IT product prices head northwards

The Central Board of Excise and Custom's move of implementing excise on MRP
of all IT products on January 25, 2008 has left the IT industry in a state of
flutter. While few vendors have already increased the prices of their products,
others are still in a wait and watch mode.

According to sources from the industry, Logitech has hiked the prices of its
products by five to six percent. HP on the other hand, already increased its
prices since January by eight percent.

Intex followed likewise and increased its prices in February to eight
percent. Vendors like Canon, Zenith, Lenovo and Sahara are however waiting for
the government to pay more attention to the situation and are currently in
discussion with senior managers in the industry before they decide on increasing
prices.

Mixed reaction

Most partners felt that this hike in MRP will affect system integrators and
LFRs the most while dealers and resellers' business will also be affected to a
considerable extent. In the process, the end-consumers will get maximum
benefits.

Intex has rationalized their price so that the channel does not get deeply
affected. While they have lowered the MRP of their high-end products to the tune
of 10 percent, in the lower segment, the company has decreased it to the extent
of 30 percent.

Subroto Biswas, Country Manager, Logitech India said, “We have tried our best
to hike the prices of Logitech products to a minimal level so that the channel
does not have to bear the brunt of the price rise.”

Puneet Datta, Senior Manager Marketing-Business Imaging Solutions, Canon
stated, “We are currently in the process of evaluating and don't want to
increase the prices immediately. The government is offering an abatement of 25
percent as of now and we are working with senior managers in the industry and
CII to approach the government.”

Ashish Taneja Director of Bhopal-based Galaxy Company and dealer of Zenith
products stated, “We haven't received any notification from Zenith as far as the
hike is concerned, as the company is currently in the process of monitoring the
situation and factoring the prices. This hike is hitting the importers both from
the excise front as well as owing to rupee appreciation.”

LFRs: Most affected

However, in this entire exercise, LFRs will suffer the most.

Stating the government's move as unjustified, Subram Natrajan, Chief
Energizing Officer of Mumbai-based Sam7 Computers and Networks stated, “This is
an attempt to take money away from the IT industry. As it is the margins were so
low and this hike leaves us nowhere. The retail segment will be affected the
most, as they used to sell it at an even higher price than the MRP.”