sales have risen by 114% in 2007-08. Additionally, laptops constitute a quarter of all computer sales. Fujitsu's Life Book range incorporates three models: the C1320 (Rs 43,000), S2110 (Rs 63,000), and S6240 (Rs 93,000). The S6240 boasts an Intel Pentium M750 (1.86 GHz) processor, a screen size of 13", and storage capacity of 60 GB on its hard drive.

The Fujitsu Life Book S2110 is equipped with a 3-inch LCD screen and runs on a 64 bit AMD Turion mobile processor, allowing for up to three hours of battery life (with Wi-Fi enabled). HP is investing around Rs 1 billion in a new computer manufacturing facility stationed in Uttrakhand, which will produce monthly batches of 200,000 units consisting of desktops, laptops and servers. Meanwhile, Sys Information Technologies has launched their range of laptops named 'Wizard' in India.

The company not only released an

LCD monitor PC (e-PC), but also introduced the Wizard 8000 series laptops featuring a compact 12in screen that caters to the computing demands of professionals while maintaining portability. Additionally, the company intends to introduce the Wizard 6000 series laptops, which will come equipped with a 15in screen priced at less than Rs 50,000. In 2005-06, Allied Computers International (ACI) launched a laptop that was priced under Rs 30,000 resulting in 10,000 units being sold in just under a year. The company utilizes Via Processor chips in their laptops.

LG has launched the Express range of laptops in India, which are renowned for their sleek design and considered one of the slimmest models available. The lineup comprises a model priced at Rs 20,000 that is significantly more affordable than HCL's cheapest laptop - the current market leader. These notebooks run on Intel's Sonoma mobile platform with a Pentium M processor chipset and Wi-Fi card support. They also come equipped with an ATI Mobility Radeon X6000 graphics card capable of handling up to 128MB of graphics memory and a PCI Express interface that delivers faster graphic performance compared to previous variants. Additionally, both the Express series and LS70 Express series feature a DVD super multi-driver (SMD) compatible with various DVD formats.

The market for notebooks is being boosted by exchange schemes and freebies offered by top brands Compaq and IBM. With the emergence of new software applications, demand for replacement notebooks is expected to rise even more, which will be further advanced by reduced prices and exchange schemes. Access Markets International (AMI) reports that almost 5 million non-PC companies or 22% of small enterprises in India plan to invest

in computers for the first time, leading to increased investments in other IT categories such as software and security. The demand for laptops has been increasing over time and is predicted to continue growing.

Between 1995 and 2019, the computer market was dominated by a few major players. Hewlett Packard (HP) held the largest share at 35-40%, followed by Lenovo at 15-20% and Toshiba at 10-12%. Other notable companies included Dell, Sony, Compaq, and Acer. Growth rates varied significantly during this period. There was an increase of 17.60% from 1996-97 to 2001-02; a significant jump of 80.0% from 2001-02 to 2006-07; then another increase of approximately38.30% from 2006-07 to 2011-12. Growth then slowed down to around30% between the years of 2011-12 and 2019. Within the Market Structure, the Market Segmentation Segment Share (%) is split into two distinct groups: businesses (56%) and householders (44%). The segment is further broken down into small businesses (16%), medium businesses (47%), and large businesses (37%). A variety of well-known brands compete within this industry, including Toshiba, HP, Dell, Tecra, Satellite, IBM Thinkpad, Acer, Compaq, Armada, and LG. Recently there was an important merger between IBM and Lenovo which highlighted an increase in technology commoditization as well as a growth of Chinese companies on a global scale. This acquisition allowed IBM to divest itself from a business that was negatively impacting its profit margins while granting Lenovo access to over $12 billion yearly revenue from the worldwide PC market. In addition to this transaction's benefits for both companies involved it also allows IBM to shift its focus towards services and software while exploring China's potentially lucrative market opportunities.

