DQ TOP 20 VOLUME 3

RankingS VeRticalS SegmentSwww.dqindia.com

Vol XXX No 16 & 17 I August 31-September 15, 2012 The Business of Infotech

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Contents

Vol- III

$112 bn,and Counting Challenges in the global and local markets may have slowed it a bit, but could not keep Indian It from achieving the $112 bn landmark

August 31 - September 15, 2012

| August 31 - September 15, 2012 visit www.dqindia.com DATAQUEST | A CyberMedia Publication

22 Overview

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cONTENTS

16 | Top viewAll The Numbers

overview

34|AuTomoTive

32 | CompuTers And smArT deviCes Polarized on Mobility FY12 can be aptly called the year of mobility in India and in sync with the trend, the mobility segment grew while desktops plateaued out

42 | moniTors: Led: The King is Here With the market focus clearly shifting to LED, most vendors are revamping their strategies around that

46 | prinTers And mFds: Against all Odds Hit by adverse circumstances, the printer market seems to have learnt to manage in uncertain times

58 | ups: In the Limelight With the power industry still plagued by the age-old problem of demand far exceeding supply, the UPS industry retained center-stage

64 | neTworKinG produCTs: Not a Rosy Picture As the market saw consolidation over the last couple of years, the networking industry saw a marginal dip

72 | servers: Win Some Lose Some The x86 servers market demonstrates growth while the non-x86 UNIX market continues to shrink. It is a two-horse race with IBM and HP locking horns

77 | seCuriTy: Defend and Protect With security breaches becoming more sophisticated and the emergence of cloud, BYOD, and virtualization, the security market stands to gain from increased budgets

86 | sTorAGe: Taming the Flood With growing data, enterprises need better ways to store, access, analyze and profit from it. All vendor moves over FY12 hence were polarized on these elements

92 | inFrAsTruCTure And sysTems soFTwAre Eventful Times While the dipping growth trajectory was a cause for concern in sub-segments like infrastructure management, systems software and middleware among others, there was a lot on the delivery side

96 | enTerprise AppliCATions: Marching Ahead CRM and BI maintained the momentum they picked up last year, becoming the saviors. Having gained popularity with small players, cloud helped in faster adoption of enterprise apps

103 | domesTiC serviCes Looking for that Sunshine The domestic services market that had been growing consistently at over 20% was caught under the impact of the turbulent economic scenario. A slowdown in IT investments, project delays, and long decision-making cycles curtailed growth at 9%

109 | mAnAGed serviCes Opening New Vistas With enterprises looking for greater flexibility and cost advantage in their outsourcing engagements, the managed services model is gradually picking up. Though the overall slump in the market did have its impact on the growth momentum

114 | semiConduCTor desiGn The Buoyancy Continues Driven by the demand across industry segments, India stands to benefit both waysas a consumer of semiconductors, and as design hub

119 | iT serviCes eXporTs: Blooming in Adversity Indias IT exports shine amidst clouds of crisis, currency fluctuations, and shrinking GDP

126 | dC equipmenT: Working Well in Tandem Virtualization and server consolidation drove increased demand for structured cabling, racks, and enclosures

132 | sTruCTured CAblinG: Gain, with Pain! The market for structured cabling is tricky, with a lot of potential but enough roadblocks too

139 | uniFied CommuniCATion Celebrating Collaboration After large enterprises, even the mid-market segments and small enterprises are now embracing UC

143 | iT disTribuTion: Changing Dimensions Still the hot seat for ambitious plans, IT distribution saw more successes than failures

150 | iT eduCATion & TrAininG: Trapped, for Now The Indian IT training industry saw some growth, thanks to demand for software certification programs. But pure-play training vendors didnt have much luck

154 | projeCTors: Boardrooms to Classrooms Technological advancements and demand from the education sector are driving the projectors market in India

157 | verTiCAl AppliCATions: An Uncertain Ride The vertical apps market continued to grow in FY12 despite the tough conditions, as it moved towards gaining a competitive edge through innovative paltforms

162 | ip surveillAnCe: War Against Terror The worsening terror environment calls for continuous monitoring and complex video analyticsopening up the market for IP video surveillance

166 | smArT meTerinG: Energizing India Indias power distribution sector should subscribe to a consumer friendly route including some smart grid initiatives for an appreciable growth

169 | bpo: Slow Growth, But Maturing The market dynamics for global BPOs is undergoing tremendous change. Service providers are aligning themselves to integrate more technology to be able to deliver better business value beyond mere cost savings

10 | August 31 - September 15, 2012 visit www.dqindia.com DATAQUEST | A CyberMedia Publication

EDiT

The Education

BombIbrahim Ahmad [email protected]

What is the most essential ingredient for the Indian tech success story to go on and on, I had asked the CEO of one of Indias largest software services companies about a year back. I had expected him to mention things like tax incentives, tackling policy paralysis, foreign investments, and so on. But I was pleasantly surprised. Education, education, and education. This is the single most important thing we should all focus on. Many countries are building their education system. He then explained that you produce great minds and the rest of the stuff will just fall in place. You will have the best of policies and you will be flooded with investments.

I am sure he must be a sad man today. The QS World University Rankings for 2012 reveals that none of our universities and institutes of excellence are amongst the top 200 in the world. IIT Bombay which was ranked 187 in 2010, dropped to 225 last year, and this has slid further to the 227th position. The saddest part is that in the global survey, India is the only BRIC country without any university in the top 200 list.

The top 10 institutes are Massachusetts Institute of Technology, University of Cambridge, Harvard University, University College London (UCL), University of Oxford, Imperial College London, Yale University, University of Chicago, Princeton University, and California Institute of Technology. These institutions have more or less managed to be amongst the top for years now. From Asia, those in the top 50 include University of Hong Kong, National University of Singapore, University of Tokyo, Kyoto University, Seoul National University, Chinese University of Hong Kong, Chinas Peking University, Singapores Nanyang Technological University, Chinas Tsinghua University and Japans Osaka University. China has 7 institutes in the top 200 list. Our IIT Delhi is at 212, and IIT Kanpur at 278.

The need for world class educational institutes is not for creating software engineers who will bring us Dollars and Euros. We need educated and skilled people to also create opportunities in India and grow demand here. We need education so that more technology products and services are created and sold in India. Education is very critical for the growth of not just the IT industry, but for the national GDP as well. It is therefore the duty of all of us to do something about it. There is a lot desired from the IT industry, which only wants to get good engineers and sales managers, but has hardly contributed in strengthening education systems in India. The government, and specially our minister Kapil Sibal, should spend time on improving the deteriorating condition of colleges and schools, rather than on defending the 2G and coal scams. If we believe that we can get 8-9% growth rate without great educational systems, we are fooling ourselves.

Its easy to get upset when QS and PISA rankings (survey for schools done sometime back) throw open the real state of educational institutes in India. But that is a fact, and the sooner we accept it the earlier we might be able to work on it. I agree with those who believe that our poor education system could be the biggest threat to our economy in the long run.

