Is it end of road for Indian PCs?

Going by the figures, Indian PCs have suffered a setback with the popularity of cloud solutions, laptops and other hand held devices

Anger and frustration is much evident in the voice of Vijay Rama Rao, chief regional distributor, HCL, Andhra Pradesh, as he talks about the PC business.
"They collapsed it", is what he exclaims when asked about HCL's shutting down of PC manufacturing. To this he adds, "It is their ill-planning due to which so many distributors suffered a huge loss in the state".

Rao was one of the chief HCL distributors for more than ten years. His company, Info Business Services, provided HCL desktops to ninety other distributors in Telengana region of Andhra Pradesh.

But, HCL's PC business took a downturn few years back. According to Rao, the company started to fair badly three years back and gradually became non-cooperative towards its distributors. As a result, HCL's regional distributors in Andhra began terminating their distributorship with it, until Info Business Service remained the only and last regional distributor of HCL in Telengana district.

Talking about the loss, Rao puts the figure ranging between Rs 80-90 lakh. That is the amount of money channel partners in the region lost due to HCL's downfall over the last two years.

"PCs are losing ground. Only corporates are into this segment," explains CH Surendra of CA & S Solutions, Vizag. Commercial demand of PCs suffered a setback with the popularity of laptops as Dell, Lenovo and HP became key players in this business. And the undisputed demand for hand held devices is the chief reason why PCs are sidelined. Smartphones, tablets and laptops are only commercial products popular with customers.

According to Surendra, "My desktops sale has gone down by thirty percent this year compared to what I sold last year". So is PC business going to see the end of the day? "Yes definitely", is his prompt reply. But the story takes a different turn here. Surendra adds, "Cloud market is gradually making its foray. It is in cloud solution that our future lies". He opiates that distributors or resellers have to evolve from their business into system integrators and cloud solution providers. Mere selling of IT products can no longer rule IT business. He feels channel partners need to think big in order to survive.

Surendra's words find echo in what Harish Chitale, CEO and whole-time Director of HCL Infosystems, said to Business Line, "Manufacturing of PC is becoming less and less a part of our business. It is not our focus for future at all." System integration and solutions business has been brought under a wholly owned subsidiary HCL Infotech Ltd and IT services, including infrastructure management has been brought under another subsidiary called HCL Services Ltd. In addition, there is HCL Learning Ltd, which is in the education space. "We will be able to decide which of these would be our growth engines of future and which of these are going to be less and less of focus going forward. In the near to mid-term, I can see distribution and services becoming the two pillars of growth," Chitale said in the interview.
Wipro met the same fate as HCL Infosystems this week. Apart from plummeting PC demand bad service network is another reason behind Wipro's exit. Channel partners exclaimed their utter dissatisfaction with Wipro's service network, which became insufferable at one point. This also made many channel partners pull out from their distributorship of Wipro's PC. Not to mention the decreasing demand among customers. But the recent depreciation in Rupee also played the villain in pulling down the PC business in India. In India computer manufacturing depends on import of components like motherboards, monitors, hard disk and memory, and an unpredictable currency can challenge a company. "In the last one year, the rupee has depreciated more than 30% against the US dollar," said Bhattacharyya, chief strategy officer of HCL Infosystems in an interview to The Hindu.

Wipro declared that it would stop making desktops, laptops and servers under the Wipro brand. So are channel partners worried by Wipro's decision? On the contrary they have welcomed Wipro's decision. Channel partners have different reasons to site for such a reaction but one thing seems clear enough and common among all the partners. And that is Wipro ‘bad service network'.

A sense of utter dissatisfaction is clear in Sadashiv Bhandari's voice when he is asked about his reaction on Wipro's shutting down its PC business. "It is a very good decision. Wipro is hardly prominent in the market. And it had a very bad service network", exclaims Bhandari of Alpha Systems, of Dharwad district in Karnataka.

Simpson V Joseph, CEO, IOVA Computers, Kottayam, Kerala has got same complain against Wipro, "Wipro has a bad reputation when it comes to service. For this reason I stopped selling its computer hardware products last month". He further sites one incident which left him completely aghast. A certain PC that comes with one year warranty was found with a non-functional chip after nine months. When this was sent to Wipro's service provider thay promptly refused to replace it, saying it doesn't hold the warranty anymore.

B V Krishna Kumar of Divya Business Systems has got the same complain. "We always face great difficulty when it comes to availing service for Wipro's products. It never gets repaired easily and one has to face many hassles to get it done", says Kumar.

Wipro would continue to excel as a system integrator and strengthen its SI business in the coming future. It verily understood the dissatisfaction it caused to its customers across the country. P Suresh Kumar, Esquire associates, Thrissur says, "We hardly used to sell Wipro's desktop, PC or laptop. The reason being you can get far better products at much lesser price." He says for the past six months he has sold only two of Wipro's computer hardware products to his customers. He further adds, "Wipro understood their fallacy in continuing PC business and hence this withdrawal."

"The bulk of value in computers is captured by companies like Microsoft, Intel and component makers. We did a value add of less than 1% and now we are removing it." HCL plans to use its existing manufacturing facilities as repair factories for computers and mobile handsets. "Distribution de-risks from volatile currency," said Bhattacharyya.

R Sridhar of Triangle, Bangalore, sees the future in system integration and cloud solution. He says, "We are moving to SI and network solutions gradually. India will see a dominant market in this in the coming future".

Subarna Talukdar
(subarnat@cybermedia.co.in)