PC sales in India to revive Intel?

As chipmaker loses market share to AMD, it hopes to increase usage of cheaper computers in Asia's third-largest economy. Photos: Intel's sub-$400 laptop

Tech Industry
Intel, the world's largest chipmaker, said on Tuesday that it would spearhead an initiative to sell cheaper computers in India to increase usage in Asia's third-largest economy. Intel's sub-$400 laptop

Intel, which is facing intense competition from smaller rival Advanced Micro Devices, also plans to win back market share during 2006 as rising PC sales in emerging markets are seen offsetting mature demand in most western countries.

India's cheapest desktop now costs about 10,000 rupees ($220). However, although India is a globally recognized software developer, penetration rates are abysmal due to high prices and the absence of reliable power in vast parts of the country.

A new desktop computer with an energy-saving microprocessor will be available at 20 percent less than the lowest price, Intel Chief Executive Paul Otellini said as he began his first visit to India.

"People really want a full-featured personal computer. They want (an) optical drive, they want (a) full-featured operating system. They want to be able to run games," he said. "They want Internet access. They want all the applications. No one wants to cross the digital divide with old technology."

Indian desktop sales are estimated to have risen 21 percent to more than 4.1 million units in the fiscal year ended March 2006. That compared with nearly a similar number of new users who enter the mobile-services market each month.

The desktop will be available in two months and will be marketed by Indian companies like Wipro and Zenith Computers. Intel will also collaborate with ICICI Bank to facilitate loans for buyers.

Demand for computers and notebooks in India is coming mainly from fast-growing sectors such as banking, financial services, telecommunications and information technology. 5450745

Entertainment- and education-based software is fueling demand for desktops in the home segment.

In December, Intel said it planned to invest more than $1 billion in India to strengthen its research and development, and pick up stakes in telecommunications and technology start-ups.

California-based Intel, which has a huge development center in Indian technology capital Bangalore, has invested $700 million in India over the past decade.

Intel plans to spend $1 billion over the next five years to promote Internet use and computer training in developing markets such as India and Mexico.

The program, dubbed "World Ahead," aims to bring high-speed wireless Internet access to 1 billion people who can't get online.

Intel would also work closely with Indian telecommunications firm Videsh Sanchar Nigam, part of India's Tata Group, to offer wireless broadband connectivity at railway stations.

Intel is facing intense competition from Advanced Micro Devices in the market for microprocessors--the brains that run computers.

Earlier this month, Dell, the world's largest personal computer maker, said it would be using AMD Opteron dual-core chips in multiprocessor servers due out later this year, ending its sole reliance on Intel.

"This means that we have to work harder...to win that business back," Otellini said. "Our intention is to win that market segment share across the board over the course of 2006."

Intel has steadily lost market share to AMD over the past several quarters and has aggressively cut prices on its processors to stop the slide.

But the chipmaker, which posted a 38 percent fall in quarterly profit in April and cut its annual revenue forecast, said it had stemmed that loss in market share.

Intel is also in talks with the Indian government to set up a chip-manufacturing facility in the country. Company officials said the dialogue continues.

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