It’s a glitch the personal computer (PC) makers in India could do without. Sales have been on the decline as buyers have turned cautious due to factors like global inflation, economic slowdown, as well as remote learning taking a backseat after the pandemic.
“After two years of exceptional growth for the PC market, driven by work-from-home and learn-from-home mandate due to the pandemic, this year the market is normalising. This will naturally have a downward trend for the PC market since the base was high in 2021. This is further contributed by economic slowdown, inflation, and budget control in enterprise market,” said Sooraj Balakrishnan, head of marketing, Acer India.
The uptick in PC sales due to remote working and learning also faded after the pandemic. “As schools across India reopened, consumer demand diminished,” said Ashweej Aithal, research analyst at Canalys, a market research firm. “The consumer market had a sharp dip of 12% in Q2, ending seven consecutive quarters of record expansion. In Q2, the segment accounted for 48% of the Indian PC market, down from 61% in Q2 2021.”
India shipped 3.7 million PCs in Q2, the first time under four million units in four quarters, according to IDC. The government segment was strong due to spillover orders from the previous quarter, but the other segments are slowing, with channel inventory increasing.
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PC vendors are however optimistic. Balakrishnan said unlike developed markets, a majority of households in India still do not own a PC, which gives plenty of room for players like Acer to expand. “Another encouraging development is that Indian consumers are now more likely to choose to purchase higher-spec laptops than they previously did for better experience and lifestyle.”
Most in the industry are rebooting fast to stay relevant in a highly competitive market. For instance, Acer is expanding into tier-2 and -3 cities to tap into the opportunities from India’s digital development which is no longer limited to the urban locations. “Additionally, producing laptops in India under the Make In India scheme gives us a competitive advantage and shields us from international headwinds and logistical challenges to some extent,” said Balakrishnan.
Analysts believe local production of PCs will be a key growth driver as it is critical from a government orders fulfilment perspective. Earlier this year, Lenovo India’s managing director Shailendra Katyal said that the company has invested in further expansion of its local presence, including initiatives supporting Make in India.
Lenovo said during its first quarter earnings that it continues to seize the opportunities driven by accelerated digital/intelligent transformation and hybrid working, while successfully navigating a range of industry-wide challenges. “Overall, the group remains optimistic about the long-term industry growth potential and the opportunities afforded by its investments in new growth engines,” it said.
The downward trend in PC sales is not India-specific. Globally, PC shipments declined 19.5% from a year ago to 68 million units in the third quarter of 2022, according to preliminary results by research firm Gartner. This, according to the firm, is the steepest market decline since it began tracking the PC market in the mid-1990s and the fourth consecutive quarter of year-on-year decline.
“This quarter’s results could mark a historic slowdown for the PC market,” said Mikako Kitagawa, director analyst at Gartner. “While supply chain disruptions have finally eased, high inventory has now become a major issue, given weak PC demand in both the consumer and business markets…On the business side, geopolitical and economic uncertainties led to more selective IT spending, and PCs were not at the top of the priority list.”
