BUNDLING AN INTERNET connection with a fully-configured personal computer under an attractive financing scheme is the latest pitch to draw consumers to the broadband market. Concerned over the poor broadband offtake, which is linked strongly to low PC penetration, both Bharat Sanchar Nigam and Mahanagar Telephone Nigam have launched schemes in a tie-up with HCL Infosystems to address this issue. These schemes that offer easy financing options (tied-up with bank loans) will help customers book PCs from service centres and web sites of BSNL/MTNL and select dealers of HCL.

The absence of attractive financing options has been one of the main impediments to providing depth to the PC market. In the developed world, the PC is available at supermarkets, jostling for the consumer's attention along with such other durables as TV sets, refrigerators and washing machines. Though selling PCs require greater handholding of the customer, vis-à-vis other consumer appliances, the steady rise of the assembled/unbranded PC market in the country shows that affordability, rather than familiarity, has been the barrier to growth. According to the latest MAIT-IMRB study, the assembled PCs (local, unbranded) still accounted for 42 per cent of the nearly one million pieces sold in the first quarter of 2005-06. Once attractive financing options catch on, there is a good chance that the branded PC market, with its better reliability and value, will grow faster than it has in the past.

The sub-Rs 10,000 PCs, launched with a lot of fanfare recently by several manufacturers, have not taken off as expected. Since these PCs offer wafer-thin margins, dealers have been reluctant to push them aggressively. But these are early days, and it is well understood that though the vision of a "low-cost PC," as articulated by the high-power Working Committee of the Ministry of Communication and Information Technology, remains viable, its success, which depends on volume growth, will happen only in a phased manner, over the next three-five years. Second, since retailing is emerging a significant play in the metros, PC manufacturers will have to work out ways and means of enhancing PC sales through the supermarket route. Since this approach has the potential to reduce the marketing/distribution costs substantially, PC manufacturers will be able to consider a bigger marketing outlay to penetrate smaller cities and towns.

Considering India's low PC and broadband penetration, multiple innovations around pricing, value-added features or freebies should be used to drive overall growth. At the same time, since a variety of devices will be used to access the Internet in future, domestic manufacturers need to be open to the prospect of forging strategic relationships with multinationals for developing India as a low-cost manufacturing base for such devices.

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