Hardware looks ahead for 40% growth

BANGALORE: After almost 30 per cent drop in sales in JFM quarter, partners in
the Garden City looking for a growth of 40 per cent in AMJ. According to several
channel partners, factors that will play a major role in accelerating the sales
for second quarter of this calendar year would be major IT investments expected
from the telecom industry and service providers.

According to market sources, the government is also planning to focus on IT
deployment in larger scale. On the other hand, after many dotcoms going bust,
the market is now seeing many call centers coming up, which is expected to scale
up hardware sales during the next two quarters.

The partners expect the growth to also come from the SOHO segment, as vendors
are refocusing on end-user campaigns to develop a brand loyalty for their
products. "The market has just slowed down, we will have to stimulate it
and this is the time when we have to support our channels and motivate them to
perform better," says Hewlett-Packard India’s country-marketing manager M
B Sam.

Connoisseur Electronics, a Bangalore-based distributor claims to seen a 60
per cent drop in sales in the first quarter, while Tovya Automations also
witnessed a 30 per cent slump in sales. Kobian on the other hand had seen a dip
of 30 per cent in sales during the first quarter.

Several channels are predicting a growth of 40-50 percent, though the
hardware components are expected to be available only by September this year.
According to the channel partners, the second quarter seems to be promising as
they are expecting the sales to pick-up and prices of hardware products to
stabilize.

"Though there is no signs of further investments from the vendors in the
market, I still feel that the second quarter will show traces of improvements,
in terms of sales towards the end. But certainly, the beginning of the second
quarter is going to be equally tough and will replicate JFM sales to a certain
extent," said Connoisseur Electronics Pvt Ltd. (managing director) Jagdish
S Varma.

The IT hardware industry is reportedly witnessing a sluggish period since
November 2000 and the much happening JFM quarter was hard hit with merger sales
recorded in the books. The entire IT hardware industry saw a recession and
several factors attributed to the slowdown.

"The true slowdown came during mid-February with the unchanged budget
and crash of the BSE. Both these factors affected the national economy and the
hardware industry to a large extent," says Sam.

While several others foresee a further dip in the figures. Most of the
vendors are putting a procurement freeze. The first half of the second quarter
will still show patterns of market slump, though we are not too sure about the
closing, says Tovya Automations Controls director, C T Raj.

Though channels in Bangalore are optimistic about a better quarter against
JFM, it might be just too early to know the reality.