Lenovo has permanently gained ownership of the "ThinkPad" brand,

making it a strategic addition to their portfolio. The acquisition is a perfect match as Lenovo concentrates on producing consumer PCs while excelling in affordable manufacturing, while IBM caters to enterprises and has a global presence. Notably, Lenovo is the leading player in China's PC market.

Lenovo relies on its 30,000 salespeople and worldwide network of 9,000 business partners to sell their PCs. IBM's stake of 19% in the new Lenovo ensures mutual interests and contributes to their powerful stance against competitors such as Dell. However, Lenovo has no plans to imitate Dell's purely direct-sales approach and build-to-order manufacturing, which is the key to Dell's success. New Lenovo has a different strategy altogether.

The potential for sales is significant, especially in emerging markets as the new product will be available through retailers, corporate resellers, the IBM sales force and Dell's route. The majority of PCs are sold worldwide through retailers and other resellers, a figure that increases in developing countries like China where consumers prefer to physically interact with products and lack access to credit cards. Since the announcement of the deal, Lenovo and IBM have made concerted efforts to ensure its success by fostering cultural exchange.

The main goal of the merger was to ensure business continuity and establish product leadership worldwide. As a result of the merger with IBM, the new Lenovo gained more than 1,000 granted patents, whereas in 1996, Lenovo only had one granted patent. Unlike typical mergers, the new Lenovo acquired an already lean division that will assume much of the management duties for the new parent. Therefore, there will be minimal overlap and layoffs. Additionally, Lenovo plans to use

the acquisition to expand into new markets by increasing their workforce. A merger provides an opportunity to update policies and procedures, which was not realized during the HP/Compaq merger. This can lead to significant improvements beyond what the current market leader offers.

Lenovo is taking a best of breed approach instead of a competitive one, but it may decrease overall effectiveness. The Chinese company faces challenges with perceptions of low quality and government issues, HR practices, and cultural differences that make marketing difficult. The Laptop industry uses dealers and retailers as intermediaries in their complex distribution systems due to the number of parts, suppliers, and manufacturing processes involved. Establishing efficient distribution systems helps build customer relationships and reduce costs.

It is crucial to manage the entire process of order management and fulfillment in order to increase revenue growth and effectively handle demand. The internet can be utilized by companies to offer customers convenient access to products, which helps capture a larger share of sales while also complementing the current distribution network. Assembling laptops occurs at a plant before they are invoiced to dealers and retailers.

When it comes to laptop distribution, availability and accessibility are crucial factors for any manufacturing company seeking to successfully penetrate the rapidly expanding Indian market. The final customer acquires the laptop from various dealers, including those who have both direct and indirect systems like IBM. As indicated in the diagram below, IBM is gradually transitioning towards a direct distribution system.

During the time of Dell's entry into the PC industry, many companies relied on expensive, specialized dealers to sell and support their products. However, this outdated and costly channel soon became obsolete and

most PC suppliers transitioned to large retail chains like CompUSA and Computer City. Rather than follow suit, Dell chose a unique approach by devising a way to sell and stock products that traditionally required assistance from local dealers or distributors without the need for such networks. Through innovation, Dell was able to offer customers a new channel option that transformed the traditional roles of distribution channels.

By allowing customers to customize products to their own needs, taking orders over the telephone and assembling products largely to order, Dell has been able to achieve rapid delivery and provide a high degree of customer service at a previously unattainable cost structure. This distribution change has been a major element of Dell's strategy, which enabled the company to grow into a profitable $7.8 billion business when many larger computer companies were giving up on the PC market.

Dell illustrates how a company can satisfy similar customer demands to its rivals using a unique distribution strategy. With the advancement of facilitating technologies such as telephone communications, call centers, and shipping logistics, more suppliers will surpass conventional sales and distribution methods, resulting in a competitive edge. Nonetheless, imitating a successful approach is not always a sure-fire recipe for triumph.

Dell has outperformed other mail-order computer companies in terms of sales and profits by implementing a successful business model and securing their position before competitors could copy them. Direct channels are one of the main distribution methods for laptop manufacturers, which lowers distribution costs and enables companies to offer more cost-effective products to consumers.

