Assemblers are a worried lot of people these days. The market is buzzing with speculation of how the market share of these players will drastically reduce, in the wake of the recent duty reductions. The fear is that with lower duty rates, branded players will now be able to offer the same kind of affordability as their assembler brethren.
p____p The assembler community, which currently holds about 60 percent of the market share, fear that the margins will come down to around 4 percent from the earlier 12 percent. They spend sleepless nights imagining the branded players eating into their market share.
p____p I think this fear is being blown out of proportion.
p____p Yes, the new duty structure does give branded players a wider market reach and it will make PCs more affordable. But it will not do so at the cost of the assembler. The strength of the local/regional guy selling a PC is that he understands the need of his client. This understanding has not come overnight. It has come from working closely with the customer, on his home turf and being able to deliver a solution that meets his requirement and fits his budget. And this insight is not something that can be wiped away with one policy decision.
p____p It will take a while to catch up with the advantages that the assembler already has, and once that happens, there will be a slight dent in the market share of these players. But by then there are new avenues of growth that beckon. Educational institutions, government offices and the SME segment are just some of these avenues.
p____p For if the home buyer does not mind spending a few thousand rupees more and opts for a branded PC, these segments, which buy in bulk, will definitely appreciate the price difference.
p____p Then, for the adventurous, there is also the assembled laptop market that can be tapped into, thus throwing open a whole new customer segment all together.
p____p So take heed. It’s not as gloomy as it may look.