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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

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Trends 2000

than a third of all PCs shipped in a year drivers of the ser ver market. In other of debate on the future of PCs, with
make their way to the home segment; and words, ser vers will transform themselves people spelling out doom for them. The
the way things are moving, this share will as engines to hosted applications. rise of thin clients and information
only improve in future. This obviously me- One expected development is the appliances (or alternate Internet access
ans that no vendor can afford to neglect blurring of the defining line between SIAS devices) have led to this debate. IDC
this segment. The winners of the future and RISC Unix servers. While SIAS will believes that while all this makes good
will be the ones who have in place a continue to cater to the bulk of require- copy, the truth is further away. The PC is
focused consumer strategy to address the ments, especially in the SME segment, the not dead and buried, it still has a lot of
home segment. entry-level RISC/CISC Server (non-SIAS) life. The PC will maintain its dominance
in the commercial segment, and will
The last two years have seen an explosive growth in continue to have a place in homes.
There’s been an increase in activity in the
Internet usage in India. We already have more than Information Appliances arena, but IAs will
a million subscribers. And this growth shows no not eat into PCs. Rather, they would
complement PCs in a digital home.
signs of slowing down
There are a number of interrelated
IDC’s “Millennium Home” study space will see the most activity in the issues that will limit the adoption of
reveals that the most important reasons ser ver market. All vendors are investing information appliances in India. For one,
for purchasing a home PC revolve around heavily in channel build-up, training, and we have to consider whether users are
enhancing the family ’s computer skills. motivation to reach out to the SME seg- ready to choose specialized products over
In an era where people have realized the ment and dot-coms. These factors, cou- a general-purpose product. Most informa-
importance of being IT literate, this pled with further drop in prices of the low- tion appliances will perform only one
finding springs no major surprises. Ano- end models of this class, will see this class function, whereas a PC is a powerful
ther important finding is that while the increasingly fighting in the same space as multifunctional device that can do a host
chief wage earner of a household is the the SIAS. Increasing acceptance of Unix of other stuff apart from Internet access.
primar y decision-maker insofar as PC for Web-related activity in the SME segme- Price and availability are other important
purchase is concerned, family and friends nt will also contribute to growth in this issues. Till these products become available
play an important role in influencing the class. in the market, users will remain confused
decision. The survey also reveals that the about their real benefits and the price
average home PC user is around 28 years Internet Usage associated with them. Another crucial
old—however, IDC believes that as The last two years have seen explosive factor that might limit the adoption of
computer education in schools becomes growth in Internet usage in India. We information appliances is the development
more widespread and more children start already have more than a million subscri- and proliferation of supporting technologies
using PCs at home, the average home PC bers. And this growth shows no signs of such as broadband and wireless.
user of the future might be younger. slowing down, thus making India the One must also keep in mind that
fastest growing Internet market in the Asia- information appliances are merely enab-
Servers Pacific region. The Internet boom has had ling devices. It’s the content and ser vice
Ser vers—both Standard Intel Archi- a positive impact on the IT industry. While that consumers will value. This implies
tecture Servers (SIAS) and RISC/Unix—is Internet access is slowly emerging as an that vendors must ensure availability of
another categor y that’s showing impre- important purchase decision criterion for ser vices and content in order to promote
ssive growth. New areas—such as ISPs, the home segment, investments by the adoption of new information applia-
Web hosting, and CRM—besides the more Internet Service Providers (ISPs) and other nces. That, we believe, will take some
established applications such as ERP Internet companies to set up their more time, thus ensuring a prominent
contribute to this explosive growth. Data infrastructure will remain an important place for the PC as an access device in
centers and Application Service Providers accelerator for domestic IT spending. the Indian marketplace.
(ASPs), the latest buzzwords doing the In the wake of the growing promi- Aditya Pant
rounds in the industr y, will be the future nence of the Internet, there’s been a lot heads research operations at IDC India

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