A crumbling consumer market has forced predominantly product companies such as Acer India and Hewlett-Packard (HP) to shift track and race after government contracts, which are in some cases, larger than the entire market for personal computers (PCs) and tablets.

The order the Uttar Pradesh Government placed last year, which was won by HP, was around 2.6 million tablets— nearly the same number of tablets sold in India in one year. This year, projects in the states of Assam, Chattisgarh, Kerala and Karnataka are up for grabs, while others like Tamil Nadu and Goa are due for renewals. Most of these states distribute laptops and tablets through welfare schemes to students and colleges.

“It’s time to face hard facts. Currently 25 per cent of our revenue comes from government projects, while 30 per cent comes from the consumer. In the next few years these could even out and become equal. It isn’t just mass orders for laptop schemes, e-governance projects in states like Kerala are also a big source of revenue,” said S. Rajendran, Chief Marketing Officer, Acer India.

“The last year was terrible, and this year the consumer market is expected to be flat. Much of the PC market for example is propped up by government agencies like the Electronics Corporation of Tamil Nadu,” he added.

Banking, finance

Other areas where desktop PCs and laptops are gaining traction are the banking, finance and insurance.

“Orders are given in large numbers for laptops for banking correspondents and so on, which is also a major driver. While the enterprise segment has also dropped – the silver lining is tablets and notebooks which will continue to grow,” Mr. Rajendran said.

In 2012, the domestic computer market grew 3.5 per cent to 11 million units, compared with the previous year, according to IDC.

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