The emergence of tablets and smartphones poses a big threat to personal computers (PC). Besides being trendy, smartphones and tablets provide all the facilities available in a computer and reliable access to the Internet on the move.
The stiff competition has made the job even more difficult for PC companies. Given the challenges, it is no wonder that most computer manufacturers are now vying for their share of the smart device pie.
Despite the growing challenges, the demand for computers can never be washed out in emerging economies, says Amar Babu R.K., Managing Director, Lenovo India, in a chat with
How has the demand for computers been?
The demand has slowed down and is moving along with the general economic growth. There are multiple reasons for the slowing demand.
However, we are optimistic on the demand front given the fact that computer penetration in India is still low at 10 per cent. Going ahead, we believe computer sales will be driven by need-based demand. The growth for PCs, tablets and smartphones is going to come from consumers.
How is demand from the enterprise (corporate) sector?
The demand is not growing as it was a few years ago. It has flown with the rest of the economy. There is buying that is happening, but at the level we would like it to be. Obviously, people are pulling back on large investments. However, some companies are still buying computers. For instance, software companies and banks continue to place fresh orders. About 60 per cent of the computer demand comes from the consumer market while large corporates and SMEs account for the rest.
Do high computer prices hinder PC penetration?
No. I do not think so. An entry-level personal computer was available at Rs 30,000 to Rs 35,000 about 10 years ago. But now, it costs about Rs 15,000-18,000. It is more to do with the question of affordability and desirability. It also depends on what you are going to do with the PC once you buy it. That is where the content becomes an important driver. Of course, there are generic mediums such as social media, Internet, entertainment and all that. If you look at it specifically, education is going to be one of the key driver. Our recent initiative to bundle our products with education content provider Learnhive is in this direction. We may form similar tie-ups in the other consumer-driven business to boost our sales.
Will tablets and smartphones replace laptops and PCs?
No. I do not think so. India is still not a mature market where you have 80 or 90 per cent penetration. I look at India in two parts. People refer to it with different terminology like India-Bharat, or India mature-India emerging. Net-net there is always going to be demand for PCs in one part of India. Bigger cities where PC penetration is more, there will be demand for a second device like a tablet or a smartphone.
In smaller cities, there is going to be demand for PCs. The smartphone market in India will touch $60 million in four years from $18-19 million now. We will adopt a PC plus strategy of offering something additional with our products be it a laptop, tablet or a smart phone. I think there is going to be demand for PCs, especially in emerging markets like India. Our ambition is to be a leader in PC plus market.
What will be your strategy and investment plans?
We would like to dice the market by different geographies and different socio-economic status to have a focused approach. We will continue to invest in brand and our retail reach. We currently have 1,200 exclusive showrooms across India. We are very strong in the enterprise segment and command a market share of 25 per cent in this sector. We will continue to protect and target the consumer and SME segment in coming days. Given the consumer focus, we will create retail touch points apart from focusing on online sales. As a vendor, we would like to be at every route the consumer buys.
What are strategies you have adopted from China?
We have taken a lot of learning from China and customised it to the Indian market. Most of the strategy on distribution, service support and promotional campaigns is largely from our learnings in China. We have a well-knit exchange programme where people from China come to India and vice versa for sharing ideas and implementing them. Quick implementation of well-tested strategy helped us to grow our market share from four per cent to 14-15 per cent in last four year.