Market Research Report : Personal computer market in china 2012

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Personal Computer Market – China
January 2012

Executive Summary
 PC market in China has been demonstrating rapid growth and development over the past few years
Market  China’s PC market will continue to exhibit speedy growth with sales volume growth of ~x % CAGR from 20‐‐ to
20‐‐

Drivers: Challenges:

LE
‐ Increasing internet usage ‐ Rise in use of smartphones
‐ Huge consumer base ‐ Rapid technology obsolescence

P
‐ Rising income
‐ Rapid price drops and low profit margins
Drivers & ‐ Accelerating urbanization and changing lifestyle

M
‐ Untapped market potential ‐ Challenges in overseas expansion
Challenges

A
‐ Growing consumer goods retailing ‐ Low IT spending

S
‐ Growing online retailing
‐ Growing computer education

 Promotion of broadband and home appliances
Government  Promotion of E‐government and public cultural service system
Initiatives  Increase education level in rural areas

 Miniaturization
 Rising popularity of tablet PCs
Trends  Emerging netbooks
 PC vendors move towards smartphones

 International players like Company 1 and Company 2 are boosting their investment in China, indicating tougher
Competition and more fierce competition for the domestic players
 Some of the major domestic players in the market are Company 3, Company 4, Company 5 and Company 6

PERSONAL COMPUTER MARKET IN CHINA 2012.PPT 2

•Introduction
•Market Overview
•Drivers & Challenges
•Government Initiatives
•Trends
•Competition
•Key Takeaways


Personal computers are used for various purposes and has
become an integral part of present day life
Introduction

• Defining the product

P LE
S AM Usage

• Usage 1
• Usage 2
• Usage 3
• Usage 4
 Sub‐point 4
• Usage 5
• Usage 6


Various kinds of personal computers are available, such as
desktop PCs…
Types of PCs (1/2)

Desktop • aaa

LE
MP
Laptop • bbb

S A
Notebooks • ccc

Sub‐Notebooks • ddd


Global PC market is intensely competitive with marginal
product differentiation and varied market environments
Global PC Market – Overview Rise in Global PC Shipments
• In Q2 20‐‐, worldwide PC shipments volume reached ~x mn units
+w%

mn units, y % y‐o‐y growth 100 a2
a1

LE
80
• In Q3 20‐‐, Notebooks grew p% and desktops increased
60

P
q%, but netbooks declined r% from the same period last
40
year

M
20

A
 PC market expansion has been primarily driven by the rise in
0

S
popularity of pads with sales tripled in Q3 20‐‐ up from Q3 20‐ Q2 20‐‐ Q2 20‐‐
‐ Note: Excluding Tablet PC sales

Domestic PC Market – Overview Market Size and Growth
• China is expected to lead the global PC market by 20‐‐
mn units
• China is gradually emerging as a leader in PC market , 200 b3
which reflects the increasing affluence of emerging
150 +x%
markets, as well as the comparative stagnation of more
mature regions 100
b2
 Company 1, the Chinese PC market leader, has directly 50 b1
benefited from the rapid growth in the PC market, accounting
for g% of global shipments and ranking hrd after Company 2 0
2005 2010e 2015e
(i%) and Company 3 (j%) in Q3 20‐‐


Drivers & Challenges – Summary

Drivers
Increasing Internet Usage Challenges

Huge Consumer Base

LE Rise in Use of Smartphones

Rising Income

MP Rapid Technology Obsolescence

A
Accelerating Urbanization and Changing
Lifestyle Rapid Price Drops and Low Profit Margins

Untapped Market Potential

Reduction in Import Duties
S Challenges in Overseas Expansion

Low IT Spending
Growing Consumer Goods Retailing

Growing Online Retailing

Growing Computer Education


Internet popularity assumes massive popularity, providing
huge impetus to the growth in PC market
Increasing Internet Usage Impact
• Finding 1

 Sub‐finding 1

LE
• Finding 2
 Sub‐finding 2
 Sub‐finding 2’
• Finding 3

MP
mn
Heading 1
Segment b
S A %
Heading 2
Segment d
Heading 3
20‐‐ 20‐‐
800 Segment a t5 120 Segment a +x%
+x% +y%
b5 100
600 +y% d5 e2 +z%
t4 80 80 e1
t3 e3 e4
400 t2 b4 60 d4 60
b3 d3 e6
t1 b2 510 40 d2 e5
70 40
200 b1 d17
277 300 20 45 48 20
157 213 27 35
0 0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐ Jun 20‐‐e 20‐‐ 20‐‐ 20‐‐ 20‐‐ Jun 20‐‐e Product 1 Product 2 Product 3