EDITORIAL

GROUP EDITOR: Ibrahim Ahmad

EDITOR: Ed Nair

EXECUTIVE EDITOR: Atreyee Ganguly, Shweta Verma

ASSOCIATE EDITOR: Shrikanth G (Chennai)

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ASST EDITOR: Onkar Sharma, Rukhsar Saleem (Gurgaon)

SR CORRESPONDENT: Shilpa Shanbhag (Mumbai)

CORRESPONDENT: Akanksha Singh

SUB EDITOR: Charu, Ruchika Goel

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BUSINESSCORPORATE HEAD of SALES & MARKETING: Satish Gupta ([email protected])MARKETING: Manish Uniyal (Mgr Audience), Gulnar Oberoi (Asst Mgr Mktg), Niketa Chauhan (Exec Mktg), Arvind Razdan (Exec Mktg)

DELHI/NCRAmresh Mishra (Asst Mgr Sales), Ratul Mallik (Exec Sales)

BENGALuRuT Roshan Sahadevan (Mgr Sales), Pradeep Kumar (Exec Sales)

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OPERATIONSGENERAL MANAGER: CP KalraSR MANAGER: Anuj SharmaMANAGER: Debabratta Joshi

MARKET SUPPORT: Priyanka Vaid

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CIRCULATION & SUBSCRIPTION: C Ramachandra (Sr Mgr), Sudhir Arora (Sr Mgr), Jagdeep Khanna (Mgr), Raghavendra S (Mgr), Raju Salve (Asst Mgr), Srinivas Gangula (Sr Exec), Bhawani Singh Rajawat (Asst Mgr)

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Vol XXX No 16 & 17 Aug 31 - Sept 15, 2012

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send your feedback for us to serve you better...

Best Foot ForwardI found the article Best Foot For-ward (Dataquest, August 15, 2012) extremely interesting. I also agree with the author that the adoption of well-structured IT governance models will assist banks in enabling better alignment between IT and business. All this will enable better control, security, and enhance con-formity to internationally accepted best practices. Good job!

Namita Das, Chennai

In Search of Frugal-IT?I came across the issue dedicated to growth verticals (Dataquest, August 15, 2012). Congratulations to the whole DQ team for the edition. The article In Search of Frugal-IT? is well-written and informative. Undoubtedly, IT will play a far more

significant role in the evolution of the automotive industry from here than it has traditionally played.

I want to add that the automotive industry contributes almost 30% of the total revenue of the Indian engi-neering services industry. In FY12, it added an estimated $1.5 bn. Thanks for the interesting article. It is a very detailed, well presented, and well researched article.

Priyanka Vohra, Gurgaon

A Lot of PotentialThis is with reference to your article A Lot of Potential (Dataquest, Au-gust 15, 2012). Despite all the bad news surrounding the telecom indus-try in India, the telecom services in-dustry managed to grow 7% in FY12. The facts put together in the story are very interesting and informative.

Another interesting factor high-lighted in the article is the increasing consumerization of IT in enterprises as well as greater penetration of newer consumer devices, the indus-try needs to quickly innovate, look-ing beyond building fatter and fatter pipes, and becoming a gatekeeper to a collection or share of anyone who innovates.

Swati Gupta, New Delhi

Au

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01

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Vol XXX No 16&17August31-September15, 2012

Corrigendumn This is with reference to the Sapient profile in the DQ Top20 Vol I (Dataquest, July 31, 2012). Rajdeep Endow was the compa-nys MD of Sapient India at the time of writing and not Karandeep Singh.n This is with reference to the Mindteck profile in the DQ Top20 Vol I (Dataquest, July 31, 2012). The CEO and managing director of the company at the time of writ-ing was Wayne Berkowitz and not Pankaj Agarwal.Error is regrettedEd Turn to page 160 for details

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FY13 An Olympic Challenge! Drawing a parallel to the brave performance of Mary Kom in the Olympics, there are enough firms in the Indian IT industry who believe that a high double-digit growth can and will be achieved through active pursuit of new opportunities, and a strong focus on innovation

The distraction provided by the Olympics in July and August proved to be a welcome opportunity to take our minds off the darkening clouds in the global economy. More importantly, they gave us a number

of important lessons in succeeding despite all the odds. It is interesting to note the differences in motivation amongst various participants and the resulting outcomes that each sport enjoyed! To draw a parallel to some of the companies in our sector cannot be difficult if we do a little analysis.

The most glaring failure was the tennis squad. The old firm of Leander Mahesh and Sania after creating all the TV headlines with their public spats flattered to deceive, leading to the oft-repeated pleas that they should now make way for younger legs in the Davis Cup and retire to tennis commentary a l Vijay Amritraj. To a lesser extent the much vaunted archery and shooting squads possibly fell prey to the unnecessary hype and hoopla that surrounded Deepika Kumari and Abhinav Bindrathe first a nervous rookie, and the other a wealthy veteran and gold medal holder who had to suffer the ignominy of finishing so far behind that he was denied a chance to watch the finals of his own event! And of the ever-warring hockey squad, the less said the better!

On the contrary, the wrestling squad showed the grit and determination needed to capitalize on chances and make it to the top (well almost!). Add the valiant Geeta Phogat to the mix of Suresh and Yogeshwar and one can have great hopes for this low-cost sport with the ongoing support of worthy foundations and of course, the Haryana

government. The great achievement in badminton of Kashyap and Saina Nehwal was a little soured by the excessive celebration of a bronze won by default. Like some firms in our industry one hopes that settling for smaller wins will not compromise the gold pursuit that the lady is surely capable of!

Mary Kom is a star and role model for every aspiring youngster from a tier-2 or -3 (in her case, probably tier-4) part of the country. Having met her and seen her at a presentation made by the Olympic Gold Quest team led by Geet Sethi to the CII National Council, there was no doubting the ladys courage. Her stellar performances and public apology at not going to the next level has won the collective hearts of all Indians. And there lies the moral of the story for all of us.

The times are tough and the weak economic outlook for Europe and a possible slackening in the US, aggravated by slowdown in spending in India, could well support the Cassandra view of single-digit growth for the industry this year. But there are enough firmsTCS, Cognizant, Zensar, Mindtree, and Infotech among them, who believe that a high double-digit growth can and will be achieved through active pursuit of new opportunities and a strong focus on innovation. We will prevail and India will retain the gold status through this decade!

Like some firms in our industry one hopes that settling for smaller wins will not compromise the gold pursuit that Saina Nehwal is surely capable of!

The author is CEO of Zensar Technologies and chairs the National Knowledge Committee of the CII. He can be reached at [email protected]

DR GANESH NATARAJAN


TOPVIEW

Top View 2012DOmESTIc

Products/Services CategoriesFY 2010-11 FY 2011-12 Growth(%)

