The PC market is undergoing a definitive transition, the kind not seen in a number of years. The generational change from Intel’s Pentium to Core “i” chips, comes to mind. As perhaps the period of uncertainty that defined Windows Vista and Windows 8, before the relative stability of Windows 10. Laptops, desktops and convertibles are increasingly finding a meaning as artificial intelligence PCs, or AI PCs. But as Arnold Su, who is Vice President for Consumer & Gaming PCs at the System Business Group for Asus India explains to HT, that definition is multi-layered.
Does the PC market need this complication at a time when sales are beginning to plateau? Su has a different perspective to that, as he illustrates with numbers, that the Indian PC market is already much bigger (and growing fast still) than it was before the year 2020—and there’s little chance of it plummeting to those numbers. He knows what he’s saying, having led Asus to its largest pie of a very competitive market share, behind the likes of HP.
Su talks about Asus’ strategy for the Indian market and touches upon plans for customising specific products, the importance of spending time to build AI solutions, a smart strategy for expanding retail as well as service footprint (and you’ll realise soon, the former can be tapped to help the latter) and more. Edited excerpts.
How would you analyse India’s PC market, Asus’ business growth within that, and how that defines the strategy heading into 2025?
Arnold Su: It is important we look critically at the past four years, also because of the COVID period, which provided a boost to the PC industry.
If we consider 2022 as a cut of point, any why I consider 2022 and the 2020, is because before 2020, India’s PC market averaged around 3.5 million units a year. The range was between 3 million to 3.7 million for the previous six to seven years too, that is since 2013 through to 2019. From 2020 through to 2022, these two years began with a quarter of lockdown and business at zero. But even then, by the end of the year, India’s PC market went up to around 4.5 million units. In such a short period. Then in 2021, it reached around 5.2 million units.
After that, demand gradually reduced because previously there was unusual demand, such as preponed purchases. Supposedly, if the market is to go back to pre 2020 numbers, it should drop to 3.7 million. But even in 2023, even though that level of demand disappeared, the market still maintained at around 4.8 million units. Which means India’s market is almost 50% higher than the pre-COVID period.
For 2024, we foresee that we are again looking at ending the year between 4.8 million to 5 million units. From an average 3.5 million units to an average 5 million units.
The sales now are mainly to do with people realising why they need a PC. If you remember, before 2020, lots of people used to say that the PC will be replaced by the smartphone because the latter is more powerful. Even tablets. But we have now learnt that phones and tablets can mainly do content consumption, but a laptop or desktop is more for content creation. For writing for instance, you still would want a 14-inch or 15-inch computing device.
Then there is the element of India’s PC penetration. It presently is around 11%, and this will not go back to pre-2020 numbers. This will only increase. In China, that number is around 45% while in the US, it is close to 90%. For Asus, we are very positive about India which is the third largest PC market, and it is an important market for us. In 2023, we became the number two consumer notebook brand in India, with close to 18% market share.
We are still in the early days of the AI PC era, but has that translated into an impetus on sales just yet? Do you believe we are yet to see the full impact, because Intel’s chips are only now getting Copilot+?
AS: The AI PC definition from Microsoft, Intel, Qualcomm and AMD are quite different. If we use the most entry level standard, and if you consider the AI PC actually in the beginning of this year when Intel launched their chips, they already consider it is an AI PC. That’s because the neural processing operation is 10 TOPS, or trillion operations per second. But as per the latest definition, the minimum is 45 TOPS. Qualcomm and AMD followed that. Microsoft’s definition calls it a Copilot+ PC instead of AI PC. The share and quantity is still very small.
Also Read:Microsoft Copilot+ PC intricacy aside, Asus handholds AMD’s resounding comeback
If you follow the general bigger definition of AI PC, the business now is between 5% or 10% of the overall PC market. But if you look at a very narrow 45 TOPS definition, then it’s hardly lone percent of the total market.
Asus has developed AI tools such as StoryCube and MuseTree. How important is it to build a broader set of AI tools that users can find value with?
AS: To be honest, this is super important and critical. like you said, even within Asus PCs, we have a few apps but we are still basically a hardware provider. We are not really able to provide many software, for which we rely on the ecosystem partner.
It is a key moment for AI PCs, as to how the entire ecosystem can develop more AI tools to provide for users. Think about it from how it was 10 years ago, when people started to talk about smartphones but mostly nobody knew why they required. It is similar with AI at this time. For AI PCs normally we always have to go first, because even though we are the hardware providers, we must make sure of how it is strongly the ecosystem will develop.
Asus’ PC portfolio in India is the broadest it has ever been till now. And that’s before we even factor in the ROG Ally consoles. How important is India as not just a market for Asus, but also as a research hub?
AS: India is a large country and we cannot ignore that we must focus on internal research. We have lots of Indians working at the Asus headquarters now and we are actively recruiting people from India.
In terms of market knowledge, we are trying to start to understand the specific requirements from India buyers. Earlier maybe most of the PC companies designed products based on US requirements, or European requirements, or the China market requirement. We have started to work out how to have specific products, for India.
When we talk about this, it’s not about having some special technology. It’s not like that. For example, in China, the animated and comic characters are very popular. Therefore, we design our product and the package with those customisations to meet Chinese customers requirements. But if you see the laptop specs itself, it’s exactly the same.
But it is with the laptop design, we make customisations.
India love colourful laptops, for example. This is one of the biggest demand from customers here, they simply don’t want just black and silver coloured laptops. Then there’s India’s gaming user base. And though the ratio is higher than most countries, they would want to buy a gaming laptop in the ₹50,000 to ₹70,000 price band—but currently in gaming, we focus more on ₹80,000 and above range. So, how can we customise one product in this particular price range for India? So this is something that we have already started to do. We will gradually make our product designs more to meet the customer demands.
What are the investment plans for India, in terms of research and retail, for the coming year?
AS: We are looking at marketing and investment in terms of how we can open more stores and therefore have a stronger sales force in the Indian market. At the moment, we have employed more than 1000 people across the chain, and the plan is to increase that to 1500 employees by the end of 2025.
At we speak, Asus has 295 exclusive stores all over India, and by the end of 2024, we plan to increase that to 350. There are some stores that are already under construction. We plan to hold an event in October, to mark our 300th store.
In India, we cover around 400 districts out of the 750 districts. To the point where we should open a store in each and the key is to find a partner. Then we will look at the 5615 talukas in India, and that goal is a bit longer, till 2028. Much like in China, we want to ensure that anywhere in India when a customer wants to purchase a PC, they should be able to touch and feel our products. It is essentially the model of the mobile phone market, where in every taluka, there is a dealer or store.
That will mean we must ramp up service touchpoints too. We so far have 197 service centres, and will expand that coverage as well. Because the cost to open a service centre is a lot more than a store, our strategy is to make our existing retail stores as the pick-up point in locations. The dealer may not have the capability to repair, but they are already there and we’ll sign them up to do that job. The customer hands over the unit to them, they will send it to the service centre and collect it back once ready.
That way we can still control the quality of service.