IT Industry Performance Annual Review: 2007-08

1. IT Industry Performance Annual Review: 2007-08 Press Conference New Delhi: July 08, 2008

2. About ITOPS… An Introduction Industry Validation of the Market Figures Only Demand-Side Study on the Indian IT Hardware market ITOPS Longest Running Tracker Study on the Indian IT Hardware market Largest Tracker Study on the Indian IT Hardware market

3. Only Demand-Side Study on Indian IT Hardware Market… Designed to deliver the much needed demand-side insights Data is collected after‘Last Mile’ Accurate assessment of Buyer Profile • “Who bought”, “Where used”…Not dependent on ‘perceptions’ of reseller/ channel member/ vendor • No undercounting/over counting stock in pipeline • Includes direct imports by customers • Accurate estimation of assembled market ITOPS Identification of Emerging Segments • Need to monitor changes in user’s perspective to obtain cues for innovative marketing Market/ Customer Sentiments • Factors in the market/ customer sentiments and opinion along with industry level indicators Identify and observe Market Trends

4. Largest Study on Indian IT Hardware Market… Coverage in 22 Cities • The Study covers a sample of around 24,000+ entities per round • The study is conducted on a bi-annual basis covering the following time periods • H1 of FY: April to September • H2 of FY: October to March • … across the Top 22 cities • Greater than 1 Million Pop Towns except Bhubaneshwar & Guwahati

5. Longest Study on Indian IT Hardware Market… Existence of over 11 Years ITOPS completes its 10th year, thus being the longest running IT tracking study 2005-06 2003-04 Coverage scaled up to 22 cities from 16 cities Launch of supplementary channel survey for in between quarters 2002-03 ITOPS becomes a Bi-annual study 1998-99 Launch of ITOPS as an annual Study 1996-97

6. Industry Validation… Two Pronged Validation Process The findings from ITOPS is accepted as the official market performance of Indian IT hardware market by Manufacturers Association for Information Technology (MAIT), the nodal body for IT hardware industry in India. Information used by Govt. of India for all IT & allied planning. Validation MAIT Various IT Players Findings on Market-size projected to All-India Urban market Validation

7. Sampling & Projection… • Sampling & Projection • Household • Using SEC A-C household population as obtained in the National Readership Survey – the largest household survey in the country • Establishment • No framework for sampling and projection were available • Thus, a new framework called Ace Grid was developed by the ITOPS team • This Grid stratified the establishments by Principal activity performed at the establishment classified by number of employee. • Principal Activity defined: • Manufacturing/ factory/ Warehouse • Office • Outlets • Government • No. of employees defined: • < 10 employees (Small establishments) • 11-50 (Medium establishments) • 50 + (Large establishments) The Ace Grid has found application across researches involving business segment across geographies

8. Some Insights that ITOPS has provided …

9. Insights on IT market from ITOPS

10. ITOPS: Comprehensive coverage • Product coverage: • Computers - Desktop PC, Notebooks, Servers • Printers - DMP, IJP, LJP • Peripherals - Monitors, keyboard, scanner, zip drive, CD writer, Print server • UPS - UPS • Networking - Incidence, size of networking (no. of nodes) • Networking products - NIC, Hubs • Internet - Active internet subscribers, Modems

11. And the findings are…..

12. Total PC (Desktops & Notebooks) sales: 2002-2008 Units • CAGR 2002-08: 26% • Growth over 2006-07: 16%

13. Total PC (Desktops & Notebooks) market: Regional spread 6,341,451 Units 7,344,306 Units (-13%) (39%) (39%) (10%) 2006-07 2007-08 • PC consumption in both West and South grew by 39% each; in East it grew by 10% while in North it declined by 13% Figures in the brackets represent the growth in 2007-08 over 2006-07

14. Notebook sales: 2002-2008 Units • Annual sales grew by 114%; CAGR: 104% • Households accounted for 44% of the market growing 150%, Businesses accounted for 56% of the market growing 93%

15. Notebook sales: City-spread • Notebooks are fast penetrating beyond the top 4 metros; growth rate 152%

16. Notebook Consumption in Businesses - by employee size % Units • Overall consumption in the business grew by 93% • Consumption in large and medium enterprises grew by 51% and 123% respectively, in small enterprises it grew 174%

17. Desktop sales: 2002-2008 Units • CAGR 2002-08: 19% • Growth over the 2006-07: 1%

18. Desktop market: Regional spread 5,490,591 Units 5,522,167 Units (-14%) (4%) (10%) (7%) 2006-07 2007-08 • Desktop consumption in West grew by 10%; in East it grew by 7% each; in South it grew by 4% while in North it declined by 14% Figures in bracket represent the growth in 2007-08 over 2006-07 18

19. Desktop Market: Share of Indian, MNC & Informal 2007-08 2006-07 • Consumption of Indian brands decreased 4% in absolute terms • Sales of MNC Brands grew by 16% however that of Informal sector PCs declined by 12% in absolute terms

20. Desktop sales: City-spread • Consumption in Top 4 metros declined by 28% while sales outside the Top 4 metros grew by 14%

21. Desktop sales: 2002-08 74% 60% 75% Units 72% 77% 40% 81% 26% 25% 28% 23% 19% • Desktop market growth over 2006-07: 1% • Consumption in households grew by 55%; in Businesses it declined 18%

22. Annual Desktop sales: Business by employee size % Units • Overall sales to the Business segment declined by 18% • Sales to small and medium enterprises grew by 25% and 8% respectively, however in large establishments it declined 33%

23. Profile of Desktop buyers: Principal activity of the establishment % buyers • Consumption in Government grew by 7% and in factory locations by 47% • Consumption declined in office locations by 21% and in retail outlets by 29%

24. Profile of PC buyers in Households by Socio-economic class % buyers • Overall Households consumption grew by 55% • Consumption in SEC A grew by 50%, in SEC B by 68% and in SEC C by 43%.

25. Server sales: 2002-2008 Units • Annual sales increased: 35%; CAGR (for 6 years): 17%

26. Server sales: Business by employee size % Units • Overall sales increased by 35% • Sales to small and medium enterprises grew by 127% and 121% respectively, however in large establishments it declined 37%

27. Server sales: City-spread • Consumption in Top 4 metros declined by 17% while sales outside the Top 4 metros grew by 64%

28. Translates to 52 million internet users Active Internet entities: March’99 – March’08 ’000 Units (Entities are establishments/individual with internet connection; an entity may house/ be multiple user/s) • Overall entities with internet grew by 20% over March 2007 • Businesses accounted for 29% of the entities growing 6% while Households accounted for 71% of the market growing 27%

29. Internet penetration: March 2008 • Internet Penetration by Town class and Socio-Economic Classification (SEC) among Top 22 Cities Business Segment Home Overall 46% 21% Top 4 Metros 50% 25% Next 4 Metros 42% 17% Other 8 Metros 46% 16% Remaining 6 Metros 28% 11% SEC A - 43% SEC B - 16% SEC C - 6% Internet penetration by Town class Internet penetration among households by SEC

30. Mode of Internet access in Businesses: March 2008 DSL Data Card DSL inching ahead. Data Card fast growing in popularity 30

31. The Market of 2007-08 Vs 2006-07

32. The expected Market for 2008-09

33. Thank you!