Are branded PCs losing out to assemblers?

Karma Negi

NEW DELHI: In the last two-three months, the assembled market has been fired up with a lot of enthusiasm--thanks to the fact that a number of vendors have come out with their own assembled PCs. Samsung came out with its `Build ur PC' and LG too took not much time to launch its `MyPC' and the latest entrant in the race is eSys which has come out with `ePC' in three models ranging between Rs 9,990 and Rs 16,990.

It has been anticipated that these companies have given a tough competition to the assembler segment. Though the sales in PCs have gone up but in the perspective of the assembler segment the entry of vendors with their own PCs, it is presumed, have posed a threat to this segment. But according to market sources and the latest report by IDC, the assembler segment is alive and kicking. Ajay Kumar, Director, Citi Solutions, totally disagreed with the whole business of a threat to the assembled market. "Assembled market is a very respected market. And, there is no threat from the vendors launching their own PCs," he said.

PK Sharma, Director, Comnet Vision (India) Pvt. Ltd., commented that these assembled PCs will increase the market share of the assembled segment and in no way can it harm it.

So does AK Pandey, Director, Miraj Marketing. According to him, "These PCs cannot harm the assembled segment. There is still a lot of potential to be tapped in the market. The prices quoted by eSys are a bit revolutionary. If they are able to make a mark then it might have a slight repercussion on the assembled segment. But, it does not seem plausible. The price configuration may boomerang on them." Said Saket Kapoor, Director, Computer Vision, "These assembled PCs in no way pose a threat to the assembled segment. The foremost fact to be considered is the price factor. As it is, our market is very price sensitive, and when people can get the same products at a much cheaper rate, why would they go to these vendors." Rather, he is of the view that assembled PCs from vendors like Samsung can be a success only when they stop selling its components to others, for which it is known in the market.

According to Saurabh Nagpal, Director, Multilink, "Though the sales of PCs in terms of numbers have improved but the assemblers in Nehru Place are finding it difficult to maintain the required margins. This is because a lot of people are turning away from this segment and prefer to buy the branded PCs. Only people who are providing certain value-added services can survive in the market. In today's time, add-ons have become very important, without which one cannot survive in the market."

A rumor that is doing the rounds of the market is that many assemblers are on the verge of closing their shops. But, it does not seem to hold much water. According to IDC's latest report, the local assemblers performed well in the consumer market in the JAS quarter, as they were able to provide a greater cost advantage and reach than multinational and large Indian branded competitors.

The share of the local assemblers and small regional brands totaled at 69 percent in JAS 2002, up from 67 percent in the same quarter, the previous year. How well the assembled market is doing can be gauged from the fact that contrary to trends witnessed in the year 2000 when MNC vendors made rapid gains, year 2001 saw local assemblers regaining lost ground for reasons of price advantage, personal touch and better reach. And, even now local assemblers control a significant share of the overall PC market.

The mood that seems to prevail in the assembled market is that the segment is really not worried about the vendors coming out with their branded or assembled PCs. Most of them are of the view that it does not give them a run for their money. But, if there is one thing they most of the assemblers agree to, it is that in today's cut-throat competition, it has become imperative to provide value-added services to customers, if one wants to survive in the market.

It should also be mentioned that the assembled segment in the B and C class cities command a share of 80 percent or so and these vendors are trying to tap the potential in these small cities. The good news for the assembler market is that as per IDC estimates, the assembler market would continue to have a stronghold on the Indian PC market.