PC sales dip 25% in Dec on weak consumer sentiment

NEW DELHI: It’s cold out there. Not only the weather but the market for personal computers
. According to the hardware lobby,
Manufacturers’ Association for Information Technology (MAIT), industry reports suggest almost a 25% dip in sales this December compared to the same month, last year. The dip in sales is being attributed to a decline in consumer and business sentiment, as people want to hold more cash in uncertain times. On the whole, the third quarter may be one of the worst for the IT hardware in many years.

Says MAIT President Vinnie Mehta: “Initial reports for this month suggest that the sales are down by almost 22-25% from last year. Sales to export oriented units have been hit. Government employees who were expected to spend more cash due to the recent pay commission hike are also seen holding on to their liquid cash.”

Meanwhile, a lot of money is reportedly stuck in distribution channels as IT distributors report large payment defaults. No IT player was willing to comment on the same. But HCL Infosystems vice-president George Paul said that the industry is now banking on public sector sales in the last quarter as departments rush to utilise their unused budgets.
He, however, ruled out a negative impact due to a price hike, twice this year, which was a fallout of the rising dollar.

“A price hike of Rs 1,000 or so, does not affect buying decisions. But due to a financial downturn and liquidity crunch, subsidiaries of MNCs operating in India have put their buying decisions on hold. IT-ITeS and banking sector sales are especially hit,” Mr Paul adds.

Meanwhile, capacity utilisation is also running low in the assembling plants of many PC makers as they report large inventory pile-ups.

The October-December quarter is conventionally seen as the best sales season as festive buying on Diwali and Christmas eve boosts PC sales. But thanks to dented consumer sentiment this year, consumers and CIOs are holding on to their liquid cash, as they are uncertain of the future. For enterprises, the third quarter was never a great period and the economic slowdown has made things even worse. Meanwhile, SMEs are finding it hard to generate funds for expansion due to a liquidity crunch in the banking sector. As per IDC data , in the quarter ending September 2008, desktop PC sales in the country dipped almost 8.9% compared to the same period last year. The desktop PC sales fell by a whopping 1.54 lakh units. On the other hand, there was some shift of consumer preference seen towards notebooks.

The growth in PC sales is set to go into negative in the third quarter but sales in the next quarter are expected to perk up a bit thanks to government buying, according to MAIT.

Leading manufacturers of computer hardware
like Samsung and LG also hint at a cold market. Says Samsung India’s Information Technology Director Ranjit Singh Yadav, “There’s no doubt that the market has been under pressure this year. Buying by small offices and homes has fallen. We have been able to register marginal growth in the business in December 2008 over last December.” Agrees LG Electronics India business group head (Digital display and storage division) R Manikandan: “It’s true that different markets of the country are behaving differently. There’s some drop in sales in Northern India.” All said and done, PC makers will have to brace up for the tough times ahead—if it’s not the economy, powerful smart phones and devices like net-tops will eat into their market share.

Economic Crisis To Squeeze Mobile Phone Market In 2009

Saturday, December 27, 2008: The impact of the global economic crisis will spread to the mobile phone market resulting in a downturn in shipments in 2009, reported IDC. The total mobile phone volumes will be 1.9 per cent lower in 2009 than 2008 levels, the first downturn in annual shipment volumes since 2001, when shipments declined 2.3 per cent.
According to the report, the mobile phone market has enjoyed double-digit annual growth due to an increased emphasis on emerging markets. However, emerging market growth has been steadily slowing as these markets mature. IDC now expects worldwide growth to be just 7.1 per cent in 2008 before slipping into negative growth in 2009.

In recent months, a number of major industry players – including component suppliers, handset makers, and operators – have announced their concerns about handset volumes in 2009.

"Nokia's announcement was the first sign of troubles to come," said Ryan Reith, senior analyst, mobile phone tracker, IDC. "However, the real concerns set in with announcements from the chipset vendors who supply the industry. Qualcomm, Texas Instruments, and MediaTek are among some of the suppliers announcing reductions in manufacturing for the upcoming year. There is a lot of uncertainty about how the markets will fare and inventory levels will be more of a focus point then ever before."

