Crystal Ball Gazing

The year 2004 has been a very eventful and dramatic for the industry, as we
learnt about the venerable Big Blue selling off its PC business to Lenovo Group
of China. Then came the news that Philips was in the process of selling off its
monitor business to TPV of Taiwan.

These two dramatic news came towards the end of the year. So, we can safely
assume that 2005 is going to be even more dramatic and newsy. And I am sticking
my neck out by doing some crystal ball gazing. I predict...

1) IBM in its new avatar as Lenovo, will demolish all competitors in PC
business in India. Yes, in the short run, till things settle down, the company
will certainly see a drop in sales. But as everything becomes clearer and IBM
gets its act together, the company will be able to out price everybody on the
strength of its extremely low cost production base in China. Just imagine-the
IBM brand name coupled with the best price-what a strong proposition it would
be able to offer.

2) The Indian PC market will explode. We can safely expect more than 30%
growth, which will make it a five million market for PCs. Now, that would be an
extremely attractive market to be in. And this stupendous growth will primarily
come from B- and C-class towns. These places will contribute more than 40% of
the total PC business.

3) The Ingram Micro-TechPac merger will neither be smooth nor will it make
vendors and channels happy. Although the merged entity will mean a
billion-dollar colossus dominating the entire distribution industry in the
country, it will hardly benefit anybody. And on top of that, the merger process
will not be easy to implement.

4) Smaller distributors will emerge stronger and healthier. This will be a
result of the Ingram-TechPac merger. Most of the principal companies who are
heavily dependent on the merged entity will now start giving extra support to
the second level distis so as to spread their risks.

5) Delhi and Chennai channel markets will see the emergence of new
associations. This, despite the capital having two existing associations and
Chennai boasting of four registered associations. In both cities, the channel
has realized the importance of having one single platform, which will result in
new entities coming into being.

6) Eastern India will emerge as a pretty attractive market in terms of
business. Already, a number of software companies have set up their campuses in
Kolkata and also in Bhubaneswar. This trend is going to become even stronger in
the new year. That would mean a significant jump in business for the channel.

Asim Raina