Figures tell all. Forecasts by Gartner, a leading information technology research company, suggests that India will see a unit decline in personal computer shipments this year. The trend is in line with what is happening overseas. Worldwide, says Gartner, the decline in PC shipments will be 11.9% this year?the worst the industry has seen so far. In absolute terms, the figure works out to about 25.7 crore units this year, says the research company.

The unit decline in India, however, will be a little less?at 3.7% to be precise. Even then it is not the best piece of news for PC vendors in the country. That?s because India like neighbouring country China, which will also see a unit decline of 2.3% this year, has been a booming market for these vendors. ?India and China are key markets for international vendors who are seeing saturation in countries such as the US,? says an observer. ?Given that markets such as India are still underpenetrated, it offers a vast potential.?

Says Diptarup Chakraborti, principal research analyst, Gartner; ?PC shipments in the last calendar year, for instance, in India, were 9.3 million units.?

Had it not been for the last quarter of the year, which bore the brunt of the slowdown triggered by the financial crisis in September, then PC shipments would have been more, say analysts. By some accounts, it would have neared or even crossed the 10-million-unit-mark. Says Chakraborti, ?In the quarter ending December ?08, PC shipments declined by 8.9% over the corresponding period the year before.?

The first three quarters, in contrast, saw high growth. That has been the case for the last few years. Says Vinnie Mehta, executive director, Manufacturers? Association for Information Technology (MAIT), an apex body representing the computer hardware, training and software industries in India, ?Vendors were a happy lot at this point.?

They would be given that annualised growth in PC shipments over the last few years was close to 25%. In 2006, for instance, PC shipments crossed the 5-million-unit mark in India. In 2007, it crossed the 6.5-million-unit mark, according to IDC.

When times have been so good, it is hard then to digest a decline. But vendors have to given that the market is sluggish at this moment. ?There are multiple reasons for it,? says Chakraborti. ?The slowdown is compelling companies to get into a cost-cutting mode. This means they are delaying recruitment, which is a big reason why computers are bought in the first place in companies. Overall IT budgets have come down. Companies are only spending enough to sustain their current infrastructure. Many are also extending the lifecycle of their PCs by six to eight months. All of this is obviously slowing down growth.?

On an average, the lifecycle of a desktop and notebook in the corporate segment, which is a key one for vendors, is 3.7 and 3 years respectively. In the consumer segment, it is about 4.2 and 3.2 years respectively.

So what do vendors do in a scenario like this? Recast strategies to adjust themselves to market realities, say observers. Says Rajiev Grover, director, consumer products, Hewlett Packard-Personal Systems Group, India, the leader in the overall client PC market for the July-September quarter of 2008 according to IDC, ?There is an attempt at this point by consumers in general, whether corporates, small & medium enterprises and students to behave in a rational manner given the climate that exists. Most are trying to see value in their purchases and our attempt is to provide just that.?

Increasing value, says Grover, doesn?t exactly mean a reduction in price. ?A five-hundred-rupee reduction in price is not going to help. I don?t think it is likely to get customers into the fold,? he says.

Though the fiscal stimulus packages over the last few months have helped organise the excise duty structure to a uniform 8% across PCs and components, the fact remains that the rupee-dollar movement has acted as a bit of a dampener eating into the savings that companies would have otherwise seen had the rupee not depreciated against the dollar to such an extent.

In recent months, the rupee has been sliding steadily against the dollar. It now stands at about fifty-one to fifty-two rupees to a dollar, which doesn?t make it exciting for PC vendors who import a sizeable portion of components for their products.

Almost 80-90% of components (in some cases it is 95%) are imported from abroad for both desktops and notebooks. Naturally, vendors feel the pinch when the rupee slides against the dollar considerably because it increases their outflow.

Which is why most vendors have actually been loathe in passing the benefits of the excise duty cut to consumers. Mehta of MAIT says that the 2% cut in excise duty in the third stimulus package last month actually resulted in a pass-on of just about 1-1.5% to consumers.

Therefore, when the price-reduction mechanism is not exactly open to vendors to improve sales in a slowing market, what do they do?

Besides trying to provide value in terms of an enhanced consumer experience or better products, HP claims to be doing more?like identifying new segments that it can penetrate. ?Such as the women?s segment,? says Grover. ?We launched a new version of the HP Mini1000 series notebook for women about three months. It was designed by Vivienne Tam, a renowned designer, who we brought down for the launch. It?s a light, sleek notebook with an 80 GB hard disk and 10.12-inch screen. It doesn?t have an optical drive but is apt for a woman,? he says. Priced at Rs 35,000, Grover claims the product is receiving a good response from the marketplace. In fact, HP has attempted to make a style statement with quite a few products.

Now when the number one player in the PC market is pushing products into newer areas, can rivals be far behind? HCL and Dell, the number two and three players in the overall client PC market by percentage share for the third quarter of 2008 according to IDC, have also been aggressive in their attempts to increase value and penetrate new segments.

Says George Paul, executive vice-president, marketing, HCL Infosystems, ?We have invested in a unique twenty-four-by-seven customer and support service, launched low-cost and low-energy-consuming PCs, come out with a simplified IT infrastructure that integrates storage, computing and networking for small & medium businesses etc. All of this in our opinion should help us. In my view, the focus on the customer should always be there, whether times are good or not-so-good.?

Says Sameer Garde, country general manager, Dell India, ?Our objective is to continue growing by understanding the needs of consumers. That is the best way to deal with the current scenario. It is difficult to predict the extent of the slowdown but our objective is to keep growing.?

The question however is: Can vendors really hope to log good growth when the market is not exactly in the pink of health? The top three players are hopeful that the market will revive sooner or later. Gartner says it is not seeing a turnaround soon enough. ?The economy will take some time to bounce back,? says Chakraborti. Till that time, it?s going to be a tough battle to survive.