PC sales slump but vendors foresee a revival
While the Q2 report by Gartner asserts that the PC shipments dip further in the Asia/Pacific region, with the festive season round the corner and the successful roll-out of GDP, vendors have their hopes high that the market will revive very soon -
It is impossible to imagine one’s life without computers. Whether it’s in the educational sector, manufacturing sector or even the industrial sector per se, computers have become an integral part in everyone’s day-to-day life. PCs aid industries and businesses by making the workforce efficient and productive by saving loads of time. PC plays a key role in enabling data access and analysis in a secure setting. Many people count the PC as a key device for ICT, which is playing a main role in the development of the nation. Through the use of computers, the business growth in many industries is pretty evident. But as time passes and new gadgets and mobile devices with innovative form factor keep on getting introduced, the user interest keeps shifting from PCs to alternate devices as these are more manoeuvrable.
India remains one of the few markets in the world where the size of the PC market continues to grow. Government’s digitization initiative will also help spread adoption of PC’s.
Vinay Sinha
Head of Sales – India, Director – Commercial Business, AMD Asia Pacific-Japan (APJ) Mega Region
While on one hand, the advancements in technology and the advent of mobile devices is leading the world to more digitalisation, on the other side it is deeply affecting the PC industry sales too, as customers are diverting themselves more towards alternative computing devices like tablets and Smartphones.
As per the latest reports, the sale of PC shipments appears to be gradually declining from the past few years. As also suggested in the latest Q2 2017 report by Gartner, the decline marked the 11th straight quarter of year-over-year fall. According to the latest Q2 report by Gartner, worldwide PC shipment has been in the midst of a 5 year slump. The shipments in this quarter have been recorded the lowest quarter volume since 2007, which have been declining year over year.
On the other hand, as per IDC, PC shipment recorded its first growth in the last five quarter in its Q1 report. It states, “India Traditional PC Market Revives due to Strong Notebook Demand with 8.5% Growth YoY in Q1 2017”.
India has very diverse SME eco-system and thus a one-size-fits-all GST solution does not work.
Pankaj Harjai
Director – Small and Medium Business, Lenovo India
The pent up demand after the demonetization cooled down after the first quarter, coupled with the absence of a large tender deal compared to a year ago and higher PC prices, brought about weak market growth in the Indian context.
Although the two independent research firms present different figures, both the firms however indicate signs of improvements for the PC industry in context to the world. Where in countries like Germany and Russia, the PC shipments have shown signs of improvements, for the markets of India and the Asia/ pacific region, the shipment figures reveal plightful condition, affected by the market scenarios of these countries. The report thus says, “In Asia/Pacific, PC shipments surpassed 21.5 million units in the second quarter of 2017, down 5.1 percent from the same period last year. The PC market in this region was primarily affected by market dynamics in India and China.”
The overall spending on the commercial PC segment however remained optimistic and the economic scenario had little impact on it. It still shows great potential for growth, despite uncertainty surrounding the stability of the global economy. The overall commercial PC market recorded a shipment of 1.11 million units in the first quarter of 2017.
I definitely believe that the PC market is reviving. Post the implementation of GST, we have seen a huge opportunity for growth, also we see the graph of PC sales going higher in the coming months.
Chandrahas Panigrahi
CMO and Consumer Business Head, Acer India
Commenting on the current situation of commercial PC sales, Vinay Sinha, Head of Sales – India, Director – Commercial Business, AMD Asia Pacific-Japan (APJ) Mega Region said, “India remains one of the few markets in the world where the size of the PC market continues to grow. The growth is coming from both consumer and commercial segments. Growth in the commercial space is coming from state-owned manifesto deals Government’s digitization initiative will also help spread adoption of PC’s. State government sponsored laptop schemes are also an important method to provide laptops en-masse to students, who then become the first-generation PC users in their families and become future users. As a percentage, a vast majority of India still does not have ready access to broadband services, as the government continues its endeavour to enhance fiber deployment into Tier 3 & 4 towns and cities, the PC penetration will improve significantly.”
