Michael Dell, who runs the world's largest personal computer maker, is preparing for expansion in India's PC market after the removal of import taxes that have made his company an also-ran in Asia's second-largest market.
The 40-year-old founder of Round Rock, Texas-based Dell Inc is opening a third call center in India and visiting clients in the country for the second time in as many years to boost sales.
India's government has proposed removing its 10 percent import tax on computers on April 1.
PHOTO: AFP
Dell's strategy of importing PCs rather than making them in India made its products more expensive in a market where PC shipments surged 34 percent last year, outpacing the 14 percent increase in Asia, according to data from researcher Gartner Inc.
Dell's 3.5 percent market share in India last year trailed the 13 percent of Hewlett-Packard Co and 7.1 percent of IBM Corp, Gartner said.
"With the government cutting import duty to zero, they will become more aggressive and sell at lower price points to a larger number of customers," said Aman Munglani, an analyst with market researcher IDC.
Dell's biggest customers in India are software exporters and customer-contact centers, which don't pay duties on computers purchased from overseas.
"That is the reason they are behind Hewlett-Packard and IBM," said Munglani, based in Gurgaon, near New Delhi.
HP and IBM both have assembly plants in India.
The Indian market will expand more than 30 percent a year for the next three years, according to the Manufacturers Association of Information Technology, which counts computer makers including HP among its members.
"Assuming the current rate of growth, we will sell 10 million computers annually by 2008" from more than 4 million units in the year ending March 31, said Vinnie Mehta, executive director at the New Delhi-based industry group. "Demand for computers is surging as industries such as telecommunications and software are expanding."
Overseas computer makers including Dell and HP are competing to win market share from unbranded products. One out of two computer models sold in India is unbranded.
Increased sales in India will help Dell, who founded the company in 1984 and is now chairman, meet his goal of US$60 billion of annual revenue next year as growth in the Asia-Pacific region outstrips gains in the US.
The company's sales in the Asia Pacific region increased an average 26 percent in the past two years, compared with 15 percent in the Americas, where it gets two-thirds of its revenue.
Dell on Monday set up its third customer-contact center in India to benefit from lower costs in the world's second-most populous nation. The center has been set up at Chandigarh, located in northern India, with 300 workers. The new center, beginning operations on March 28, will provide technical support to customers in the US.
The computer maker employs about 7,500 employees at its software and contact centers in the cities of Hyderabad and Bangalore, K.S. Narahari, spokesman of Dell's India unit said in a phone interview from Bangalore.
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