The small and medium enterprise sector in India is expected to invest around $4 billion on computer hardware this year. In 2006, the overall SME investments in hardware purchases in the country grew 20 per cent to cross the $3 billion mark, according to a study by New York-based Access Markets International Partners.
Identifying the key areas of spending by SMEs, Kapil Dev Singh, country manager, IDC India, said: "In 2006, the Indian IT market was around Rs 61,761 crore, out of which the SME spend constituted 38.5 per cent, amounting to Rs 23,776 crore. Out of this total figure, SMEs spent almost 50-55 per cent on hardware."
He added: "PCs topped the list while identifying the key areas of spending on hardware by SMEs, followed by servers and networking products."
Given the huge potential this emerging market holds, the key players in the hardware segment are laying special emphasis on the SME space, especially in personal computers.
Last year, notebook PC spending grew at 43 per cent among Indian SMEs, according to an AMI study. "SMEs are looking beyond the price tag and giving increased importance to hassle-free maintenance," said Partha Sarathi Sengupta, senior analyst at AMI-Partners.
He added: "Aggressive pricing by vendors has narrowed the price gap between desktops and notebooks, and the availability of wireless technology has resulted in the mobile computing boom. Desktops, however, remain the starting point for less IT-savvy small businesses."
Global giant Hewlett-Packard gets over 50 per cent of its revenue in India from the SME space. To cater to its larger client base, the $97 billion company aims to provide self-maintenance products under its business range.
"SMEs are a key market for us. Our growth is directly dependent on their growth," said Deepti Dang, head (Marketing Commercial & SMB), Personal Systems Group, Hewlett-Packard.
PC maker Dell recently joined the bandwagon when it launched its Vostro range of products. Identifying that the main problems faced by small businesses (the ones with workforce less than 25 employees) was the lack of knowledge of information technology and IT management, Dell launched three laptops and two desktops to fulfill the customised needs of SMEs.
Lenovo, another big PC manufacturer which acquired IBM's PC business a year ago, is aggressively positioning its ThinkPad brand of notebook products for the SME customers in India. The company also launched its Lenovo 3000 products for individual customers and lower-end SMEs.
According to Sengupta, servers provide more potential for IT service providers. "Branded servers enjoy widespread usage among the Indian SMEs. Expenditure of the small of medium enterprises is set to grow at a CAGR (compound annual growth rate) of about 30 per cent over the next three years. Advances in 64-bit, dual-core, and virtualisation technologies will also result in increased growth rate of the server market."
To cater to this segment, HP had recently launched its Proliant DL180 server, which can meet the needs of network service providers looking to manage networking, gaming, mail and other functions of SMEs.
HCL Infosystems, another big player in the market, introduced its HCL edgeBOX, a multi-function business gateway that consolidates data, voice and IT services for small and medium sized businesses.
"To address the SME segment in a focused manner, HCL has realigned its resources and made new investments. We have an entire gamut of products and solutions that are backed by technical skills and services to address the specific needs of the sector," said Rajendra Kumar, executive vice-president, HCL Infosystems Ltd.
According to the AMI study, SMEs are likely to spend $330 million during the current fiscal. The survey highlights that the bulk of the fresh demand in the printing space comes from small businesses, which would account for up to 75 per cent of the country's total SME printer expenditure this year.
