Markets waiting to be tapped

KOLKATA: Despite the ubiquity of PCs, as many as 75% of small businesses (1-99 employees) in four of the most populous countries in Asia – India, China, Indonesia and the Philippines – do not own any computers at all.

If some see this as a problem, it is also a huge opportunity in terms of an untapped demand and opportunity for vendors to convert these to PC-enabled businesses.

According to the latest study by New York-based Access Markets International (AMI) Partners Inc, there’s reason to hope. The study notes that about 40% of the non-PC SBs in India, over a third in China, and about a quarter each in Indonesia and the Philippines have expressed their intent to buy PCs in the next 12 months. “SBs in China and Indonesia plan to spend relatively higher amounts – especially on desktop PCs,” says Dev Chakravarty, Kolkata-based Analyst at AMI-Partners.

“The retail store remains the preferred channel for buying computing hardware. The touch-and-feel concept is still crucial among non-PC SBs – especially those with a low level of computer literacy. This explains the huge preference of the retail store for first-time PC buyers in the four mega economies.”

Currently, China has the highest PC penetration among SBs, at 33%. This is followed by the Philippines at 24%, India at 22%, and Indonesia at 18%. “It is surprising that even today, a huge majority of SBs conduct their daily business without the help of computers,” said Chakravarty. “However, there is a huge latent need among these businesses for PCs that can be fulfilled by PC vendors that focus on the Asia-Pacific region,” he added.

Most of the non-PC SBs in these four countries are small – with 1-9 employees each. The bulk of SBs in these countries belongs to the wholesale and retail vertical sector. The exception is China, where more than 50% of non-PC SBs are in the manufacturing vertical.

What hinders them from buying PCs? The primary hurdle is the belief that PCs are not relevant to their line of business. About 30% of non-PC SBs in India and 14% in China told AMI that they just have not thought about buying PCs. A significant portion of SBs believe that a simple fax and phone is enough for their business. Lack of knowledge about the installation and operation of PCs is also a powerful deterrence. “It is important to note that neither financing methods nor a cash crunch has emerged as a problem area for SBs in these countries,” says Chakravarty.

What can motivate SBs to opt for PCs? Despite these deterrents, a portion of non-PC SBs is still considering buying PCs to automate business processes, improve efficiency and productivity, adhere to business partners’ demands, keep pace with competitors, and grow the business. “A concerted effort by PC hardware vendors to convince non-PC SBs about the utility of computers and educate them about PC usage can go a long way in clearing the way for computers,” said Chakravarty.

Most of these non-PC SBs said they learn about IT products and usage through newspapers, followed by TV. Business and IT magazines are also read by some. However, being highly traditional and primitive in choosing the right PC, a large proportion of these SBs said they base their judgment on word-of-mouth and opinions of peers, friends and family members.

© CIOL Bureau