High consumer base is propelling the growth of the PC
market in China
Huge Consumer Base Impact
• Finding 1
• Finding 2
• Finding 3

LE
MP
S A 0‐14
Heading 4

15‐29 30‐44 >45

Total Population in
20‐‐: ~y mn

a%
d% Large target market‐
above x% of the total
population
b%
c%


Rising income and reduced prices to provide new growth
opportunities for PC manufacturers
Rising Income Impact
•Finding 1
•Finding 2
 Sub‐finding 2

LE
•Finding 3
•Finding 4
MP
Heading 5 S A Heading 6
USD
2,000 +x%
no. of weeks
a2
a1
40
1,500
b1
30 ‐y%
1,000
20
500 10 b2
b3
0 0
Jan‐Jun 20‐‐ Jan‐Jun 20‐‐ 20‐‐ 20‐‐ 20‐‐e


Accelerating urbanization coupled with changing lifestyle
boosts PC sales
Accelerating Urbanization and Changing Lifestyle Impact
• Finding 1

 Sub‐finding 1

LE
• Finding 2
 Sub‐finding 2

MP
S A Heading 7
Analysis 1
Segment a Segment b
mn
t1 t2 t3 t4
100%
80% a1% a2% a3% a4%
60%
40%
b1% b2% b3%
20% b4%
0%
20‐‐ 20‐‐ 20‐‐e 20‐‐e


Low PC penetration provides significant opportunity for
further growth
Untapped Market Potential Impact
• Finding 1

%
a1
Heading 8

LE
P
100
Analysis 2
a2 a3

M
a4
50
a5 a8

0
Country 1 Country 2

Reduction in Import Duties
Country 3

S A
Country 4 Country 5 Country 6

Impact
• Finding 2

Before 27th Jan 20‐‐ After 27th Jan 20‐‐

x% Import Duty y%


Rapidly growing retail industry facilitates the growth of PC
market
Growing Consumer Goods Retailing Impact
• Finding 1 Heading 9

 Sub‐finding 1

LE
USD bn
• Finding 2 +x%
300 a2

P
a1
200

Growing Online Retailing S AM 100

0
Oct 20‐‐ Oct 20‐‐
Impact

Heading 10

USD bn
200 +y% b4
Analysis 3 b3
b2
100 b1

0
20‐‐ 20‐‐e 20‐‐e 20‐‐e


Growing computer education pushes further PC usage in
China
Growing Computer Education Impact
• Finding 1
• Finding 2
• Finding 3
• Finding 4

LE
MP
S A
Heading 11 Heading 12
+x%
a e
b g USD bn t1 t2 m1% i1%
a1% i k m
c h b1% b2% a2% l1%
c2% j l
d c1%
d2% j1%
d1%
e2%
e1% f2%
f1% k1%
g1% g2%

20‐‐ 20‐‐e


Non PC‐devices becomes increasingly trendy, providing stiff
competition to the PC market
Rise in Use of Smartphones Impact
• Finding 1

 Sub‐finding 1

LE
 Sub‐finding 1’
• Finding 2

• Finding 3
Sub‐finding 2

MP
Heading 13 S A Heading 14

mn mn units
400 100 b3
+x% +y%
a2
300 80
a1 b2
60
200
40
100 b1
20
0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐e


Lack of established Chinese brands restricts global
expansion
Challenges in Overseas Expansion Impact
• Finding 1

• To achieve global recognition, domestic companies must focus on following categories:

P LE
M
Category 1 Category 3

S A
Category 2 Category 4

Heading 15

%
a1 a2
80
60 a3
Analysis 4
40
20
0
Country 1 Country 2 Country 3


Summary – Trends

LE
MP
SA
PC Vendors Move towards
Miniaturization
Smartphones

Trends

Emerging Netbooks Rising Popularity of Tablet PCs


Tablet PC market in China will become more mature in the
coming years
Rising Popularity of Tablet PCs
• Finding 1 Heading 16

