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HP to focus on premium segment, small towns to drive India growth

LiveMint logoLiveMint 23-06-2017 Rozelle Laha

New Delhi: HP Inc. is set to accelerate its personal computers (PC) business with focus on the brand’s premium segment and smaller towns in India.

The company plans to expand its retail footprint with 1,000 HP Exclusive retail stores (HP World), up from 490 stores now, by December 2018, with focus on tier II, tier III and tier IV towns, to “lift retail experience and showcase HP’s technology to customers”, Ketan Patel, senior director, personal systems, HP Inc. India, told Mint.

HP emerged as the market leader with a 29.5% share of the overall India traditional PC market, according to research firm International Data Corporation’s (IDC) quarterly personal computing device tracker for Q1 2017.

It has registered a consistent growth in demand from smaller towns. In 2016-17, 40% of HP’s sales in India were driven by tier II, tier III cities, up from 25% in 2014-15. In FY18, the company is eyeing this share to be up to 60%.

Without disclosing any investment amount, Patel told Mint, “India is among the top 10 countries for HP worldwide and we are investing in this country because we believe that the growth will come... with Digital India plans, improvement of connectivity, fibre network, enablement of smartphones that has reached to smaller towns has helped technology reach smaller places. We believe PC business will see growth now.”

Premium segment, gaming and mobility will be among key growth areas for the company during the current fiscal year as HP strengthens its consumer business by tapping demand from students, and reaching out to first-time buyers through retail store expansion in smaller towns.

HP on Wednesday introduced a new range of convertible notebooks powered by Windows Ink—HP Spectre x360 and HP Pavilion x360—starting from Rs40,290 in New Delhi.

HP’s market share in the premium category was 36% in Q1 2017, according to IDC data.

According to IDC quarterly personal computing device tracker for Q1 2017, the overall traditional PC market registered a year-on-year growth of 8.5% over Q1 2016 and a quarter-on-quarter growth of 12.5% over Q4 2016 with a rise in demand for notebooks.

However, IT researcher Gartner Inc. sees challenging times ahead for worldwide PC market and expects that 2017 will decline 1.8% and return to a growth of 1.1% in 2018. According to Gartner, in Q1 2017, PC shipment declined 1.8% from the same quarter a year ago. Gartner’s data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads.

The improved telecommunications infrastructure in small towns and need for bigger screens and computing performance will drive demand for PCs in India, an expert said.

“Goods and Services Tax (GST) implementation will drive digital services as well as a need to overhaul company’s accounting systems. It will lead to PC upgrade or new placements in the commercial segment in the next 6-8 months,” Lillian Tay, principal research analyst, Gartner, said in an email response to Mint.

The company awaits clarification on certain tax rates with the introduction of GST. “GST will bring in more technology... that brings in opportunity for us to increase our business and get customers to adopt technology.”

However, HP has no plans to expand capacity of its India plant that presently manufactures for India consumption only. The company that currently employs over 8,000 employees has no immediate plans to scale up staffing.

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