IT Industry Performance Annual Review: 2007-08

Press Conference
New Delhi: July 08, 2008

About ITOPS
An Introduction

Industry Validation
of the Market
Figures

Only Demand-Side
Study on the Indian
IT Hardware market

ITOPS
Largest Tracker
Study on the Indian
IT Hardware market

Longest Running
Tracker Study on the
Indian IT Hardware
market

Only Demand-Side Study on Indian IT Hardware Market

Designed to deliver the much needed demand-side insights

Data is collected
after Last Mile
No undercounting/over
counting stock in pipeline
Includes direct imports
by customers
Accurate estimation of
assembled market

Accurate assessment
of Buyer Profile
Who bought, Where
usedNot dependent on
perceptions of reseller/
channel member/ vendor

Identification of
Emerging Segments

Market/ Customer
Sentiments
Factors in the market/
customer sentiments and
opinion
along
with
industry level indicators

Need to monitor changes

in users perspective to
obtain cues for innovative
marketing

Identify and observe

Market Trends

Largest Study on Indian IT Hardware Market

Coverage in 22 Cities

The Study covers a sample of around 24,000+ entities per round

The study is conducted on a bi-annual basis covering the following time periods

H1 of FY: April to September

H2 of FY: October to March

across the Top 22 cities

Greater than 1 Million Pop Towns except Bhubaneshwar & Guwahati

Longest Study on Indian IT Hardware Market

Existence of over 11 Years

2005-06

ITOPS completes its 10th year, thus being the longest running IT tracking study

2003-04

Coverage scaled up to 22 cities from 16 cities

2002-03

1998-99

Launch of supplementary
channel survey for in between
quarters

ITOPS becomes a Bi-annual study

1996-97

Launch
of ITOPS as
an annual
Study

Industry Validation
Two Pronged Validation Process
Validation

MAIT

Findings on
Market-size
projected to
All - India
Urban market

Various
IT Players

Validation

The findings from ITOPS is accepted as the official market performance of Indian
IT hardware market by Manufacturers Association for Information Technology
(MAIT), the nodal body for IT hardware industry in India.

Information used by Govt. of India for all IT & allied planning.

Sampling & Projection

Sampling & Projection

Household

Using SEC A-C household population as obtained in the National

Readership Survey the largest household survey in the country

Establishment

No framework for sampling and projection were available

Thus, a new framework called Ace Grid was developed by the ITOPS
team
This Grid stratified the establishments by Principal activity performed
at the establishment classified by number of employee.

Principal Activity defined:

Manufacturing/
Office
Outlets
Government

factory/ Warehouse

No. of employees defined:

< 10 employees (Small establishments)
11-50 (Medium establishments)
50 + (Large establishments)

The Ace Grid has found application across researches involving

business segment across geographies
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Some Insights that ITOPS has provided

Insights on IT market from ITOPS

Our Insights

What happened?

IT market moving towards the smaller cities

ITOPS 2001 Pro

Today, the smaller cities constitute close to

50% of the households. Vendor targeting a
wider canvass benefiting the most.

PC usage not restricted to upper and upper middle

class households only. It is increasingly percolating
to middle and lower middle class ITOPS 2002 Pro

Increased targeting of the segments through

price reduction, interest free loan schemes
helping in targeting the segment.

Students a key target segment in the households

ITOPS 2002 Pro

IT players launched PCs targeted at the

students community.

WiFi adoption in the country is expected to take

time! ITOPS 2002 Pro

Though many WiFi zones have come up in

major cities of the country, it is still not very
popular among the Internet users.

Education the key reason for purchasing PC in a

household students the main focus ITOPS 2002

Several PC vendors launched PCs targeted

specifically at students and running special
promotions for students. Universities a key
focus for most Notebook vendors.

ITOPS: Comprehensive coverage

Product coverage:

Computers

- Desktop PC, Notebooks, Servers

Printers

- DMP, IJP, LJP

Peripherals

- Monitors, keyboard, scanner, zip drive,

CD writer, Print server

UPS

- UPS

Networking

- Incidence, size of networking (no. of

nodes)

Networking products - NIC, Hubs

Internet

- Active internet subscribers, Modems

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And the findings are..

Units

Total PC (Desktops & Notebooks) sales: 2002-2008

CAGR 2002-08: 26%

Growth over 2006-07: 16%

12

Total PC (Desktops & Notebooks) market: Regional spread

6,341,451 Units

40%

7,344,306 Units

34%

40%
26%

30%

23%

30%

25%

31%

27%

18%

20%

20%

10%

10%

0%

0%
North

West

South

2006-07

East

17%

(-13%)

(39%)

(39%)
(10%)

North

West

South

East

2007-08

PC consumption in both West and South grew by 39% each; in East it grew by
10% while in North it declined by 13%

Figures in the brackets represent

the growth in 2007-08 over 2006-07

13

Units

Notebook sales: 2002-2008

Annual sales grew by 114%; CAGR: 104%

Households accounted for 44% of the market growing 150%, Businesses accounted for
56% of the market growing 93%
14

