The Hindu Business Line : Growth in notebook segment slumps

Bangalore, March 4 Notebook vendors, impacted by a steep slump in sales over the past two quarters, are pinning hopes on government buying to prop up sales in the first half of 2009.

Negative consumer sentiment coupled with low corporate spending caused a significant decline in notebook sales during the period, contrary to the high growth in the last few years driven by increased IT adoption in enterprise, government, education and consumer segments.

“Growth rates have further contracted in the fourth quarter,” said Mr Anurag Arora, Country Manager (Business Notebooks), Personal Systems Group, HP India, without mentioning the extent of decline.

The prevailing economic condition is the primary reason for contraction in growth rates in the commercial segment, and job losses and wage cuts have affected buying sentiment in the consumer market. “Sectors such as IT and ITeS have stalled buying as their earnings have fallen and the small and medium businesses are struggling as is the textile industry,” said Mr Arora.

The only sector that is investing money is the government and that is one of the core segments for HP now, he added. HP also sees good traction for the mini-series of notebooks. “The demand is depressed, but government purchases and better election spends could perk up sales in the first half,” said Mr Diptarup Chakraborti, Principal Analyst at Gartner Inc.

Sales drop

Gartner said growth in notebook segment fell consistently over the past two quarters from 75.3 per cent in second quarter of 2008 to 52.7 per cent in Q3, and slipped to a low of -0.3 per cent in the December quarter. Gartner estimates a further decline in growth to -2.8 per cent in the January-March quarter before a pick-up in the April-June period at 1.8 per cent.

“There’s definitely a slump in demand because of the recession. However, sectors such as government, education and telecom are still buying. There’s also demand in pockets from banking and insurance,” said Mr S. Rajendran, Chief Marketing Officer, Acer India.

However, with the announcement of poll dates, an element of uncertainty persists on government buying as some purchases could be deferred due to code-of-conduct issues, Mr Rajendran added. Gartner’s Mr Chakraborti felt that government purchases would not be affected due to the elections.

Mr Raj Saraf, Chairman and Managing Director, Zenith Computers, said the market is flat and the corporate sector is not buying. He expects the situation to continue throughout 2009.

Different tune

However, PC maker Dell Inc said 2008 has been a good year for notebooks and the company has grown across all verticals in India including corporates, SMBs and consumers. “We have taken a share from our competitors,” said Mr Sameer Garde, Country General Manager, Dell India.

Local manufacturing, a range of products specific to sectors, good proposition, availability and strong media campaigns have resulted in growth, Mr Garde said.