Dell rolls out first 'made in
India' computer By Siddharth
Srivastava
NEW DELHI - While India has
established itself as the global hub for software,
hardware manufacturing has lagged. This changed
when US major computer maker Dell Inc recently
rolled out its first desktop computer from its new
plant at Sriperumbudur, an industrial hub near
Chennai, its third plant in Asia after China and
Malaysia. Dell said it has delivered its first
"made in India" computer, with hopes that local
production will raise domestic sales.
Indian computer sales have increased 30%
annually over the past
five
years and totaled 6.3 million units in the fiscal
year ended March, according to the Manufacturers
Association for Information Technology, India's
main hardware trade body.
One of the
reasons that personal computers have not followed
the huge success of mobile phones in India has
been price. A PC can cost the equivalent of
US$400; a mobile phone, only $35. However, it is
expected that competition will make computers more
accessible to the masses.
Computer giants
US-based Hewlett-Packard (HP), Dell and China's
Lenovo group are fiercely bidding to take on one
another as well as local competition and the gray
market in India. Inroads by Dell and HP in China
have already seen Lenovo's market share drop
sharply.
Lenovo has expanded its capacity
at its existing facility in Pondicherry in
southern India, while local giant Hindustan
Computers Ltd (HCL) Info Systems is looking to
churn out 1.5 million laptops and desktops a year.
HP retains the top slot (desktop plus
notebook), followed by HCL, and then Lenovo in
terms of unit shipments. In terms of total desktop
PC shipments, HCL leads the market, followed by HP
and Lenovo. For notebook shipments, HP was the top
vendor.
Laptop sales in India have
burgeoned in the past few years because of price
decreases and the rising number of traveling
executives in the private sector.
There
has been considerable buzz about Dell's new Indian
manufacturing facility and, as a consequence, HP
has raised its marketing pitch over the past year
considerably. Dell has done well selling servers
and computers to large Indian firms in recent
years, but the company has had problems breaking
into the mass market for desktop computers and
laptops.
This is because Dell computers
are comparatively expensive in India, as they are
shipped as fully assembled systems, thus being
slapped with more duties than rivals that
manufacture locally. But this has changed. The
first desktop computer from Dell was delivered to
Indian software giant Infosys, one of Dell's
largest customers in the country.
"The
Chennai operation reaffirms the strategic
importance of India to Dell, providing significant
impetus to our growth plans and prospects here,"
said Rajan Anandan, general manager at Dell's
Indian subsidiary. "The planned investment is of
$30 million over a period of five years, with an
initial capacity of 400,000 desktops per year, and
will go up to about 2.5 million units over a
period of time."
There is no doubt that
there is a big emerging market for PCs in the
country. India's fast-growing
information-technology (IT) sector is one huge
demand center. Despite an appreciating rupee and a
slump in stock prices, India's software industry
is breaking new ground.
According to
recent industry estimates, the Indian IT industry,
including IT-enabled business process outsourcing,
crossed the $50 billion mark in 2006-07, recording
a growth of 32% in rupee terms and almost 30%
growth in dollar terms during the year. Internet
usage too is burgeoning, creating a bigger mass of
people looking at the computer as an essential
accessory to implement many essential services.
India's Internet population is more than
50 million, and many of them use the Internet
directly or indirectly to buy rail or air tickets,
for banking purposes and gathering weather or
market information, including stocks and regional
wholesale trade prices. In the first half of 2006,
more than 80% of all air tickets sold in India
every month were conventional paper tickets.
Today, the ratio has reversed, with 75% being
e-ticket printouts.
Nevertheless,
observers say that prices of computers will have
to dip considerably to add up the kind of figures
that the industry is seeking. A slightly
higher-end mobile phone, still considerably
cheaper than a computer, can offer many
convergence features such as Internet surfing and
e-mail. They are popular among students, who are
generally low on cash.
It is forecast that
mobile-phone subscribers will grow at a compounded
annual rate of 23%, taking total connections to
more than 462 million in 2011. Compared with such
figures, there are an estimated 25 million PC
owners in the country.
Siddharth
Srivastava is a New Delhi-based
journalist.
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