Organisations cutting IT expenditure appear to have pulled down the sales of personal computers in India. For the first time, sales in 2008-09 clocked a decline of 7 per cent, aided by a sharper drop of 17 per cent in notebook sales.

The Manufacturers’ Association for Information Technology, or MAIT, blamed the regression on the slowdown in the economy which forced companies to cut IT spending.

Vinnie Mehta, MAIT executive director, said sales were flat in the first half of 2008-09 but plummeted in the second half. From a handsome growth of 114 per cent in the previous year, notebooks fell into a market chasm. Desktop sales too dropped to 5.27 million from 5.52 million. The drop was 4 per cent.

There is a silver lining though. MAIT expects 2009-10 to reverse the decline and, in fact, grow by 7 per cent as the ‘business sentiment improves’.

In 2008-09 sales of notebooks totalled 1.51 million, down from 1.82 million in 2007-08. Mehta said businesses such as BPO and ITeS, manufacturing, retail and households, which traditionally accounted for a large portion of the IT market, were “conservative” in their IT spends last year.

Sanjiv Goenka, RPG group vice- chairman, put the dilemma of both hardware buyers and sellers in perspective. He said his group was buying less as the requirement had dropped because it was going slow on store expansion. “Two years ago we were opening more than two stores a month on an average. Now we open only one store in two months,” Goenka said.

Notebook and PC makers also blame the credit crunch. Sameer Garde, country general manager for Dell India, said IT budgets of businesses had been pared by between 15 and 20 per cent.

“The main trend is that the refresh cycle has become longer. Big enterprises, which refreshed IT hardware every three or four years, have not done so this year. That is the only logical explanation for the drop,” he said.

There could be another lesser factor. Dell India did not spend as much on advertising this year as it did before. But it did try to make up the gap by spending more on consumer campaigns.

Ravi Swaminathan, president for personal systems group at Hewlett Packard India, more or less agreed. “The fall in sales is related to the global recession which has impacted growth. The US market has been very slow. Customers in India too have been holding back their purchases,” he said.

Unlike Dell, Hewlett continued to advertise as it considered branding important in keeping ahead of competition. Swaminathan refused to say if Hewlett had increased or decreased ad spends.

IT companies, usually large buyers of hardware, too have slowed purchases. Arvind Singhal, chairman of Technopak, said the net hiring by these companies was stagnant. The PC sale growth in the past was a result of the frenetic hiring that had gone on then. With IT budgets frozen, the PC market had been impacted. Ditto is the case of the replacement market.

Singhal, however, was positive about the next six months “as companies again begin to hire cautiously”.

(with inputs from Ruchika Chitravanshi and Jayashree Maji)