In `crore In $mn In `crore In $mn In ` In $

Servers 2,709 602 2,817 587 3.99 -2.51

PCs Desktops 13,341 2,965 13,423 2,796 0.61 -5.67

Laptops 13,101 2,911 15,137 3,154 15.54 8.32

Total PCs 26,442 5,876 28,560 5,950 8.01 1.26

TotalSystems 29,151 6,478 31,377 6,537 7.64 0.91

Devices Smartphones 8,796 1,955 14,513 3,024 65.00 54.68

Tablets - - 1,962 409 - -

TotalDevices - - 16,475 3432 - -

Printers/MFDs Inkjet Single function 100 22 80 17 -20.00 -25.00

Laser Printers Single-function 550 122 620 129 12.73 5.68

Dot Matrix Printers 251 56 177 37 -29.48 -33.89

Inkjet MFDs 242 54 200 42 -17.36 -22.52

Laser MFDs 509 113 571 119 12.18 5.17

PoS Printers 250 56 305 64 22.00 14.38

Large Format Printers 131 29 160 33 22.14 14.50

TotalPrinters/mFDs 2,033 452 2,113 440 3.94 -2.56

Monitors (standalone sales only) 2,624 583 2,710 565 3.28 -3.18

Storage Peripherals (including digicam) 4,265 948 5,757 1,199 34.98 26.55

Consumables 4,339 964 4,989 1,039 14.98 7.79

Enclosures & Racks 524 116 629 131 20.04 12.54

UPS 3,278 728 3,671 765 11.99 4.99

TotalPeripherals 17,063 3,792 19,869 4,139 16.44 9.17

Networking Products Routers 2,966 659 2,788 581 -6.00 -11.88

Switches 4,421 982 4,686 976 5.99 -0.63

Modems 378 84 314 65 -16.93 -22.12

WLANs 1,079 240 1,316 274 21.96 14.34

Structured Cabling 1,345 299 1,614 336 20.00 12.50

TotalNetworkingProducts 10,189 2,264 10,718 2,233 5.19 -1.38

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TOPVIEW



Storage TotalStorage 1,978 440 1,584 330 -19.92 -24.92

ATMs, Unified Communications, Biometrics, Projectors, and others

ATMs 1,720 382 1,892 394 10.00 3.13

Unified Communications 1,829 406 3,647 760 99.40 86.94

Biometrics 151 34 210 44 39.07 30.38

Projectors - 0 576 120 - -

Others 15,867 3,526 3,637 758 -77.08 -78.51

TotalHardware 70,877 15,750 89,985 18,747 26.96 19.02

Systems Software System Software 2,320 516 2,695 561 16.16 8.90

Enterprise Applications ERP 1,625 361 1,780 371 9.54 2.69

SCM 717 159 863 180 20.36 12.84

CRM 956 212 1,250 260 30.75 22.58

BI 1,147 255 1,550 323 35.14 26.69

Others 333 74 250 52 -24.92 -29.62

Total 4,778 1,062 5,693 1,186 19.15 11.70

Infrastructure Software RDBMS 1,629 362 1,970 410 20.93 13.37

Middleware 1,421 316 1,507 314 6.05 -0.58

Infrastructure Management 1,365 303 1,462 305 7.11 0.41

Development Tools 1,494 332 1,644 343 10.04 3.16

Productivity Suite 800 178 840 175 5.00 -1.56

Total 6,709 1,491 7,423 1,546 10.64 3.73

Vertical Applications Core Banking 1,084 241 1,302 271 20.11 12.60

PLM 684 152 740 154 8.19 1.43

Graphics Software 655 146 702 146 7.18 0.48

Telecom Software 1,322 294 1,490 310 12.71 5.66

Others 134 30 200 42 49.25 39.93

Total 3,879 862 4,434 924 14.31 7.16

Security Products Network security 942 209 1,046 218 11.04 4.10

Content Security 630 140 720 150 14.29 7.14

Total security 1,572 349 1,766 368 12.34 5.32

TotalSoftware 19,258 4,280 22,011 4,586 14.30 7.15

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TOPVIEW

Products/ Services Categories

FY 2010-11 FY 2011-12 Growth(%)

In `crore In $mn In `crore In $mn In `crore In $

IT Services Application Development & Maintenance 87,642 19,476 108,676 22,641 24.00 16.25

Infrastructure Services 27,602 6,134 43,436 9,049 57.37 47.53

IT Consulting & Package Implementation 16,783 3,730 22,397 4,666 33.45 25.11

Testing 8,432 1,874 12,596 2,624 49.38 40.05

Engineering Services 18,528 4,117 26,686 5,560 44.03 35.03

Others 54,773 12,172 63,200 13,167 15.39 8.17

Total 213760 47,502 276,991 57,706 29.58 21.48

Semiconductor Design 16,201 3,600 19,117 3,983 18.00 10.62

BPO Services 58,735 13,052 62,935 13,111 7.15 0.45

Training 736 164 828 173 12.50 5.47

TotalServices 289,432 64,318 359,871 74,973 24.34 16.57

Hardware Exports 1,712 380 2,216 462 29.44 21.35

TotalExport 291,144 64,699 362,087 75,435 24.37 16.59

TotalITIndustry 438,296 97,399 536,202 111,709 22.33 14.69



IT Services (domestic) 39,325 8,739 42,864 8,930 9.00 2.19

BPO services (domestic) 12,876 2,861 13,597 2,833 5.60 -1.00

Gaming & Entertainment Services 3,176 706 3,303 688 4.00 -2.50

Training 1,640 364 1,476 308 -10.00 -15.63

Other Training (certification, IT e-learning, etc)

0 879 183

TotalServices 57,017 12,670 62,119 12,941 8.95 2.14

TotalDomestic 147,152 32,700 174,115 36,274 18.32 10.93

EXPORTS


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$112 bn,and Counting Challenges in the global and local markets may have slowed it a bit, but could not keep Indian IT from achieving the $112 bn landmark

Onkar Sharma (with inputS frOm team DQ)[email protected]


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Hardly had Indias IT industry shown signs of resurrec-tion in FY11, that the Eurozone disrupted inves-tor sentiments and affected customer-behavior adversely in FY12. A sense of disbelief which seemed to have been instilled in the psyche of Indias IT frater-nity, though, painted FY12 as a year of growth, but with a hazy road ahead. This time around the industry seems to have realized that the road ahead will not be as rosy as it was during 2003 to 2008 when exports grew at a phenomenal 26% CAGR.

What built further pressure is of course the intense competition within the sector, which impacted growth in billing rates and rev-enues. This was apparent in the latter part of FY12, when quar-terly results of leading players fell short of expectations. For the first time in 47 quarters, Infosys, considered the bellwether of the sector, did not meet its revenue growth guidance. Cognizant re-vised its growth guidance down-ward to 20% from 23% while Wipro cringed away from giving a full-year guidance. However, TCS was the only company that seemed upbeat in its outlook banking on a bouquet of clients.

Size does MatterAll said and done, the fact is that Indian IT industry leapt past the $100 bn mark in FY12. Though the landmark has come at a time when the business sentiment is bleak, it means a lot for the economic progress of the country. It reflects how Indian IT industry has emerged as a mainstream contributor to Indias GDP. Also it must be noted and acknowledged that the size of the industry has moved up significantly. And it surely

seeing that the spend on IT is by all kinds of companies spread across diverse verticals.

However looking at the overall global scenario, these figures also show the endurance of the Indian IT industry and its ability to hold on in rough times despite a troubled global scene. Fur-thermore, the market does not appear to be stuck in a loop and signs of improvement are already visible. Most market research firms have indicated this, though with reduced growth figures. For example, Crisil Research sees In-dian IT services exports growing at 12-14% in 2012-13 in dollar terms. Obviously it is still lower than the previous year, but the good part is that it will grow in double-digits.

Another important point to observe is that after having reached a mammoth size of $100 bn the industry cannot continue to multiply at the same rate as before. It has to go through a period of rationalization and maturing, and growth rates will gradually stabilize at a reason-able level. This is a juncture where the industry needs to reflect upon its current standing and decide upon a future course of action. The IT companies will also have to develop strategies to deal with some of the global challenges that have recently emerged.

Some of the challenges that stare in the face are of course related to the global markets of

puts the countrys IT in a lead spot compared to its global counterparts. The outlook might be gloomy right now but it does not disappoint the long-term interests of the industry and its peers. It is apparent from IT exports, which continued its steadfast movement in the posi-tive direction. Though it is a fact that the domestic market has not grown to a size where it could weigh on exports, it is nearing a phase where it needs to decide its further course. It has to look beyond the culture and tradition to set trends and compete with the global majors. Thus, the do-mestic market might be a cause for concern but it has reached a transitional phase that calls for innovation. The domestic mar-ket growth registered a sharp decline from 23% in FY11 to a mere 15% this fiscal. Certainly an indicator of the countrys vulnerable economic situation

Indian IT Crosses the $100 bn Mark

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80

100

120

FY12FY11FY10

$ bn79

$ bn97

$ bn112

Ind

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Growth OverviewIndustry FY12 FY11 GROWTH %

In `crore In $bn In `crore In $bn In ` In $

Exports 362,087 36.3 291,144 32.7 24.37 16.59

Domestic 174,115 75.4 147,152 64.7 18.32 10.93

Total 536,202 111.7 438,296 97.4 22.34 14.69

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high degree of storage manage-ment agility and scalability. EMC and IBM fought for greater mar-ket share in a market that is fast seeing a bigger play from other vendors like Dell and HDS. HP on the other hand had chalked out aggressive go-to market strat-egy on storage. FY13 will see the overall storage segment growing at a brisk pace with all vendors deepening their mandates here in India.