He adds,” State governments are investing in computer systems under various schemes to enable the last mile computing access for programs and services under Digital India, apart from Digital Inclusion and furthering education. There is also a high demand for powerful PC systems in the BFSI space. On the consumer front, there is a growing demand for premium PC systems like the one powered by AMD’s Ryzen CPU’s. People are also spending on Gaming PC’s and convertible laptops.”
This however is the stats before the roll out of the GST reform. Furthermore, the latest GST tax reform and demonetisation scheme implemented by the Government is also considered as one of the factors that are going to impact the number of PC sales.
Impact of GST on PC sale...
The impact of the new uniform tax regime is still dubious as it is yet not clear whether the impact on PC sale is positive or negative and hence it will be too early to comment anything. Under the new GST regime however, the rate on PCs ( Laptop, Desktops, AIOs etc) has been fixed at 18 per cent, while the covering items (i.e. on accessories - printers, monitors), the tax rate is set to be charged at 28 per cent, which earlier was of 14 – 15 per cent.
Though the GST impact on sales of PCs since its inception have been seen as a major concern as 18 per cent tax slab under GST were expecting to hit the industry hard, still many vendors see this uniform tax regime as an opportunity to grow.
To this Vinay adds, “GST in itself provides a unique platform for unifying India by a single tax regime and structure. With distributors and partners not being forced to sit with inventory and stocks as they have paid VAT, ST, Octroi, etc., they are instead now focusing on doing what they do best, which is to take the technology out to the markets they participate in. In the enterprise space, OEMs and resellers would face difficulties in complying with a uniform price to quote across the country while faced with different tax structure. But with the coming of GST, the inherent inefficiency that used to be there in the system has now been addressed.”
Similar are the views of Chandrahas Panigrahi, CMO and Consumer Business Head, Acer India, who sees enormous potential in this segment. He discusses, “Post the implementation of GST, we have seen a huge opportunity for growth. Traders and business owners are bracing their IT infrastructure and adopting digitization. We expect a strong growth for computer segment. Our plug and play GST ready range of desktops, laptops and AIOs will help businesses to make transition simpler. We see this as a huge opportunity to assist small businesses and trades in adopting this change and growing with economy by utilizing technology at its best.”
Many PC vendors are also expecting that sales would fuel up after small businesses are buying computers as they need to comply with the GST norm. Also, the owners have started revitalizing their IT infrastructure to become more GST compliable through developing GST-enabled machines. As according to market Pundits, the demand for GST enabled systems will also lead to the growth of PC sales in India.
Hence, to become more GST compliant, companies are coming up with GST solutions to aid their business and channel partners. Chandrahas reveals, “We have introduced a one-stop GST solution- BizGuru along with Tally and CAIT. Under BizGuru we have a range of desktops, laptops and AIOs which will eliminate the barriers and make the transition and adoption of GST simple. The introduction of the new tax reform is drawing Indian businesses into the digital economy, which is further pushing the Digital India vision”.
To ease the effect of the GST implementation, Lenovo has also introduced a solution to fortify the impact. On this Pankaj Harjai, Director – Small and Medium Business, Lenovo India says, “Lenovo has always been a trusted provider of robust business computing devices. India has a very diverse SME ecosystem and thus a one-size-fits-all GST solution does not work. We have partnered with the best in the industry to provide a multitude of options for businesses to choose from. We are calling this solution the Lenovo GST advantage.”
And so...
Though vendors are positive of the GST impact on PC shipments, but one cannot ignore the revealed figures in the Q2 report by Gartner. Things have changed rapidly in the past two months since the roll out of GST. Although, GST holds great promise for the PC industry, the latest Q2 report raise key concerns on the PC sales and the present situation of the PC Industry in India.
The only other hope is that of the impending festive season – when retailers and PC vendors gear up for the biggest quarter of the year. Very soon vendors would set to launch a few new models before the shopping season and retailers would look to clearing the old stocks by playing with heavy discounts and schemes with their inventories. While it is also true that the channel is taking some time to get adjusted to the new taxation system, but they are quickly trying to recover from it and spring back to action before the mega festive season starts.
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