• Sub‐finding 1
Analysis 5

LE
• Finding 2
mn units
 Sub‐finding 2

P
a2
2.5 +x%

M
2.0

A
1.5

S
1.0 a1
0.5
0.0
20‐‐ 20‐‐e
Date Description
Jan 20‐‐ • Event 1
Mar 20‐‐ • Event 2
Mar 20‐‐ • Event 3
Jul 20‐‐ • Event 4


PC vendors need to adopt strategies to face the growing
competition in the Chinese PC market
Competition – Overview Competitive Landscape – Market Share
• Finding 1
Company 1 Company 8

 Sub‐finding 1 Company 2 Company 9 n%

LE
• Finding 2 Company 3 Company 10 a%
Company 4 Company 11
 Sub‐finding 2

MP Company 5
Company 6
Company 7
Company 12
Company 13
Others
k%
l% m%

i% h%
j%

S A g%
f%
e%
d% c%
b%

Pre‐requisite to become a successful PC vendor

• Point 1
• Point 2
• Point 3
• Point 4
• Point 5


Domestic Competition – Summary (1/2)

Revenue and Profit for Major Domestic Companies of 20‐‐

0 5,000 10,000 15,000 20,000

LE 16,604.8
USD mn

P
Company 1
129.4

S A
Company 2M 308.6
9,189.4

2,769.1
Company 3
72.7

1,238.8
Company 4
Revenue
36.5
Net Profit


Domestic Competition – Summary (2/2)
Net Income
450 Size of the Bubble represents Market
Capitalization in USD mn

400

LE
350

300

MP c

A
250

200

150

100
S d

b
50
a

0 Revenue
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000

Company 1 Company 2 Company 3 Company 4


Major Domestic Players in the Market (1/5)

Company Snapshot: Company A
Corporate Information Financial Performance

Headquarters Province 1 Revenue Revenue Profit/Loss

LE
USD mn USD mn
Profit/Loss
Founded 20‐‐ a4
1,500 40

P
a1 a2 a3
Product 1, product 2, product 3, product 4, 30
Products 1,000

M
product 5, product 6, product 7, product 8 20

A
500
10

S
Key People Person 1– President
0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐
Business Highlights
• Company engages in the manufacture and sale of computer and other electronic products in country 1and
internationally
• In Oct 20‐‐, Company A. entered into an agreement on equity transfer to acquire x % stake in company b from
company c for ~ USD y mn
• In Apr 20‐‐, company announced that the company's wholly owned subsidiary, a city 1‐based manufacturing
company, will transfer a z % stake in a city 1‐based technology development company to an information industry
holdings company, at USD p mn
• In Dec 20‐‐, company announced that it divested a x % stake in a city 2‐based computers company to a city 3‐based
digital company, at USD q mn


PC market has experienced rapid growth and China is
expected to be the world’s largest PC market by 20‐‐
PC industry has become a leading industry in China's national economy and is playing a guiding and supporting role in
the overall national economic situation

Opportunities in the Initiatives Taken by

Market Size
Market Players

LE
mn units
200 a3

P
Increasing internet use Players are taking
150 +y%
and rising prosperity steps to upgrade the
which has resulted from
accelerating urbanization,
acts as a major driver for
the growing demand of
personal computers in the
100

S A
50

0
M a1

20‐‐
a2

20‐‐e 20‐‐e
quality of their
services

Mini PCs, Tablet PCs,
country netbooks are being
Low market penetration added to the product
and reduction in import Challenges portfolio to sustain
provides scope for the PC competitiveness
vendors
• Rise in use of smartphones
Growing retail industry
• Rapid technology obsolescence Players need to focus
coupled with increased
on global expansion
computer education • Rapid price drops and low profit margins
by strengthening
supports the future • Challenges in overseas expansion their consumer
prospects of the PC
• Low IT spending brand and products
industry


Thank you for the attention
Personal Computer Market ‐ China report is a part of Netscribes’ Information Technology
Industry Series.
For more detailed information or customized research requirements please contact:
Jitendra Punjabi
Phone: +91 33 4064 6215
E‐Mail: jitendra.punjabi@netscribes.com

About Netscribes
Netscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment &
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value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth
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Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India,
Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the
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