Semiconductor Design: Driven by the consumer boom, India as a market for semicon-ductor design and a captive base for design jobs is getting better by the day. Industry reports sug-gest that the India semiconductor market is anticipated to grow at a CAGR of around 22% during 2012-2015. According to Da-taquest estimates semiconductor as a segment saw overall growth of 25%. As per the ISA-E&Y Report of 2011, the VLSI Design industry is poised to grow at a CAGR of 17.3% from a base of around $827 mn in 2009 to around $1.3 bn in 2012. Around 35% of the chips being designed in India are for consumer elec-tronics products, around 31% for telecom related products, and slightly more than 15% for wire-less products.

Servers: It is clearly a mixed bag. Overall for both x86 and non-x86 the market managed to garner just about 4% or `2,817 crore. The UNIX market saw a steep fall challenged by slow up-take from large enterprises and commodity x86 servers eating into the traditional UNIX ter-rorities. Due to their form factor and ability to offer more comput-ing density, blade servers grew well over FY12 and will make up for bulk of the x86 shipments moving forward, eating into the conventional server forms like

Industry Segments: An OverviewIndian IT industry comprises several segments and sub-seg-ments wherein the perform-ance of key vendors shapes up the market mood. Of course the enterprise customers also play a huge role in defining the industrys growth with their preference for certain products and services. Shaping the in-dustry were a number of trends like cloud, big data, enterprise mobility, et al. Lets take a look at how some of the key industry segments fared in FY12, a sneak preview of the pages that follow with more in-depth and detailed analyses of each of these areas.

Computers and Smart Devic-es: The PC market (desk-tops and notebooks) as per Dataquest estimates

saw an overall growth of 8% to `28,560 crore. The

demand for desktops re-mained sluggish with growth

hovering at single digit. With the market for conventional desktops going through a challenging phase, the ven-dors focused their energies on desktop form factors like the All-in-ones (AIO)

which connected well with consumers. Meanwhile vendors

like HP and Lenovo launched AIOs specifically for the SMB markets as well, indicating that enterprises too adopted AIOs.

Storage: The storage market rode on key trends like big data and cloud to analytics, and dem-onstrated a growth of 14%. One of the key highlights of the year was the industry transitioning to

a unified storage market rather than selling NAS or SAN separately. Unified storage devices married both NAS

and SAN and offered the best of both worlds and a

the US and Europe which are fraught with internal challenges right now. In the US it is election time, so the anti-outsourcing rhetoric has again taken steam, keeping India IT extra-cautious. On top of that visa norms have been tightened and local hir-ing by Indian IT companies in the US has gone up. All this has naturally slowed the offshore services. Indian IT companies generate close to 20% of their revenues from the European market, primarily the UK, hence any improvement in business sentiments in these markets will surely usher a new era of growth for the Indian IT services com-panies.

DATAQUEST | A CyberMedia Publication visit www.dqindia.com August 31 - September 15, 2012 | 27

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According to Dataquest estimates, the overall managed services market in India currently stands at `10,755 crore and is growing at about 11%.

and is growing at about 11%. With enterprises showing greater preference for the on-demand model, managed services has now become an integral part of every IT service providers portfolio. However, there are many con-cerns related to security and de-livery processes that will need to be addressed. While the market is set to take off, service provid-ers will need to enhance their capabilities and invest in trained resources that can efficiently manage the complex require-ments of multiple clients.

IT Services Exports: Despite the continuing sluggishness of the global economy, IT exports from India have been growing with vendors tapping more geographi-cal areas, driving innovations in their products and services, and balancing their service offer-ings. IT Services exports have grown steadily from 14% in FY10 to 22% in FY11, to almost 27% this fiscal. This certainly dem-onstrates the resilience of the Indian IT industry and its ability to hold its own despite a turbu-lent world market. The industry had to deal with several chal-lenges ranging from the ongoing global slump, Euro zone crisis, a rapidly fluctuating currency and the countrys shrinking GDP. The coming months may see growth coming from the emerging markets and new tech frontiers

including cloud computing and virtualization, and the conver-gence of mobility and web.

Printers: India remained an exception to the general rule, again, as its PC adoption stood at 15%, which opened doors for the printer market also. This offered a ray of hope along with the boost offered by the government, BFSI, SOHO, and education segments. Advancements in technology en-sured that vendors put their best foot forward. With players taking note of the importance of MPS, companies are moving towards offering end-to-end solutions.

Monitors: The PC monitor market underwent a difficult time post the Thai floods. The com-bined bundled and standalone PC market in FY12 accounted for `5,130 crore with a nominal 3.6% growth against the 12% growth in FY11. Certainly the overall business spend on IT took a sharp plunge given the market conditions in the US and Europe. Out of the `5,130 crore, the bun-dled monitor market accounts for `2,420 crore with a growth of 4%. The standalone market was the worst performer with a 3.3% growth at `2,710. The dearth of hard disks pushed the assembled PC prices up, directly impacting the sale of standalone monitors. Vendors like LG, Samsung, and others were seen struggling to find takers all through the year.

UPS: FY12 was witness to some major acquisitions (Numer-ic Power Systems by Legrand; Hi-Rel Electronics by Hitachi; Luminous by APC by Schneider Electric) which brought about a lot of consolidation in the mar-ketplace (Emerson acquired DB Chloride; Eatons making aggres-sive moves). With the presence of local, regional and MNCs, the marketplace is expected to get highly competitive.

tower and rack-mounted. As we look ahead at FY13, servers are expected to maintain the same flat growth.

IT Distribution: Natural calamities (Thailand floods) and rupee devaluation weighed heavy on the IT distribution segment, which received a lease of life from the SMBs and SMEs. Mobility and non-IT businesses seem to attract a lot of attention from tier-1 and -2 distributors and even sub-dis-tributors were trying to cash in on it. The segment was witness to the trend of offering a complete pack-age of solutions to partners. FY12 also saw regional expansion and national proliferation.

Domestic Services: A slow-down in IT investments, project delays and long decision-making cycles pulled down the domestic services revenues. After grow-ing steadily at more than 20% for several months, the industry came sliding down to a dismal 9% in FY12. Overall market senti-ment remained gloomy as most large enterprises cut down their expenditure on new tech initia-tives. Service providers expanded their focus beyond traditional networking and co-location services, and growth came from infrastructure and cloud-based services. The market is expected to witness consolidation in the near future as some tier-2 serv-ices providers will merge with or be acquired by large vendors. The government and SMB sectors are also expected to drive growth in the coming months.

Managed Services: As enter-prises look for greater flexibil-ity and cost advantage in their outsourcing engagements, the managed services model is gradu-ally picking up. According to Dataquest estimates, the overall managed services market in India currently stands at `10,755 crore


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Enterprise Applications: This segment was directly impacted by the slow growth of the industry. But the perform-ance of major vendors like SAP and Oracle was way above industry expectations. However the trend was more with cloud which opened up avenues like mid-market for vendors. While ERP continues to be the biggest solution, it was CRM and BI that ultimately saved the year, especially when global factors hit the market adversely, forcing several conglomerates to delay their IT adoption/upgradation plans. All in all, the enterprise apps market grew by 14%.