Specialty laptop dealers and value-added resellers in the indirect channel offer customized products at a premium for big businesses. Dell's direct

method has elevated it to the top tier of laptop production, while Acer still relies on distributors. Major players such as Hewlett Packard (HP), IBM, Toshiba, Compaq, Dell Computers, and Sony compete in the industry. Success factors include synchronization between the Indian laptop market and global trends.

In 2005, laptop sales in India exceeded those of desktop computers for the first time. This shift was a result of changes in consumer work habits that require information access at any location and time. As a consequence, laptop sales have been rapidly increasing. Additionally, reduced prices have made laptops more accessible to consumers, with current costs almost half what they were two years ago.

As laptops are not subject to import duties as personal baggage, the prices of both laptops and desktop computers have become comparable. This has made them more accessible and popular due to their portability, flexibility, ease of use, and similar price-performance compared to desktops. Therefore, many consumers now prefer notebook PCs.

Three technology market leaders are Dell, HP, and Sony. Dell holds the largest market share at 27%, while HP follows with 20%. The Hewlett-Packard Company (HP), based in Palo Alto, California and with offices at the old Compaq Campus in Houston, Texas, specializes in producing computing hardware, software, storage and networking systems. With over one billion customers served worldwide across six continents, their product lines include personal computing devices like enterprise servers and printers.

Following the 2002 merger between HP and Compaq, HP gained the right to sell both HP and Compaq-branded machines. HCL Enterprise Limited (previously known as HCL Computers Limited) is a significant electronic, computing, and IT company located near Delhi in India.

The company includes two publicly listed Indian companies - HCL Technologies and HCL Infosystems. Dell is a globally recognized laptop brand that is frequently selected.

Dell laptops excel in efficiency, performance, elegance, customer service and more, making them the ideal choice for thousands of prospective buyers around the world. The brand has expanded its reach by making its laptops available in India, a country with a high number of IT conscious individuals and laptop buyers. While Dell's distribution strategy in India differs from other countries due to lower online purchase rates, the brand has partnered with a channel partner to distribute products traditionally. This is great news for those wanting to purchase from Dell's vast range of laptops as the brand is likely to compete with already established competitors in India.

In India, Dell and Acer are both well-established companies. Dell primarily offers its series through online channels or local resellers, while Acer is a multinational electronics manufacturer based in Taiwan that provides a broad range of products to various users such as businesses, governments, education centers, and home users. In India specifically, the company operates under the name Acer India (Pvt) Limited which was established in 1999 as a wholly owned subsidiary of Acer Computer International Ltd. The company is recognized for supplying education equipment along with desktops and low profile notebooks.

Lenovo Group Limited, headquartered in Bangalore, India, specializes in desktops and notebook PCs, workstations, servers, storage drives, IT management software, and related services. Their environmental analysis utilizing Porter's 5force model reveals that new entrants to the market encounter obstacles such as aggressive pricing and decreased profit margins. This is due to the fact that established

corporations possess greater R&D investment capabilities.

It is easy for companies to improve their products, creating a barrier for new competitors, thanks to the standardization of laptops. The competition is driven by both pricing and product differentiation, with DELL focusing more on pricing and APPLE emphasizing product differentiation.

It is essential to invest a significant amount of capital in both areas. This combination leads to minimal risk for new companies entering the industry. The influence of suppliers can be divided into two groups: those who supply hardware and software for the laptop sector.

Although there are various suppliers of hardware components, including Samsung, Western Digital, and Seagate, the dominant market position of Intel and AMD with regards to microprocessors grants them significant influence over PC companies. Furthermore, major entities such as Intel, MSI and ASUSTek offer motherboards but possess limited bargaining power as their brand is not directly associated with the final product.

While manufacturers have the ability to switch suppliers if prices are not competitive, hardware suppliers do not possess significant bargaining power. Conversely, Microsoft holds a dominant position in the software market through its operating system.

