Thursday, December 5, 2013

Wipro exits PC biz: Another one bites the dust

by FP Staff Dec 5, 2013

The dwindling demand for PCs has claimed yet another victim. Wiprohas exited its PC manufacturing business, one of the very first IT businesses that promoter Azim Premji entered into—- long before he entered the IT services business that Wipro is known around the world for today.
Wipro will discontinue manufacturing SuperGenius line of desktops, EGO laptops and NetPower servers in a market where customer needs are changing rapidly. “All the affected employees will be redeployed in the company,” said Wipro in a filing to the Bombay Stock Exchange (BSE).
“Our vision is to strengthen our position as a leading system integrator,” said SoumitroGhosh, senior vice-president and head of Wipro Infotech.
This news follows the footsteps of HCL Infosystems that decided to abandon the PC making ship and focus on distribution and services.

Research firm IDC has rightly predicted the slump in PC shipments this year. According to analysts, worldwide PC shipments are expected to fall by 10.1% in 2013, slightly below the previous projection of 9.7%, and by far the most severe yearly contraction on record.
“Perhaps the chief concern for future PC demand is a lack of reasons to replace an older system,” said Jay Chou, Senior Research Analyst, Worldwide Quarterly PC Trackers at IDC. “While IDC research finds that the PC still remains the primary computing device – for example, PCs are used more hours per day than tablets or phones – PC usage is nonetheless declining each year as more devices become available. And despite industry efforts, PC usage has not moved significantly beyond consumption and productivity tasks to differentiate PCs from other devices. As a result, PC lifespans continue to increase, thereby limiting market growth.”
India saw a mixed third quarter in 2013 and is in for a not so positive fourth quarter in PC sales.Manish Yadav, Market Analyst, IDC said, “July and August was noted to be upbeat as lower tier channels stocked up owing to exchange rate pressures. However, excess stock mixed with poor end user demand weakened channel buying in September”. Despite constrained spending, back-to-school season and festive demand starting Onam did drove pockets of investment amongst consumers, particularly around Portable PCs.
“However,” continues Yadav, “IDC expects Q4 to crumble because we anticipate seasonality and price hike to disrupt PC buying in the quarter ending December”.
Additionally, elections in Delhi, civil issues in the state of Andhra Pradesh are further expected to impact the overall buying in some of these larger states. Excitement around product transitions to ‘Haswell’ family of processors and the launch of Windows 8.1 may not drive demand in the near future.
In terms of market share, HP and Lenovo take the top two spots in India. But Kiran Kumar, Research Manager at IDC cautions vendors to remain careful about their inventory in the subsequent quarters as they prepare to transition to some.

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