Infrastructure and Sys-tems Software: The segment witnessed healthy demand for rotational database management systems (RDBMS) as companies were seen spending on managing and utilizing their data. Mid-dleware was perhaps the worst performer as the big custom-ers showed minimal interest. The development tools market though saw an uptrend. Micro-soft completed the development of over 10,000 applications on its Azure platform. Equally, IBM and HP had their share in the market. The infrastructure mar-ket accounted for `10,118 crore in FY12 up from `9,029 crore in FY11.

IT Education & Training:Revenues for FY12 stood at `2,355 crore, with the market remaining almost flat. Pure-play companies witnessed marginal growth while the software certifi-cation market was quite impres-sive as companies are constantly leveraging advanced technologies like smartphones, games, labs, etc, to impart better knowledge. The demand for specialized courses is likely to increase in future. And the focus should

now move from students as its immediate customer to the IT professionals who are looking for specialized certification programs and short-term technology-ena-bled courses.

Vertical Applications: The overall market grew 13%, which was below expectations. The total market was at `4,239 crore, up from `3,745 crore the previ-ous year. While the core banking solutions market was upbeat, PLM market fell into the global slowdown trap. Manufacturing proved to be a biggest dampener. However 3D was a trend that took rounds in the PLM indus-try. The banking sector contin-ued to be part of the financial inclusion drive and opened its arms to core banking apps. A number of RRBs and coopera-tive banks were seen lined up to ride the core banking bandwag-on. Solution providers like TCS, Infosys, Oracle, etc continued to win contracts from Indian as well as overseas banks venturing into India.

Unified Communications: Tremendous growth is seen in the mid-market and smaller enterprise segments, which have increasingly invested in UC services over the last year. Affordability and the huge benefits attacted Indian SMBs to adopt. There was big adoption of mobility and video, a trend that will continue to grow in future

also. The other area is IM which has grown tremendously from 2010-11 and is expected to grow in the coming fiscal also. Since the network and IP infrastruc-ture of the country has already begun to improve, IP telephony has also shown tremendous growth over the last year. Apart from this, conferencing and collaborationaudio, web, and videohas always been a lucra-tive area.

Networking Products: In FY12 enterprises began to consolidate their IT require-ments into a single pool with the flexibility to scale up. Many state governments, PSUs, and banks rolled out IP networks while many of them have already laid down the roadmap for stronger network rollouts in the coming years. New deployments coupled with productivity enhancement initiatives in the business en-terprise segment, strong con-sumer demand for clients, drove enterprises towards setting up a strong and reliable network in-frastructure. Wireless picked up tremendously in the last couple of years and thus networking products saw huge influence of this technology. So be it switch, router, modem or other network-ing products, the demand was to grab a wireless product rather than something that can only be connected through physical mediums.DC Equipment: This market showed promising growth last year with structured cabling and racks and enclosures con-tributing equally. Consolida-tion, virtualization, information explosion, energy demand, and cloud computing drove racks and enclosure, while the key driv-ers for DC equipment were the finance sector and government projects. n

HighlightsIndian IT industry leapt past the

$112 bn mark in FY12At a time when the business

sentiment is bleak, Indian IT industry has emerged as a mainstream contributor to Indias GDP

India remained an exception to the general rule, again, as its PC adoption stood at 15%, which opens doors for the printer market also

n

n

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CompUTErSAnDSmArTDEviCES

Polarized on Mobility

FY12 brought in some cheer and heartburn as well. The vendors cheered with the growing adoption of notebooks, smartphones, and tablets and heartburn as desktop market growth remained in low single digits and many found the go-ing getting tough.

Clearly the termconsumer is kingmanifested well and defined the market in FY12. The consumer business remained buoyant while the enterprise had its share of ups and downs and some quarters challenged the vendors to the core.

Shrikanth [email protected]

FY12 can be aptly called the year of mobility in India and in sync with the trend, the mobility segment grew while desktops plateaued out



HighlightsOver FY12, in unit terms the overall

desktop shipments stood at 5 mn units and notebooks managed to muster about 6 mn units

The biggest shift in the smartphone as a segment one saw over FY12 was the 4.2-inch large display becoming the norm with the exception of the iPhone

With just about half a million units for FY12, the Tablet market is taking nimble steps in India

Many started on a good note and faced turbulent weather as the year progressed. Even big vendors with huge market-ing muscle like HP faced rough weather and were caught in the recessionary headwinds at the later part of the year.

So FY12 was all about go-to-market and grabbing whatever the opportunity and market share possible. In a way that sums up the overall mood of the PC industry which also saw path-breaking form factor innova-tions. According to Dataquest estimates, over FY12, in unit terms the overall desktop ship-ments stood at 5 mn units and notebooks managed to muster about 6 mn units.

Desktops DownBlame it on MobilityThe growth was not at all impres-sive at low-single digits, even if vendors ventilated their angst by saying we could have done better but the more worrying trend for them was the buying sentiment. Many enterprises went slow on new PC purchase deci-sions. That said, many vendors harped on how best to innovate the desktops.

In line with that a fundamen-tal form factor shift happened in this space and as a reflection of this the bulk of consumer desk-top buying is clearly polarized on All-in-Ones (AIOs) and one saw enterprise adoption as well. These integrated machines are cross overs and offered a unique computing experience.

In terms of conventional desktops, the traditional buying segments like IT/ITeS and BFSI, education were the ones that are still powering the volumes. Even though the demand was not like the mid-2005 times, but there is a certain amount of stable buying

one saw from these verticals over the year.

If you look at vendor strate-gies, clearly they invested in transitioning to an AIO based

desktop strategy in addition to conventional ones. Take the case of Lenovo, which during OND 2011 launched two powerful AIOsThe ThinkCentre Edge 71z and the ThinkCentre Edge 91z.

Company sources say that the new range has been designed specifically keeping in mind the entrepreneurs and small busi-nesses, who can take advantage of PC hardware and software in-novations like faster processors, stability and security, that are most likely to make them more competitive.

With a good line-up of prod-ucts for the SMB segment, Lenovo is evolving as a preferred partner in this category with both consumers as well as small businesses. Lenovo also says that

FY10 FY11 FY12

21,601 26,442 28,560

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Indian PC Market(In `crore, Growth%)

Total Units: 11mn ( Desktops and Notebooks)

Desktop growth slowed down as vendors focused on upping their share on AIO market. Notebook market innovated on form factor and oriented towards thin and light and to an extent, Ultrabooks

Desktops 47%

Notebooks 53%

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PC Market Composition (Revenues %)

Total Revenues: `28,560 crore(Desktops and Notebooks)

Others41%

Dell16%

Lenovo13.3%

HP13.2%

Acer12%

HCL5%

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Analyzing PC Vendor Market Share (Units %)

Total Units : 11 mn ( Desktops and Notebooks)



Apples Mac Book Air and hence its performance pales out as Apple Air many believe is a one-of-its-kind device and has no head-on competition for that product right now. So this com-parison has led to Ultrabook as a low-cost Apple Mac Book Air, which it is not, as some of the Ultrabooks are more expensive and less functional.

Meanwhile as we look at main-stream notebooks the address-able market also expanded over FY12 with Tamil Nadu govern-ment announcing the free laptop scheme for students had clearly benefited players like Lenovo

it enjoys a leadership position in the AIO segment with market share close to 45%.

Meanwhile players like HP also upped their ante on the AIO space with leading products. It brought to market products like the HP Compaq Pro 4300 AIO for businesses with some innova-tive technologies on board. As we look at other vendors like Acer which saw good traction for ver-ticals like education, BFSI and government.

Companies like Dell also followed the innovation route on desktops and if we look at players like HCL, it had a tough year and it lost overall market share. HCL is a major desk-top player in the country and clearly companies which had a good product mix of desktop and notebooks were able to successful cushion and take the impact of the slowdown in the desktop space.

