AMI: Over One Million Non-PC Small Businesses in India Plan PC Purchase in 2008

Kolkata: Over 40 percent of SBs (small businesses, or companies with up to 99 employees) in India have indicated plans to invest in computers for the first time in the next 12 months, opening up a huge opportunity for hardware, software and solution vendors. The universe in India for small businesses that do not own any computers (also termed as non-PC SBs) is vast—around 2.6 million. On being queried, over 40 percent of them—totaling more than a million—revealed plans for first-time PC adoption in the next 12 months. These findings emerged from a recently concluded study by Access Markets International (AMI) Partners Inc.

Dev Chakravarty, senior analyst at AMI-Partners, said, “The India SMB sector is en route to becoming an extremely potent force within the Indian economy; yet it may seem surprising to many that a huge majority of this segment (roughly 65 percent) still manage without owning a single computer. If we delve into the cause of the relatively lower usage of PCs, a single-most striking barrier looms large – the lack of awareness and education about the utility of computers. After all, a commercial unit is not likely to invest on computers if it feels that they have ‘no relevance to their line-of-business’; this sentiment exists for over half of the entities that AMI surveyed.” Hence, a need remains to educate SBs about the myriad benefits and applications of PCs.

The demographic analysis of SBs without PCs reveals that a huge majority; above 90 percent of them are quite small and fall within the 1-9 employee category. The vertical breakout indicates a skew towards the wholesale/retail sector that makes up 55 percent of the universe. The non-PC SB segment is also growing quite fast and displaying a healthy economic trend. More than one third of them mentioned hiring plans in the next 12 months and over three quarters experienced revenue growth last year.

Chakravarty, added, “Non-PC SBs are gradually realizing that computerization and automation is the first step towards managing rapid business growth—this probably explains a shift towards PC-purchase plans. Pressure from ecosystem players like customers and suppliers as well as an urge to outshine competitors are some other key drivers behind PC purchases in the next 12 months.”

The adoption plans of these first-time PC buyers add up to a likely planned shipment of 1.6 million PCs in the next 12 months. Even if a small fraction of these purchase plans is translated into actual practice, this is going to boost the overall PC installed base and PC penetration within the nation to a significant extent. Thus the future holds considerable promise for hardware and software vendors.

When asked about their channel preference for future PC purchase, 57 percent of non-PC SBs preferred the local retail store. Retail offers many advantages, e.g. convenient options of buying over the counter and scanning through the available brands and models—thus providing a chance to weigh the pros and cons of each.

Chakravarty, explained, “However, an interesting trend is also the rising popularity of local resellers/system builders/box-pushers (also known as value-added resellers, or VARs) as a preferred channel—mainly due to their personalized service & support. Non-PC SBs need considerable hand holding in the initial stages, in terms of installation and occasional troubleshooting. And herein lies the utility of VARs.”

AIM