Business Today

Back on a roll

Demand for computers and tech gear goes into an overdrive in India, catching vendors such as Dell and Acer by surprise. That happy state is here to stay as government ramps up spending like never before.

Rahul Sachitanand | Print Edition: May 30, 2010

The rising prosperity of the Indian middle class is showing up in the way it sleeps and has Pertish Mankotia hassled.

Spring-coiled mattresses are selling by the thousands and the Head of Information Technology, or IT, at Sheela Foam, better known for its Sleepwell brand, has been busy as his company pushes into a sales overdrive.

Mankotia has been spending long hours with Sheela's IT vendors rapidly upgrading the company's creaky computing hardware—built around fiveyear-old servers, typically with software and hardware bundled together for specific applications. Sheela has already replaced three servers and is buying at least a dozen personal computers, or PCs, a month.

"There is a firm recovery in progress and we need to be prepared to tap this revival," says Mankotia. While tech budgets may have been frozen or, as in the case of Sheela, shrunk at the trough of the economic slowdown, a rebound in business has IT managers across India Inc. scrambling to replace and upgrade ageing hardware.

Brisk spending by Mankotia's fraternity in India is causing ripples in Austin, Texas, in the US, home to computer maker Dell, which is struggling to regain its second spot in global sales after Taiwanese rival Acer overtook it in late 2009 to rank behind market leader Hewlett Packard (HP).

In India, it's a pleasant contrast for Dell. In the past three years, the company has gone from being a one-trick pony focussed on just sales to large businesses, also referred to as enterprises, to serving small businesses.

It is also aggressively attacking lucrative long-term government contracts, and, more recently, making deep inroads into the home-user PC market. In making this transition, Dell India's sales have surged to an annualised $1 billion, or Rs 4,500 crore, and it has vaulted to the top place in the fast-expanding "notebook" segment, overtaking HP.

In desktop computers, Dell ranks second behind HP. Much of this resurgence has happened in the consumer market. Dell has, over the past year, opened new retail outlets, launched 17 new models, increased its service centres from two to 14, and, to increase its reach, has expanded into the indirect sales channel through distributors. "This has helped Dell reach over 300 towns, through 5,000 partners, something that it didn't have until early 2008," says Sameer Garde, who runs Dell's India business, which still depends on enterprise customers for the bulk of its offtake.

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