Notebooks: The Happening SpaceIt has been one of the most innovative years for the note-books and it was during FY12, Intel pioneered a new brand of notebooks called Ultrabook and laid out some fundamental design philosophies to guide the Ultra-book form factors.

The Ultrabook as per Intels vision is an ultra-sleek notebook weighing at sub 1.5 kg and yet able to provide mainstream com-puting experience with extended battery life of 5 plus hours.

Acer was the first of the ven-dors to jump into the Ultrabook bandwagon and followed by Asus and all other vendors. But in an Indian context, Ultrabooks are yet very nascent as vendors are still struggling to arrive at a price parity. Yet again, Ultra-book is benchmarked against

which considerable expanded its market share by clinching a 3.65 lakh deal with the Tamilnadu government for its free laptop.

Interestingly, Lenovo is said to have emerged as the lowest bidder and had offered at the Notebooks at sub `14K, much below the average selling price. However all vendors are gun-ning for the overall free laptop scheme of Tamilnadu govern-ment which envisages to give a total of 9.6 lakh laptops. So by end of FY13, this will consider-ably expand the India notebook market by about close to million additional units.

One of the bigger success sto-ries last year was Dell, it also saw its significant spikes in its market share with AMJ and JAS 11 see-ing great traction for its mobile offerings. In May last year Dell added the Vostro 3000 series, to its Vostro range of laptops fol-lowed by Vostro V131 in August. Dell also aggressively focused on tier-2 cities to capture mid-mar-ket clients for hardware, software and IT services.

In all the Notebook space over FY12 was a tightly fought game between HP, Dell, Acer, and Lenovo. The second-in-line vendors beyond the Top 5 also

FY10 FY11 FY12

4,465

8,796

14,513

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97%

-23%

Indian Smartphone Market(In `crore, Growth%)

With customer options expanding, the smartphone market saw good growth with Samsung, RIM, Nokia, and HTC took the top slots. Market also saw the emergence of low-cost smartphones from a whole lot of smaller vendors



made their say and the vendors to look out here is Toshiba, Sony, and Samsung. These vendors demonstrated big gains over the last year but recently Fujitsu is also making aggressive forays in the Indian market with its offerings.

Samsung, of late, had launched some very innovative thin and light notebooks that are fast catching up. Interestingly HCL is the only Indian company in the fray with comparable mar-ket share and it really needs to counter this big MNC aggression during FY13.

Smartphones: What Goes up Stays up for NowThe smartphones market is grow-ing at high double digits both in terms of value and units. But it saw vendor realignment over last 6 quarters and clearly polarized towards Android in India. As per estimates a total of 11.5 mn smartphones were shipped in India during FY12 with Samsung emerging as a leader in the last two quarters.

According to CyberMedia Re-search Mobile Handsets Tracker 2011, smartphones contributed to 6.2%, multi-SIM handsets over 57% of total shipments in CY11. The report further states that the overall India mobile handsets market recorded sales (unit ship-ments) of 183 mn units in CY11.

In the overall India mo-bile handsets market, Nokia retained leadership position with 31% share, followed by Samsung at #2 with 15% and Micromax at #3 with 5%, in terms of sales (unit shipments) during CY11.

The biggest shift in the smartphone as a segment one saw over FY12 was the 4.2-inch large display becoming the norm with the exception of the

iPhone. Players like Samsung and HTC clearly thrived on the large-screen HD display. The smartphone market is divided into 4 worlds.

The enterprise world in India still remained loyal to RIMs BlackBerry while the mass market adopted Android in a big way. The Apple world is just about growing in India and Windows mass market adoption

is yet to be seen. The iPhone still remains as an object of exclusiv-ity in India and the higher price is a big deterrent for iPhones here in India.

Vendors like RIM adopted a two-pronged strategyenter-prise and consumer. BlackBerry predominantly an enterprise centric vendor up till now made aggressive forays on the con-sumer side over FY12 and made all attempts to create a balance through a well-spread out prod-uct portfolio.

On the enterprise side Black-Berry went aggressive on trends like BYOD and the entire wave of consumerization of IT according to RIM sources, this trend augurs well for its growth here in India as its phones are most secured and more apt for BYOD.

With Android adoption on the rise, it had fostered quite a bit of regional vendors started attack-ing the lower end of the spec-trum with low-cost smartphones. However if one looks at the OS dynamics from an Android per-spective, the bulk of the devices out in India were still stuck with Android 2.3.

And, while players like Sam-sung and HTC had announced and rolled out upgrade roadmaps for older Android phones to Android 4.0, but it has not been

Samsung38%

Nokia28%

RIM14%

Others20%

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Smartphones: Top Vendors FY12 Market Share(Units %)

Total Units: 11.5 mn

Clearly Samsung had a spectacular year backed by a huge smartphone product folio. Nokia in the last 2 quarters had lost signficant share and until it populates the market with newer models, it will further lose out to competition

The market has a plethora of low cost sub `10K tablets but it still has potential to grow. One is waiting for the big push...



a smooth rollout. For instance, HTC garnered much of customer ire for not giving Android 4.0 update to its flagship Smartphone Desire HD, citing compatibility issues with its Sense UI.

Right now Android 4.0 smart-phones are in the higher end of the price point, and vendors rolling out newer generation Android OS phones quickly at affordable prices is the need of the hour.

Overall smartphone outlook for FY13 is expected to grow at a healthy pace with players like Nokia firmly putting Windows Phone and its latest versions in the market in addition to vendors like Samsung and HTC going ag-gressive on Android.

The Tablet Market: Growing upWith just about estimated half a million units for FY12, the Tab-let market is taking nimble steps in India. Yet again industry estimates point out that Apple holds a significant slice of the tablet space followed by Sam-sung. The market has a plethora of low-cost sub `10K tablets and

this market though has a good potential to grow, one is yet to see the big push.

Even a player like RIM took on the value-for-money strategy and significantly slashed the prices of its tablet, Playbook. Globally, as we look at the recent data released by iSupplis (IHS iSuppli Display Materials & Systems Service report) shows that Apple iPad saw a phenom-enal growth of 44.1% during Q2, 2012 and shipped 17 mn iPads and garnered a whopping 70% market share over Q2 globally. During the quarter the total

number of tablets shipped (all vendors) stood at 24.4 mn.

In the last one year, Apple had significantly upped its ante in India thanks to distributors like Redington which is driving Apples growth here in India. Apple iPad 2 saw a big spurt post iPad 2 sales and post its new iPad (aka iPad 3) launch, it slashed the prices of the iPad 2 significantly thus leading to larger adoption.

However players like HCL say that India is the value-for-money market and the market for sub `10K tablets are on the rise. HCL in the last one year went ag-gressive on the tablet space and competes head-on with players like Micromax, Karbonn, iBall among others.

But again, with Apples 7-inch iPad miniall set for launch in the coming quartermight change the low-cost tablet market as well, given that Apple gets the India pricing right and puts the mini pricing at sub `15K will totally alter the personality of the India tablet market in 2013. n

Samsung56%

Apple22%

Others22%

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Tablet Market: Taking Nimble Steps

Total Revenues: `1,962 crore

Despite the market being flooded with low-cost sub `10K tablets, its still positively oriented towards Samsung and Apple. However the low-cost tablet market share is expected go up significantly during FY13

The smartphones market is growing at high double digits. It is clearly polarized towards android in India


MoniTorS

With the market focus clearly shifting to LED, most vendors are revamping their strategies around that

ONKAR [email protected]

The PC monitor market went through a very difficult time post the Thai-floods. PC prices went soaring because of the dearth of hard-diskswhich are primarily manufactured in Thailand. This was visible across the bundled and the standalone PC monitor segments. But irrespective of the growth parameters, the market came alive with interesting technological trends and changed consumer behavior. Combined bundled and standalone PC market in FY12 accounted for `5,130 crore with a nominal 3.6% growth against the 12% growth in FY11. Certainly the overall business spend on IT took a sharp plunge given the market conditions in the US and Europe. Out of `5,130 crore, the bundled monitor market accounts for `2,420 crore with a growth of 4%.

