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Multinational-Corporation (MNC) PC brands have overtaken the local Indian PC brands in terms of sales, growth rates and marketing activities, says Gartner Inc. Indian branded vendors like HCL, Zenith, Wipro and PCS account for only 14 percent of the Indian desk-based PC market and six percent of the Indian mobile-PC market in 1H07. According to Gartner, only HCL has withstood the competition.

However, even they are losing out to MNCs in the consumer segment. The Indian PC landscape is divided among three different groups: MNCs, local brands and white box vendors. In the past few years, although local brands are growing at a steady pace, they are clearly way behind the growth rates of the MNC brands.

Indian vendors' shipments grew 18 percent year over year in 2006 and 35 percent year over year in 2005, while MNC shipments grew 73 percent in 2006 and 50 percent in 2005. This disparity gets even more accentuated considering that in 2004, local and MNC brands were growing at roughly the same rates.

“Unable to withstand the pressure of the marketing blitz and the reach of the MNC brands, the local brands have almost exited the consumer segment and are rethinking their strategy to focus more on government, education, and small and midsize business (SMB) segments”, said Diptarup Chakraborti, principal research analyst for Gartner’s client computing group.

“Moreover, the mobile-PC segment in India, which has been growing at 74 percent year on year, has seen little traction by local brands. MNC brands are dominating this niche yet high margin segment with 94 percent per cent of the market share.”
Top 5 desk-based PC Vendors

Top 5 mobile PC Vendors

The key growth drivers in 2007 were the education, small business, consumer and government sectors. Mobile PCs continue to out perform desk based PCs in terms of growth.

The key factors contributing to this phenomenon is the rapidly decreasing price differential between mobile PCs and desk based PCs, performance parity between the two, availability of a wide portfolio of products ranging from entry level to high end and push from both vendors and channels to grow this segment.While mobile PCs have grown at 74 percent, desk based PC growth has slowed down to 3.9 percent.

However, with small business and education segment likely to continue with their spends on IT infrastructure desktops should see some rapid upward mobility in the coming quarters.

Gartner recommends a roadmap for local brands to improve their market share in the India:

Improve product lineup: Indian vendors lack a complete product lineup. They are primarily focused on the low-and-mid range desk-based PC segments and miss out on the lucrative mobile PC and high-end desk-based PC segments.

To grow their market share they should focus on introducing and pushing AMD-based products, maintain specific stock keeping products for smaller cities and gain technological advantage by concentrating on high-end digital lifestyle and gaming machines where none of the MNC brands have a dominant position. ·

Increase brand visibility: It would be a challenge for local vendors to quickly ramp up their visibility through marketing activities. They should therefore use a more focused approach of targeting select retail outlets in major cities where they can increase POS material, display space, product range, customer assistants, etc.

They should also leverage key channel partner for joint marketing initiatives in smaller cities. Such programs haven't yet been undertaken by MNCs in smaller cities, so local vendors can get a head start.

Improve channel mind share: Local vendors, although gradually, are losing channel mind share, but not necessarily the channels themselves resulting in fewer new-client. Local vendors must invest more to gain channel loyalty by adopting a more proactive approach toward their channels, investing in building a brand at the POS, improving their product range, and forging deeper bonds with the likes of Intel and Microsoft. Indian vendors must continue to focus on and dominate government, education and small-business segments, a space where their MNC counterparts haven't yet made major inroads.