Robust notebook sales growth paints 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.