But here Dataquest will look into the standalone monitor market and trends that swept the market. The effort here is to measure the size and growth in this segment. As the overall monitor market did not do well, standalone suffered a joltregistering a mere 3.3% growth at `2,710. The dearth of hard disks pushed the assembled PC prices up which exert a direct impact on the sale of standalone monitors. Vendors like LG, Samsung, and others were seen strug-gling to find takers all through the year.

In the overall market, AOC emerged as the clear leader taking over LG with a marginal lead. It clinched the top spot with 22% market share, whereas LG grabbed 21.5% market share. Samsung stood at the third place with 21% share while Acer stayed at number four with 20%.

Industry TrendsThere was a demand for the adoption of LED monitors over LCDs in a big way. While LCD still leads the market, the trend for the coming quarters, among


MoniTorS

HighlightsVendors like LG, Samsung, and

others were seen struggling to find takers all through the year

The standalone monitors market had a worst year with merely 3% growth

3D was the buzzword in the monitor space as well

Vendors hope for a revival in sales in FY13

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other things, is LED monitors stealing the show, thereby turn-ing out to be the growth driver for vendors like LG, Samsung, AOC, and others.

Thus taking into consideration the bundled monitor market, it is important to look at the growth in the desktop market. The desk-top market did crawl up in India which impacted monitor sales also. However all in all, it pushed the bundled market by 4%.

In a first for the country, the Indian standalone PC monitor market saw LED sell-throughs touch a new level. This can be attributed to leading vendors discontinuing production of LCD based models, at the same time promoting the LED form factor. Major vendors have re-placed their entire portfolio with LED monitors, especially that of the 15.6 inch screens. Viewsonic has entirely shifted its focus from LCD to LED. LG joined the fray this year declaring that it would discontinue with the LCD monitor business in same category because of the drop in sales numbers. The drive has brought good results as was quite visible in the last quarter of FY12, with LED monitor sales overtaking LCD.

The India market for the 15.6 inch LCD monitor witnessed a drop of 45% in volume terms in Q4 2011, as compared to the previous quarter. AOC witnessed growth in its 21.5 inch LED busi-ness significantly.

Smaller vendors including Beetel, Viewsonic, and Intex also witnessed growth in a few pockets due to their lower priced offer-ings as compared to the major MNC vendors. Interestingly for these small vendors, close to 80% of their business was gener-ated by the LED category. In a nutshell, most of the vendors are

Northern and western India saw a growth in their shares during Q4 2011 due to the festive season sales extending into the month of October 2011.

Amongst the top 5 vendors, LG and Samsung saw more than 60% of their business coming from southern and western India collectively. AOC had almost equal business from all regions, while Acer and Dell received more than half of their business from southern India.

Also, the slow demand in metros forced the vendors to focus on the upcountry market and push on its channel schemes in those regions. LG conducted several lucky draw programs for its channel partners in order to revitalize the monitor business.

Price Variation and Rupee DepreciationAs far as prices of monitors are concerned, it was no different than last year in the beginning. But as the rupee eroded, most vendors were forced to increase the prices. LG had to take the hard decision despite the sluggish demand. Similarly, other vendors endeavored to keep themselves in profit.

Also adding to the price increase was the LED phenom-enon which was touted to be slightly pricier. However most of the monitor prices ranged in the LCD category. Further,

Indian Monitors Market(In `crore, Growth %)

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2,624 2,327 2,710 2,420

Standalone

Bundled

19%5%

3%

4%

Total (`Crore)

12% 4%FY11: 4,951 FY12: 5,130

phasing out their LCD monitor lines, shifting their emphasis to LED. The consumer today has a wide array to choose from, also with the add-on technology advancements.

Interestingly, consumers have shown big interest in large screen sizes. More than 45% sales was reported in the 18.5 inch cat-egory while 15 inch followed with 30% sales. Increased interest in 20 and 22 inch categories de-pict the choice of consumers for future trends.

Furthermore, the market saw an onrush of 3D and HD moni-tors. Urban consumers laid their interests in the new category. LG had started the trend in FY11 which was further extended by AOC that unveiled its 3D and IPS monitors to tap on the grow-ing segment. BenQ is also in the market with its XL2410T 3D LED gaming monitor.

Regional SplitAccording to CMR, in terms of regional split, southern India contributed the maximum sales of around 37%, followed by west-ern, northern, and eastern India.

Though the monitor space was the worst hit in FY12, the overall monitors segment (bundled and standalone) has rapidly shifted towards LEDs. Vendors minimized their LCD offerings to replace with LEDs.


MoniTorS

Tracking The Top Vendors(In `crore)

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AOC22%

LG21.5%

Samsung21%

Acer20%

BenQ3.5%

Viewsonic4%

Others8%

with LED taking centerstage, prices of most monitors are coming in consonance with LCD counterparts. It is believed that in FY13, LCD would reach an extinct level. LGs LED monitor range in screen sizes between 18.5-23 inch is priced between

`7,300 to `13,000. Samsung and ViewSonic have tried to match the competition in terms of price range for their LED moni-tors. AOC, BenQ, etc, have tried to stay ahead of the competi-tion in the price race for their LEDs.

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LG

SAMSUNG

ACER

BenQ

VIEWSONIC

OTHERS

578

582

554

534

95

116

161

596

576

567

542

95

108

216

FY11

FY12

(Market Share %)

There was a shift in the leadership. AOC emerged as the leader with as much as 22% market share while LG managed to grab the 2nd spot. But more than market share, the vendors were concerned about their sales which suffered a major setback due to a slump in the assembled PC market. Companies like LG tried to woo customers through reward schemes to boost their partners but to little help.

The Road AheadIt is expected that the ongoing fis-cal is going to be a year of revival for the vendors when they would see the re-emergence of the assem-bled PC market. Amid the myriad trends, LED will be the buzz of the market unlike ever before. n

Shilpa [email protected]

Against All Odds

Hit by adverse circumstances, the printer market seems to have learnt to manage in uncertain times

PRINTERS AND MFDs


entrant in the market has been able to give others a stiff compe-tition.

MFDs have managed to at-tract maximum interest owing to affordable price bands and the attractive features offered by this segment of printers. The prime features and characteristics of MFDs like printing speed, price range, features, and value for money quotient have enabled it to strike a charm among the customers. These devices are also gaining popularity owing to the fact that usage of these devices save time, space, cost, and are ideal for small businesses as well as consumer segment.

Technology AngleTechnology grows and creates new propositions. In the laser multi-function segment, new technology was introduced. HP and Canon both launched ink efficient inkjet models. Technol-ogy to ensure cloud computing compatibility was also intro-duced. On the customer-user behavior front, medium size enterprises are adopting man-aged document services. A lot of importance is being given to printing cost as companies have become more sensitive towards it. Owing to general inflation

and high interest rates, there was a standstill on investments in expansion which is evident from the fact that the national retail chains like Croma did not expand much.

Continuous ink supply based systems like L100 and L200 pro-vided litmus to Epsons growth. Canon witnessed a shortage of IP 2770 in the inkjet SF printer seg-ment in H2 FY12, whereas their new model, E500 in the inkjet multi-function printer segment helped Canon increase sales due to low cartridge cost. Samsungs market presence was strength-ened by the launch of its chipless toner based printers ML1676 and SCX-3201G.

