Sluggish demand pulls down sales

The overall Indian PC market fell 15.2 per cent in calendar year 2016 to 8.58 million units from the previous year, pulled down by reduced consumer demand and high inventory during the first half of 2016.

Among companies, HP continued to dominate the consumer PC business with 26.8-per cent market share for the third year in a row, followed by Dell with an overall 23.3 per cent share.

The consumer PC market recorded 4.22 million units in CY 2016, with a year-on-year decline of 12.9 per cent over CY 2015.

The overall commercial PC market recorded 4.35 million units in CY 2016, with a year-on-year drop of 17.4 percent over CY 2015, according to a study by International Data Corporation (IDC).

''With high inflation and ongoing fiscal consolidation, consumer sentiment remained frail until H1 2016. However, with subsiding inflation and benefit from the Pay Commission award, continued low commodity prices and measures announced in the Union Budget to transform the rural sector created just the right buzz for PC purchase in CY 2016,'' said Manish Yadav, associate research manager, client devices at IDC India.

''Barring fulfilment of limited large education projects, the year witnessed muted investment and delayed spending from government segment in H2 of CY 2016. Enterprises consumption had been the mainstay in holding up the aggregate demand during the same period.'' said Yadav

India PC shipment for Q4 CY 2016 stood at 1.92 million units, with a quarter on quarter drop of 23.4 per cent over Q3 CY 2016 and a year on year drop of 23.6 per cent over Q4 CY 2015. Outside strong festive demand, the quarter did observe impact of demonetisation and limited execution of large projects compared to Q4 CY 2015.

HP recorded a market share of 28.4 per cent in the overall PC market in CY 2016, with the vendor taking top spot with 3.0 percentage point growth over CY 2015. HP continues to dominate in the consumer PC business with 26.8 per cent market share for the third year in a row.

HP has recreated its brand with strong product placement and aggressive marketing campaigns supported by new innovative products like Spectre. The vendor also led the commercial category with the execution of special projects and strong hold in enterprise vertical as well.

Dell recorded an overall market share of 23.3 per cent, coming in the second spot. The vendor continues its investment in expanding channel strength and remained focused on addressing new opportunities in segments like government and education. Owing to which Dell gained around 4.9 percentage point growth year on year to record 24.5 per cent market share in CY 2016 in the overall commercial category against CY 2015.

Lenovo held on to the third spot, with an overall market share of 17.6 per cent in CY 2016. The vendor declined by 5.8 percentage point in CY 2016 over CY 2015 in overall India PC market. With changes around GTM strategies and internal structure, the vendor's consumer business did observe a drop of 2.5 percentage points year on year in CY 2016, further the drop was aided owing to lack of special project execution against CY 2015. However, market believes Lenovo will bounce back in CY 2017 by leveraging its improved marketing strategies and channel strength backed by innovative product line-up.

India forecast
On short-term, positive consumer spending is leading to healthy sell out and expected to build a strong base for first half of CY 2017; unlike CY 2016 which was badly hit owing to sluggish consumer demand from start of the year.

''With increase adoption of digital transaction and affordable PCs; consumer PC market is setting up for a revival in CY 2017,'' said Yadav.

Further the commercial market is anticipated to observe execution of state owned education projects across different states in CY 2017 and the incremental spending from BFSI and government verticals will further strengthen the overall category growth.