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To: Elwood P. Dowd who wrote (554)	5/21/2002 11:28:12 PM
From: PCSS	Read Replies (1) \| Respond to of 4345

Low PC sales in India could hurt IT ambitions BOMBAY, May 22 (Reuters) - Personal computer (PC) sales in India will rise five to seven percent this year and by 15-20 percent in 2003, a local consultancy forecast, rebounding from a fall last year and outpacing global growth predictions. Sales next year could expand to nearly two million machines, said a report by Skoch Consultancy Services, an IT and telecom industry consultancy based in Gurgaon, a suburb of Delhi. Still, that is less than the number of PCs now sold in China in three months, posing a threat to India's ambition of dominating the burgeoning global market for IT-enabled services. The penetration rate of computers lags well behind China and other nations moving, like India, to develop computer-centric service industries, and the gap is widening. "(Sales) growth rates have been coming down since Q3 of 2000," said Skoch's managing director, Sameer Kochhar. Nevertheless, Skoch's forecast puts India ahead of expected global growth rates, which leading research firm International Data Corp (IDC) puts at 3.2 percent this year. Skoch estimates PC sales in India fell 6.3 percent by value and 7.0 percent by volume in calendar 2001, due to the sharp slowdown of the economy and the IT industry's tarnished image as a career choice. "PCs stopped being an aspiration purchase," said Kochhar. Skoch estimates almost 1.6 million PCs were sold in India last year, in a market worth 68.7 billion rupees ($1.4 billion). Sales by volume surged an estimated 67 percent the previous year and by almost 50 percent in 1999. MORE UPBEAT VIEW Skoch's figures show a bleaker picture of the Indian PC market than data compiled by IDC, which estimated PC sales rose last year, though by hardly enough to close the gap with China. IDC figures PC sales rose to 1.75 million, from 1.6 million the previous year. That compares to 2.15 million PCs sold during just January-March in China, where software service and IT-enabled service companies are springing up, posing a challenge in an industry India hopes to dominate. The global IT services market will grow from $395 billion in 2000 to $700 billion in 2005, according to a joint study by IDC and India's National Association of Software and Services Companies or NASSCOM. The number of PCs sold yearly in India and those in use are educated guesses, as heavy taxation has created a huge "grey market" for unbranded machines sold by hundreds of assemblers. Skoch estimates the market share of assemblers slipped to 56 percent in 2001, from 58.6 percent the year before. Indian brands accounted for 16 percent, down from 20 percent three years earlier. Less than a third of the PCs sold were foreign brands like Dell (DELL) , Compaq and Hewlett Packard (HPQ) . The latter two companies have since merged, forming the world's largest PC maker. Skoch estimates there are now just 7.5 million PCs in use throughout India, mostly in corporate and government offices. In India's 16 largest metro areas, it estimates only 6.59 million households can afford to buy a computer as high taxes push the cost beyond the means of most. Duties and taxes account for 40-50 percent of the cost of a computer in India, versus 10-21 percent in China, NASSCOM says. Kochhar said the average cost of a PC in India has remained around 43,000 to 45,000 rupees for the past three years, and the cheapest multimedia machine costs 30,000 rupees. "India will have a grassroots IT revolution when PCs are available for 15,000 rupees," Kochhar asserted. (US$1 = 49 Indian rupees)