Notebook sales: City-spread

Notebooks are fast penetrating beyond the top 4 metros; growth rate 152%

15

% Units

Notebook Consumption in Businesses - by employee size

Overall consumption in the business grew by 93%

Consumption in large and medium enterprises grew by 51% and 123%

respectively, in small enterprises it grew 174%
16

Units

Desktop sales: 2002-2008

CAGR 2002-08: 19%

Growth over the 2006-07: 1%

17

Desktop market: Regional spread

5,490,591 Units

40%

40%

31%
27%

30%

5,522,167 Units

24%

30%
18%

20%
10%

20%

27%

30%

25%
19%

(-14%)

(10%)

(4%)

(7%)

North

West

South

East

10%

0%

0%
North

West

South

2006-07

East

2007-08

Desktop consumption in West grew by 10%; in East it grew by 7% each; in South it

grew by 4% while in North it declined by 14%

Figures in bracket represent the

growth in 2007-08 over 2006-07

18

Desktop Market: Share of Indian, MNC & Informal

2006-07

2007-08

Consumption of Indian brands decreased 4% in absolute terms

Sales of MNC Brands grew by 16% however that of Informal sector PCs declined
by 12% in absolute terms

19

Desktop sales: City-spread

Consumption in Top 4 metros declined by 28% while sales outside the Top 4
metros grew by 14%

20

Desktop sales: 2002-08

74%
60%

Units

75%
77%

72%
40%

81%
26%
19%

23%

28%

25%

Desktop market growth over 2006-07: 1%

Consumption in households grew by 55%; in Businesses it declined 18%

21

% Units

Annual Desktop sales: Business by employee size

Overall sales to the Business segment declined by 18%

Sales to small and medium enterprises grew by 25% and 8% respectively,

however in large establishments it declined 33%
22

% buyers

Profile of Desktop buyers: Principal activity of the

establishment

Consumption in Government grew by 7% and in factory locations by 47%

Consumption declined in office locations by 21% and in retail outlets by 29%

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Profile of PC buyers in Households by Socio-economic class

SEC A

SEC B

SEC C

100%
18%

16%

20%

21%

36%

34%

28%

46%

46%

51%

55%

2002-03

2003-04

2004-05

2005-06

20%

18%

36%

39%

44%

43%

2006-07

2007-08

80%

% buyers

60%

29%

40%
20%
0%

Overall Households consumption grew by 55%

Consumption in SEC A grew by 50%, in SEC B by 68% and in SEC C by

43%.

24

Units

Server sales: 2002-2008

Annual sales increased: 35%; CAGR (for 6 years): 17%

25

% Units

Server sales: Business by employee size

Overall sales increased by 35%

Sales to small and medium enterprises grew by 127% and 121% respectively,
however in large establishments it declined 37%
26

Server sales: City-spread

Rest of India

Next 4

Top 4

100%
22
36

80%
60

35

55

60%

16

26

40%
21
20%

36

48

58

52

2006-07

2007-08

19
0%
2003-04

2004-05

2005-06

Consumption in Top 4 metros declined by 17% while sales outside the Top 4
metros grew by 64%

27

Active Internet entities: March99 March08

000 Units

Translates
to 52
million
internet
users

(Entities are establishments/individual with internet connection; an entity may house/ be multiple user/s)

Overall entities with internet grew by 20% over March 2007

Businesses accounted for 29% of the entities growing 6% while Households

accounted for 71% of the market growing 27%
28

Internet penetration: March 2008

Internet Penetration by Town class and Socio-Economic Classification (SEC) among

Top 22 Cities
Business Segment

Internet
penetration by
Town class

Overall
Top 4 Metros
Next 4 Metros
Other 8 Metros
Remaining 6 Metros

Internet penetration
among households
by SEC

46%
50%
42%
46%
28%

Home

21%
25%
17%
16%
11%
SEC A SEC B SEC C -

43%
16%
6%

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Mode of Internet access in Businesses: March 2008

Internet connections Contribution to the total by
Access type
Dial up
ISDN
Leased line
DSL/Cable Link
VSAT
Data Card
Others

DSL inching ahead.

Data Card

March
2007
38%
19%
15%
38%
1%
*
*

March
2008
16%
18%
7%
43%
2%
12%
2%

DSL

Data Card fast growing in popularity

30

The Market of 2007-08 Vs 2006-07

Total Sales

Product

2006-07

Total Revenue (in Rs Crores)

2007-08

%
Growth

55,22,16
7

1%

2006-07

2007-08

%
Growth

10,431

10,216

-2%

3,830

7,289

90%

1,533

2,016

32%

Computers
Desktops

5,490,59
1

Notebooks

850,860

Servers

90,189

18,22,13
9
1,22,178

114%
35%

31

The expected Market for 2008-09

Total Sales

Product

2007-08

2008-09

% Growth

Desktops

55,22,167

55,00,000

Notebooks

18,22,139

30,00,000

65%

Total PCs

73,44,306

85,00,000

16%

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Thank you!

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