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Notebooks-market-outlook

Robust notebook sales growth paints a bright future

Rudijanto
Contributor
Jakarta

Although the average price of a notebook computer may be four
times that of a desktop personal computer, or PC, the
surprisingly higher 2003 sales growth of notebooks in Indonesia
has made distributors quite optimistic about the device's
marketability in the years to come.

Data compiled from various sources by the Association of
Community Internet Centers (APWKomitel) reveals that notebook
sales in 2003 grew around 14 percent, while PC sales rose by only
about 10 percent.

Despite the fact that PC sales still constituted the bulk of
last year's computer sales -- about 740,000 units compared to
80,000 notebooks -- many notebook distributors believe they can
maintain the growth in sales.

"We hope that in 2004, notebook sales growth can be maintained
at about 13 percent, especially among commercial buyers, like
corporations and executives," said Rudi Rusdiah, APWKomitel
Chairman and PT Micronics Internusa CEO. Micronics markets Dell
products in Indonesia.

Similarly, Martin Wibisono, Hewlett Packard (HP) Indonesia's
market development manager for Personal Systems Group, also
believed prospects for the notebook market looked bright in 2004.

"According to figures issued by the International Data
Corporation (IDC), our target for notebook sales this year has
gone up from 15 percent last year to 18 percent," he said.

Toshiba distributor PT Aneka Infokom Tekindo expects even
higher growth. Aneka general manager Gunawan Nugroho said this
year, domestic notebook sales could grow by 18 percent or more,
even 20 percent.

During the launch of Toshiba's new Portege series A100 and
M20 and its Pocket PC e400 and e800 series in Jakarta last month,
Gunawan announced that the company had targeted sales of between
25,000 and 27,000 notebooks in 2004 -- or 30 percent of the
domestic market share.

Gunawan claimed that last year, Toshiba was the market leader
in this segment.

HP also has similar expectations. Claiming market leadership
during the second and third quarters of 2003, Martin said HP
aimed at better sales growth and maintaining its dominant
position with a market share of over 30 percent.

"In the first quarter of 2003, we were still number three in
the market. We jumped two positions in the second and third
quarters and have maintained our number one position up to now.
We expect that we will claim the number one spot in the fourth
quarter of 2003 ... we are still awaiting the sales report from
the IDC. Our market share in the third quarter was a robust 30
percent," said Martin.

Such optimism among notebook distributors seems at odds with
the current investment trend -- most foreign corporations with
investment or expansion plans have adopted a wait-and-see
attitude.

Moreover, some investors and analysts predict that the 2004
national elections would impact the local economy negatively,
such as contribute to a decline in consumer spending.

While major players in the Indonesian notebook market expect a
healthy domestic growth in spite of various internal and external
factors, most admit that such factors heighten competition.

"Competition is not getting any easier, and it will become
fiercer in this hyper-competitive market, where many products are
becoming commodities," said Ferry Sutanto, IBM Indonesia Personal
Computing advisory sales specialist.

Most major companies acknowledge that competition is going to
be tough on all fronts, since players are battling it out in both
the commercial and individual consumer segments. HP and Dell,
however, are clearly focusing on the corporate segment.

"The most promising market in 2004 is the corporate market,
which we believe will grow faster than the individual consumer
segment," said HP's Martin.

Elaborating on the market's potential, Dell's Rudi said many
multinationals, such as those in the mining industry, were not
apprehensive about the domestic situation, including the
elections.

"I believe that major corporations, such as financial
services, banks, mining companies and other, mostly export-
oriented firms, will make solid contributions to notebook sales
this year and in coming years," he said.

In addition to the corporate sector, IBM and Toshiba also
expect strong growth in the retail consumer segment. IBM's Ferry
expects greater demand in this segment, even though the segment
was price-sensitive.

Toshiba Computer System sales and marketing manager Glenn
Batchelor emphasized the company's commitment to developing its
individual consumer segment this year.

"One of our reasons is that this particular segment showed
high growth -- 124 percent -- during 2003, above the average
sales growth for notebooks in Indonesia," said Glenn.

This year, more than ever, major players such as IBM, HP,
Dell, Acer and Toshiba are strengthening their marketing
strategies, network, support services and communications
campaigns to claim a big chunk of each market segment. It goes
without saying that all are also offering a full range of
superior products.

"We plan to launch several new notebooks -- the IBM ThinkPad
R, T and X series and a number of others ... with the newest
Intel processor technology, integrated Wireless Fidelity (WiFi)
and our own latest innovation, the Active Protection System,"
said Ferry.

He explained that the Active Protection System monitored
external conditions and also protected the hard drive from severe
shocks in the case of an accidental fall.

"We have also installed the newest data protection system.
Users can return to the last working condition, or last backup
save, by pressing F11. For instance, let's say the last scheduled
backup is today at 12:00 p.m., but an accident or virus attack
happens at 3:00 p.m. By pressing F11, users can return to the
working condition of 12:00 p.m.," Ferry explained.

To boost sales for this year, HP is introducing its new
Pavilion notebook for the retail and individual consumer market.
Pavilion incorporates an Intel processor enhanced with hyper-
threading technology. HP's new Tablet PC TC1100 with Centrino
technology is expected to raise sales further.

"We are also going to launch several new corporate models in
coming months. They come with the latest technology, like higher
processor speed, Centrino technology, hyper-threading processor,
widescreen format, rejuvenated docking system, Bluetooth, SD
slot, wireless format and remote control," said Martin.

With more models incorporating the highly advanced features
available today, corporate and individual consumers obviously
have a better selection from which to choose. Like any
technological product, the more advanced the product, the higher
the price tag.

The good news is that some notebooks and laptops with adequate
features and a few extras cost less than US$1,000, not much more
than a branded desktop PC and LCD monitor.

"Given the current high demand for LCD monitors, their price
has gone down significantly. At the same time, notebook prices
have also fallen as a result," said Rudi.

Another encouraging factor for PC distributors is the
relatively stable rupiah exchange rate. Add to it the current
trends and lifestyles across major cities, where cafes, lounges
and other public venues provide facilities for today's mobile
Indonesians.

Such trends and developments -- and their hopes for a smooth
national elections -- are good reasons for an optimistic
projection.