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India PC Market Declined 19.9% In Q4 2013; HCL Factor

In the quarter where HCL decided to get out of PC business, the PC market in India, which includes both desktops and laptops, has declined by 19.9% YoY to 1.96 million units. According to Gartner, this is mainly due to declining government spending on hardware and consumers accounted for 49% of the total PC sales in India for Q4 2013.

HP continued to be the biggest vendor in India in terms of shipments with 21.3% of the market, up from 16.8% in Q4 2012. Dell has gained marketshare to be the second biggest with 18.6% of the shipments , as opposed to 11.2% it had in 2012. Lenovo gained marketshare, but not enough to hold on to its second position in India. It now holds 15.9% marketshare in terms of shipments, up from 13.5% in the same quarter last year.

PC_shipments_q413_india

White boxes, which includes assembled PCs and parallel imports, now account for only 44% of the overall desktop market, a decline of 10% YoY. Meanwhile, mobile PCs, which includes notebooks saw a 27% YoY growth.

HCL factor: It needs to be noted that most of these players seems to have gained from HCL’s decision to get out of the PC business. The company had a marketshare of 11.6% last year, but holds only 2.5% in Q4 2013. HCL had said that it will phase off its manufacturing business over the next three years as part of a company-wide restructuring following which it will focusing more on services and distribution verticals. The company has been struggling in the market for a while and its net sales had declined by 32% to Rs 1,593.48 crore in July-September this fiscal against Rs 2,341.68 crore in the same quarter of 2012-13 fiscal.

The PC business accounted for about 8% of HCL Infosystem’s overall revenues in Q2-FY14 and it has been under pressure for some time now as people started adopting new form factors such as tablets and phablets that are finding more takers. The company had then started distributing tablets and had even won a contract to manufacture 100,000 $35 tablets for the Indian government. However, this tender was cancelled as it failed to furnish a bank guarantee of Rs 60 crore. The company also had some disagreements over pricing with the government and allegedly HCL had listed some additional ‘unacceptable’ conditions to the government.

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PC gaming on the rise

IDC meanwhile, has predicted that sales of PC games will grow internationally to over $24 billion worldwide by 2017. The revenues are expected to rise at a rate of 4% per year even if there is a fall in demand in US market. Revenues outside US is expected to grow by 5% in 2017 largely driven by rising living demand in Brazil, Russia, India, and China.

Casino and casual genres is expected to get lower revenues with hardcore-oriented freemium titles such as Tencent’s and Riot Games’ League of Legends, Valve’s Team Fortress 2 and Dota 2,Wargaming.net’s World of Tanks and a handful of Chinese MMORPGs expected to get more popularity.

The forecast also notes that Valve’s Steam service has a significant opportunity to expand into North American and Western European living rooms in the next few years based on the company’s Steam Machines initiative.

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