Indian PC market hits all-time low on back of GST implementation

Traditional PC shipments in India have slumped nearly 19% quarter on quarter to an all-time low on the back of the recent GST implementation according to IDC India.

The analyst firm says 1.75 million units were shipped in the second quarter, down 18.9% quarter on quarter and down 18.0% year on year.

The consumer PC market accounted for 0.81 million units – down 22.7% year on year and 22.6% quarter on quarter.

Manish Yadav, IDC India associate research manager for client devices, says the outlook on discretionary spending remained optimistic, however channel partners remained cautious and planned for de-stocking due to the impact of the GST implementation.

The commercial segment fared better, with 0.94 million units shipped – a 13.4% year on year and 15.3% quarter on quarter decline, with IDC noting a lack of fulfilment of special projects and slowness in government spending.

"GST implementation has impacted the business in India even as the effect of demonetisation has subsided," Yadav says.

"Further, concerns related to new demand and new investment also turns as binding contraint on business sentiment," he adds.

Commercial desktops made up 32.5% of the overall PC market shipments for the quarter, with commercial notebooks making up 19.6%. Consumer desktops accounted for 11.8% of the market and consumer notebooks, 34.4%. Workstations made up 1.6% of the market.

Yadev says seasonality, aided by an increase in consumer spending along with the fulfilment of ELCOT and other state-owned education projects are expected to drive growth fo the market as it recovers, post GST implementation.

"Demand for PCs would be fuelled by small business buying as this segment of business users would look to comply with GST norms which came in effect from July 01, 2017," he says.

The Q2 results show HP continuing to dominate the traditional PC market, taking 33.8% market share and recording its highest overall consumer market share in the last 10 quarters with 35.4% share.

IDC says the vendor's strong channel engagement and complete package offering including hardware, software and services for successful GST implementation made HP one of the preferred brands in India.

Dell was a distant second, with 17.7% of the overall traditional PC market.

"Dell was also impacted by GST implementation and hence took an opportunity to liquidate their excess inventory in traditional IT channels," IDC India says.

"However, with slower demand than expected in the latter half of the first quarter, Dell took a cautious call of stock reversal and postponed their sell-in until the third quarter of 2017.

"Owing to this, the vendor observed a decline of 57.8% quarter on quarter in Q2 2017 in terms of unit shipment.

Lenovo meanwhile held on to third spot with 16.9% share. It's hold in the consumer market was stronger though, with the company taking second spot there with 17.4% share – up 1.3 percentage points quarter on quarter following increased shipments in the latter part of the quarter.

"With Lenovo's focus on enhancing device security and performance, it will look to thrive in the commercial segment moving ahead," IDC India says.

Acer took fourth place with 12.4% share.