IDC does not expect the downturn in mobile phone shipments to stretch past 2009. By 2010, the worldwide mobile phone market will show signs of improvement as economic recovery plans will have taken effect. With more disposable income in hand, consumers should feel more comfortable buying a new handset, especially if the opportunity to purchase was delayed. Beyond that, further growth is expected, but at a slower pace compared to the strong double-digit growth experienced in the years prior to the decline, says IDC.

Additionally, not all segments of the mobile phone market are expected to decline. IDC expects converged mobile devices – commonly referred to as smartphones – to grow 8.9 per cent worldwide in 2009.

Lower prices are also making converged mobile devices an attractive choice for consumers. It was not long ago that these devices cost well above the $200 price point with a two year contract. As prices have come down in recent quarters, these devices have become competitive alternatives to traditional mobile phones, reported IDC.

Tata Comm Maintains Internet Connectivity Despite Cable Cuts

Saturday, December 27, 2008: Tata Communications has said that it maintained Internet connectivity to its customers in India, Middle East, and South East Asia and restored normal connectivity to its customers in these regions on 20 December 2008, within a day of the triple cable cuts of 19 December.
Three major undersea cables (SMW3, SMW4, and FLAG) were damaged in the
Mediterranean, disrupting Internet and communication services in parts
of Asia, India and the Middle East. During this triple cable cut, the company's global Internet backbone maintained full connectivity
and remained completely operational.

Although there was induced latency in some routes, the activation of a diverted path towards North America and Europe via East Asia, Trans-Pacific and Trans-Atlantic routes enabled and contributed to the service continuity and minimal service interruption, said the company.

"Tata Communications' extensive global Internet backbone has diverse eastward and westward paths which enable us to maintain services when incidents like this one occur," said Radwan Moussalli, managing director, Middle East and North Africa, Tata Communications. "We are proud of our global operations and engineering team that worked round the clock to execute a speedy and successful recovery plan to ensure business continuity for our Internet customers."

Cable TV Rates Up As Temperature Dips!

CABLE television subscribers will have to pay higher monthly fees from the beginning of the New Year. The Telecom Regulatory Authority of India (Trai) on Friday announced a 7% increase in cable television subscription rates across the board. Trai has also reduced settop box rentals effective January 1, 2009. So consumers will have to pay an additional Rs 0.35 paise more per month per pay channel in conditional access system (CAS) areas. This means, each pay channel will now cost Rs 5.35 as against Rs 5 at present. Besides, if you are subscribing to only the basic free channels (without any pay channels), your monthly bill will increase to Rs 82 compared to the current Rs 77. The minimum cable fee for CAS areas have also been hiked to Rs 82. CAS areas include parts of Delhi, Mumbai and Kolkata and the whole of Chennai. Here, television viewers can access pay channels only in the digital format, which means they should either take up a set-top box or a Direct-to-Home (DTH) connection provided by players such as Dish TV, TataSky among others. The rest of India is classified as non-CAS. The new rates for set-top boxes come in two schemes and consumers can opt for either. The first offers lower security deposit (Rs 200, down from the earlier Rs 250) and monthly rental of Rs 34 from the earlier Rs 45. The second offers higher security and lower monthly rentals. Under this scheme, the security deposit is down to Rs 750 from Rs 999, for a monthly fee of Rs 22 (instead of Rs 30).
“It was felt necessary to provide for inflation-linked increase in the ceiling for different players of delivery chain of cable TV services, and accordingly 7% increase has been provided based on whole sale price index movement for cable services in non-CAS and CAS areas,” said Trai in a statement. Thus the ceiling that the telecom and broadcast regulator had earlier imposed would now be revised based on the number of paid television channels in different parts of the country. If you are living in one of the metros like Chennai, Bengaluru, Kolkata or non-CAS regions of Delhi and Mumbai, you would have to pay Rs 171-278 depending on the number of paid channels. Apart from the metros, the X Class (see table) includes cities like Ahmedabad, Faridabad, Ghaziabad, Gurgaon, Hyderabad, Jaipur, Kanpur, Lucknow, Nagpur, Noida, Pune and Surat. In smaller cities and state capitals like Agra, Aligarh, Ludhiana or Vishakapatnam, your cable bill will now be Rs 150- 235.