Despite being an operating system, Linux has not gained significant market share for Google's new OS. This lack of success has resulted in software suppliers having greater bargaining power. However, the laptop market has experienced growth in comparison to desktops due to consumer preferences for mobility and wireless connectivity at cheaper prices. As a result, there is persistent demand for lower costs which leads to intense pricing competition and the emergence of new categories like netbooks. Overall, this shift in consumer behavior showcases their influence.

Due to the presence of numerous large companies

in the market, the cost of switching for buyers is low, resulting in a high bargaining power for them. This has influenced Dell's decision to sell through retail stores in developing markets, in response to the changing behavior of customers. Additionally, the high threat of new entry is due to aggressive pricing and reducing profit margins, resulting in a high barrier to entry for new companies.

Greater investment in R&D and top management talent by larger companies increases the possibility of more innovative products, creating a higher barrier to entry for smaller companies. However, ASUSTek's introduction of netbooks in 2007 is an example of identifying consumer demand that top industry players overlooked, leading to newfound competition. The laptop industry faces a significant threat from new trends like cloud computing that could potentially reduce the need for high computing power in portable laptops. Additionally, advancements in computing power and communication technologies, like 3G and WiMax, have made devices such as smartphones (iPhone, Blackberry, etc.) substitutes for laptops.

At present, smartphones like iPhones are providing similar capabilities as laptops, which makes them a substitute for the latter. This moderate threat of substitute can affect the industry. In 2005, the Indian Government removed import duty on 217 items related to personal computing components including laptops, as observed in the political aspect of PEST analysis.

In India, computer hardware technologies are now widely and inexpensively (at world prices) accessible to consumers. This resulted in the first ever sales of more laptops than desktop computers in the country, according to IDC India. Sales of notebook computers saw a remarkable 61% year-on-year growth in 2009-2010, with 8.5 lakh shipments made. However, despite this progress,

bureaucratic obstacles related to land acquisition and insufficient local industry drive have hindered the production of computer components.

The situation in India regarding the sourcing of electronic components is risky due to the country's dependence on unpredictable relationships with foreign countries such as China, Taiwan, and the USA. With environmental concerns surrounding electronic waste disposal and changing customer expectations, it is likely that stricter quality control regulations will be imposed in the future. To reduce costs, local players may have the opportunity to engage in contract manufacturing of laptop components in special economic zones. For instance, the HRD Ministry's One Laptop per Child initiative's target price of $35 may force international component manufacturers to enter into agreements with Indian subcontractors and suppliers. Moreover, the growth of portable computing in import-led India is influenced by various factors related to the global economy.

Developing countries, including the BRICKS nations (Russia, China, India, Brazil, South Africa, Kazakhstan) and Latin America, have economies that are growing at a faster rate than developed countries like the US and Japan. This presents better growth opportunities for computer manufacturers since these developed nations have already reached saturation. The call center industry is well-established in India where material and hardware costs are the cheapest in the world yet of world-class quality. Furthermore, English-speaking graduates and technical experts are readily available in India for significantly lower wages. These factors have ensured that Indian offshore development centers hold a sustained 60% market share worldwide in the global call services market.

Social factors like education, cultural preferences, income levels, and other related factors have a pivotal role in demand pattern influencing the company's functionality in various regions.

Education and income levels are crucial in shaping the brand perception of computer manufacturers. On the other hand, low-income regions have witnessed the emergence of rugged and ultraportable devices like OLPC (One Laptop Per Child) tailored specifically for underprivileged users in developing countries like Africa. Therefore, both education levels and income play an essential role in determining product demand as well as preferences. The proliferation of computer access has been noteworthy since liberalization in 2000.

The HRD ministry introduced the Sakshat tablet computing device in July 2010, using the Android OS as part of the United Nations initiative. The success of E-choupal is a testament to the potential for growth in demand for laptops in rural Indian markets. ITC's venture, E-choupal, facilitates direct communication with rural farmers via the internet to procure agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. The advent of low-cost netbooks has made e-choupal an appealing distribution channel.