There is an increased level of awareness in relation to docu-ment outsourcing as people are now making an effort to print less copies. With the entry of smartphones, tablets, et al ruling the roost document outsourcing is assuming center stage. Even the concept of e-copy is assum-ing importance, especially in the telecom, automobile, healthcare, banking, and insurance sector as they offer huge opportunities. This is driving many vendors but

FY10 FY11 FY12

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The Overall Printer Market(In `crore, Growth%)

The printer market showed some promise after being badly hit and having witnessed price hike. The technology and services quotient seemed to offer hope

FY12 was surely a chal-lenging period for the IT industry. The printer segment was no exception. The turbulence started around 2-3 years ago, after the Lehman crisis 4 years back, and affected the industry badly. The industrys upward ride came to a standstill. Just as it was on the recovery path, a natural calamity in the form of Japans tsunami brought in the realization of how vulnerable the IT industry was.

Before it could even limp back, the Thailand floods ad-ministered another blow on the manufacturing clusters leading the IT industry to ponder about separating the IT clusters to avoid such a scenario in the fu-ture. If all this was not enough, the last blow was still to hit the Indian IT industry (which according to market research reports is 85% import-centric)read rupee devaluation. This also had an impact on the prices of printers which witnessed a rise of 8-12% across all brands during FY12.

Under the ScannerThe Ministry of Environment curbed the imports of second hand devices which helped in increasing sales and proved to be a silver lining. Apart from that, the reconditioned market players came across loopholes owing to which around 30,000 units found their way to the Indian shores. This loophole was later plugged by the ministry and further damage prevented. India was the hub of competi-tion as Japanese companies like Konica minolta and Toshiba in-creased activities. Other vendors like Panasonic, Brother, etc, also recorded growth in their busi-nesses. Even Dell, though a new

HighlightsMPS is showing wide traction

among the small and medium businesses in India.

Companies across verticals are now insisting on paper and ink cartridge recycling which in turn is forcing vendors to manufacture green printing oriented printing devices

MFDs have managed to gauge maximum interest owing to affordable price bands and the attractive features offered by this segment of printers


PRINTERSANDMFDs

printing and also helps in main-taining a healthy and sustainable environment.

being riddled with the opportu-nity is the risk of the confiden-tiality of the data stored, which necessitates security to be treated with importance.

Though the fundamental technology hasnt changed much, the addition of cloud printing, managed print services, and the nascent introduction of mobile printing allows printers to follow their users onto their tablets, smartphones, and other mobile devices.

Green QuotientGreen printing primarily refers to the usage of cost saving and environment-friendly methods of printing. In the recent past, en-terprises and SMBs have started focusing on green printing as it helps in diminishing the cost of

Companies across verticals are now insisting on paper and ink cartridge recycling which, in turn, is forcing vendors to manu-facture green printing-oriented printing devices. Taking this trend into consideration, numer-ous benefits have been offered by green computing to custom-ers and the demand for green printing is sure to get a boost in ensuing years.

Cloud printing, though at a nascent stage, has shown promi-nent signs of gaining foothold in the recent times. Despite of being at the initial stages, it has tremendous potential for gaining wide spread acceptance among the SMBs and enterprise seg-ments. Some of the prime fac-tors driving this are enhanced productivity, seamless workflow of mobile and remote sales force, and unprecedented flexibility.

Segment SupportAccording to Netscribes, the overall printer shipment figures in India stood at around 2.7 mn units in CY 2011 and is antici-pated to leap forward to reach about 2.9 mn units shipment by CY 2012.

The printers market in India gets a significant boost from the prevailing SMB space by virtue of its extensive volume and steady increase in IT expenditure. Ac-cording to Netscribes, IT adop-tion among SMBs is anticipated to witness a CAGR of 24%. A major chunk of their expenses has been spent on computational expenses followed by internet, IT services, networking, security, software, and storage expenditure.

The wide presence of SMBs apart from home, government, education, and SOHO (buyers of single function devices) cur-rently forms a pivotal support for the printers market. In order

Scanning AheadScanning, as a utility, has not witnessed

a decline but in fact it is growing. There are large number of sectors where the demand of scanners is increasing and healthcare is one of them. Some of the key players in this segment are HP, Compaq, Canon, Fujitsu, Acer, Umax, and Epson. Apart from healthcare, there is a major demand from the banking sector for flatbed scanners. These are used extensively for digitization of records. In order to leverage on this trend, Canon is working with its system integrators. With over 100,000 units shipped during the last financial year, Canon enjoys 50% market share. The current market size for flatbed scanners is estimated at 200,000 units.

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-20%

Single-function Inkjet(In `crore, Growth% and Share in %)

HP60%Epson

25%

Canon12%

Others3%

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-17%

Multi-function Inkjet(In `crore, Growth% and Share in %)

HP68%

Epson14%

Canon15%

Others3%

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This market bore a look similar to that of FY11


PRINTERSANDMFDs

to target the growing demand in the education segment, vendors like HP and Canon launched inexpensive printers. Even Ricoh launched printers targeting SOHOs and tier-2 and -3 cit-ies. But for some companies like Canon, BFSI offered big bulk business opportunities in the face of a largest deal (implementa-tion of 800 document scanners for digitization projects). Canon was awarded the largest managed document services contract with a multi-national bank.

While the government seg-ment did not grow fast for some companies owing to delay in approval of contracts and rupee devaluation leading to govern-ment projects posing as a loss

FY10 FY11 FY12

642 550 620

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Single-function Laser(In `crore, Growth% and Share in %)

HP52%Canon

34%

Samsung8%

Others1%

Xerox5%

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Even the price rise seemed to not affect HP and Canons foothold in this market

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620 509 571

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-18%

12%

Multi-function Laser(In `crore, Growth% and Share in %)

HP37%

Canon23%

Samsung28%

Epson1%Xerox

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As increasing number of companies got into the buying mode, its benefits galore for the market leaders

making debacle. This led to many companies adopting the refrain mode. Though the telecom sector has been going through a bad phase, digitization is taking shape in the telecom industry. Even the e-business segment has pulled the margins for Canon cameras and inkjet printers.

Multi-function printers witnessed increasing acceptabil-ity in the SMB, home, and retail segments. SMBs prefer a mix of single function and multi-function printers to attain overall printing solution efficiency. Even the de-creasing price gap between single function and multi-function print-ers in the same technology space also prompted a set of customers to move to the latter category.


PRINTERSANDMFDs

Services AngleManaged print services showed wide traction among the small and medium businesses in India. The adoption of MPS eliminates hardware costs comprising capi-tal required to purchase printers and other multi-function devices. Companies mainly opt for pay-per-page services in order to lev-erage on cost reduction benefits. Another important factor driving the adoption of MPS is the lack of knowledge on the require-ment of printing infrastructure among users and hence outsourc-ing these services proves to be a profitable solution.

The MPS segment is assuming great significance, which even the vendors are recognizing. On the MPS front, Xerox has a remark-

able presence coupled with the ef-forts of OEMs like HP and Canon. Even WeP Peripherals and HCL have started taking steps in this direction in order to offer end-to-end solutions. But the challenge on this front remains localiz-ing these end-to-end services. Companies like HP, Canon, and Xerox have understood that while providing end-to-end solutions to customers, they also need to un-derstand the needs of the organi-zation to whom these services are provided.

Vendor PerspectiveIn order to grab a better picture of the fiscal that breezed past, lets put the top players under the scanner:

HP: HP intends to partner with

channel partners to address the SMB and mid-market space to of-fer MPS. There are approximately 35 mn SMBs in India (the second largest number after China). It is targeting about 350 mid-market accounts for MPS in metros and plans to extend the services in a phased manner to other tier-1 and -2 cities. HP has included its printing solutions as part of its Partner Managed Print Services (PMPS) cus

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DQ TOP 20 VOLUME 3