LG ups the ante on IT

The PC
industry market is in a state of shock with the recent announcement
made by PC maker
giant Hewlett-Packard ( href="http://www.dqweek.com/HP-enhances-customer-support-program">HP)
to either sell off or spin off its PC
business and kill its tablets and smartphone category. Overall the PC
industry is in doldrums. According to the industry analyst Gartner,
“Worldwide PC unit growth is projected to be slightly weaker in
2011 than the previous projection. PC shipments are expected to grow
9.3% in 2011, reaching 385 mn units. This is slightly lower than
Gartner's previous projection of 10.5% growth for this year.
Consumer mobile PCs are no longer driving growth, because of the
sharp decline of consumer interest in mini- notebooks. “Mini-notebook
shipments have noticeably contracted over the last several quarters,
and this has substantially reduced overall mobile PC unit growth,”
said Ranjit Atwal, research director, Gartner.

Contrary to
the belief of present situation, consumer durable major href="http://www.dqweek.com/LG-eyes-Rs-3000-cr-B2B-solutions-market">
LG has
re-entered into notebook space for the second time, with the
introduction of 13 SKUs. The company aims to become top 5 player in
this space by 2014. The company said that the market for notebooks in
India was growing rapidly and it has now got a range of India
specific products to break into the segment, dominated by Dell, HP
and Apple. India is a growing market for notebooks and LG plans to
kick start sales here. We have launched 13 notebooks at a price
ranging from Rs 26,000 to Rs 66,780.

PAST
EXPERIENCE

In the past
LG had been struggling hard to position its PC business worldwide.
The company had
exited the notebook segment around two-and-a-half years ago. The
decision to make a re-entry was of the fact that the Indian notebook
market is currently much more matured and burgeoning. However, by
taking the corrective measure and setting the right directions
towards PC business, the company has made a comeback.

Speaking on
the sidelines of the launch of notebook, Soon Kwon, president, South
West Asia region and MD, LG Electronics said, “Earlier we had seen
a partial success in the notebook space and reason being discontinued
our PC business was our inability to understand the customer needs.
Therefore, we took a time to understand the consumers need better and
work towards the same. Having said that notebook business is a key
part of our portfolio globally. As we are not looking at any
marketshare this year, however next year we expect this category to
contribute 12% to 14% in IT business by 2012.

Our IT
division is eying a 15% growth in revenue terms and has targeted Rs
1,000 crore revenue by 2012. Nevertheless, in the current year, we
hope to garner Rs 860 crore.” Kwon further added, “At LG, we have
decided to grow very big in the 3D technology space including TV or
3D laptops. The new lineof notebooks is targeting premium customers,
who are more interested in technology, style and design. However, we
have plan to come out with the affordable range of notebooks in near
future.”

BEEFING
UP
IT VERTICAL

The company
has an aim to cross Rs 1,000 barrier of IT business. Presently, LG
has been having a dominant marketshare with 24% marketshare in PC
monitor and 60% in ODDs. The company is banking on notebook business
and aiming to capture 20% marketshare in next 5 years. “In addition
to our notebook, we will soon foray into printing domain with the
launch of our inkjet and laser printers in next two months.
Henceforth, notebook and printers will be the growth engine of our IT
verticals. However, the launch of tablets is also on the card,”
said Kwon.

In the next
6
months, LG is going cautiously and will take the market feedback. To
begin with, it will operate in the mid-and high-end segments. “We
do not have any plan to play in the low-cost segment in the near
future,” said Kwon. Also, LG said it will be importing the
computers initially. “Well, it is just a matter of numbers.
Presently, it makes business sense to import. Once we reach to a
critical mass, we will start assembling our notebooks in India,”
added Kwon. LG plans to launch tablets in the Indian market by the
second quarter of 2012. The company's IT division is eyeing a 15%
growth in revenue terms and has targeted a Rs 1,000 crore revenue by
2012.

CHANNEL
TO
DRIVE BUSINESSES

The
go-to-market strategy for the notebooks business will remain through
the traditional IT channel. Sanjoy Bhattacharya, product group
marketing head, IT, LG Electronics India said, “We will continue to
drive our notebook business with our 10 year old regional
distribution model. We have identified 70 distributors for the
notebook distribution. In addition to this, we are also taking retail
route in a big way. Our LG brand shop will continue to contribute.
Plus we have signed up with 3 large format retail showrooms. From
October month onwards, our notebooks will be available for the end
customers. Moreover, in the current year we are looking at the
shipment of 20,000 followed by 80,000 units in 2012.”