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Mint
30-04-2025
- Business
- Mint
Laptop makers push 'AI PCs', but buyers aren't biting
New Delhi: Artificial intelligence (AI) may be the bleeding-edge tech of today, and tomorrow, but an attempt by laptop brands to hawk so-called 'AI PCs' has left consumers distinctly unimpressed. The laptops, which come with specialised AI-compliant processors, are priced anywhere between 30% higher and double that of regular, top-of-the-line laptops, and are supposed to give users an edge in AI-related tasks. It is the price differential that has left consumers cold. According to industry experts, consumers prefer to buy regular notebooks and simply install ChatGPT or Gemini or other such high-tech generative AI (Gen AI) software, at a fraction of the cost, even free. On their part, laptop brands insist that enterprises are lapping up the new products, and picture a future where the AI laptop will be default when it comes to buying a computer. Today, though, the picture is starkly different. Data sourced from market researchers Counterpoint India and International Data Corporation (IDC) India showed that as of 30 April, the market share of AI devices in the entire laptop market of more than $5 billion is under 5%. To be sure, it has been just a year since Microsoft,which makes the ubiquitous Windows operating system, spurred a push for 'AI PCs" by laying down a set of parameters to define it. Chipmakers, too, are ho-hum about all the noise. On 24 April, Intel Corp, the world's third-largest chipmaker as per Gartner's 2024 Worldwide Semiconductor report, said that demand for processors that it launched up to two years ago is currently far greater than its cutting-edge, AI-compliant processors. 'We're really seeing much greater demand from our customers for n-1 and n-2 products, so that they can continue to deliver system price points that consumers are really demanding… (the new chips) are great, but (they) come with a much higher cost structure—not only for us, but at lower price points for brands as well," said Michelle Johnston Holthaus, chief executive of Intel Products, during the company's post-earnings analyst call last week. Bharath Shenoy, principal analyst at IDC India, said buyers have not seen clear use cases of an AI PC. 'There have been some sales in commercial contracts with enterprises, where brands procuring new laptops, especially for higher-rank employees, are simply opting for an AI PC to future-proof their investment since in five years, most PCs will feature AI in bigger ways," Shenoy said. 'But for now, consumers have offered a very lukewarm response to brands offering AI PCs." Retailers, too, are seeing weak sales. The chief executive of a top pan-India multi-brand retailer, requesting anonymity since he has multiple marketing and non-disclosure contracts with each of India's top five laptop brands, said, 'There's no buyer who walks in saying they want an AI laptop—largely, this fad has not caught on as yet. Any laptop that is marketed by brands as an AI PC gets sold due to other factors—premium build quality, gaming, and so on. But AI is yet to prove to be a sales driver for laptops as yet." As per market data from IDC sourced by Mint, overall laptop sales in India saw a slim 4% year-on-year growth last year—after a sharp 11% decline in 2023 due to a post-pandemic lull. Sales are expected to pick up pace this year, since the average usage cycle of a laptop per user in India is four to five years—and 2020 and 2021 were the years when most laptops were sold in India after the covid-19 pandemic forced everyone to scurry indoors for both work and leisure. Pricing, too, is a key factor. Shenoy and Pathak both said that while the entry point to AI laptops has come down to ₹ 60,000, the bulk of these devices is still priced at ₹ 1,00,000 and above. But, this too is still at least 30% more than the average price of a laptop in India, which stood at ₹ 45,000 as of this month. While the growth itself has been slow, the growth of AI laptops in line with the industry has been weaker than anticipated. In 2024, approximately 1-2% of all laptops were sold from the 'AI laptops' bracket, per market estimates. 'This, though, may change by the end of this year—2025 is a transition year for laptop usage behaviour trends, and retailers marketing laptops are yet to become fully aware of the key use cases of AI," said Tarun Pathak, partner and director at Counterpoint India. 'This is why brands are right now pushing hard to launch and stock inventories with AI laptops, in anticipation of sales picking up in the near future." Despite this lukewarm response, brands see clear value of investing in the marketing of AI laptops in India. Ashish Sikka, director and category head for laptops at Lenovo India, agreed that AI laptops are priced higher today primarily because of their upgraded hardware configurations, but felt the future would be different. 'We see AI PCs triggering replacement cycles of computers in India… These devices could account for 60% of all shipments by 2027," Sikka said. 'Our early adopters are already seeing tangible benefits, and as awareness grows, consumer perceptions will shift toward viewing AI PCs as essential, not experimental." Indrajit Belgundi, senior director and general manager of client solutions group at fellow laptop maker Dell, cited an internal study within the US-based tech firm to state that 'by 2028, 98% of PCs will be AI-enabled". He further said that among enterprises, three of every four IT heads at companies see AI access in workplace devices to be imperative. 'This shift is already driving change, with 32% of organizations planning to equip their teams with AI PCs by 2026. Key trends for this transition include the migration of workloads from traditional data centres to the edge, and the rising demand for localized, intelligent PCs," Belgundi said. Dinesh Sharma, vice-president of commercial PCs and smartphones at Taiwanese tech firm Asus, admitted that for consumers, AI has not been a big mover as yet. 'The commercial perspective on AI value fundamentally differs from consumers," said Sharma. 'The CIOs and CTOs have a greater understanding of the incremental value AI is adding to their firms. We're seeing significant empathy from enterprises towards AI PC pricing." He further said that Asus is seeing AI PC sales to small businesses—in a further nod that for now, the only sales driver for these laptops are businesses at the moment. In the long run, experts believe AI PCs will undeniably take over the market. Shenoy said this will be driven largely by chipmakers switching entirely to AI-first processors even among mass-market products. For now, though, a lack of clear market demand could be a dampener in the near term for these brands, in what is the third-most valuable electronics market in the country, after smartphones and televisions.
Mint
22-04-2025
- Business
- Mint
Xiaomi India shifts focus to premium smartphones to boost sales, profit
New Delhi: Chinese consumer electronics brand Xiaomi is charting a new course in a challenging Indian smartphone market, prioritizing revenue and profitability by aggressively targeting the mid-to-premium segment of mobile handsets priced above ₹ 20,000. This strategic pivot by the company reflects evolving consumer preferences for higher-end features, Xiaomi India chief operating officer Sudhin Mathur told Mint in an interview. The company aims to differentiate itself through software, improving user experience for its smartphones and bring advanced artificial intelligence ( AI ) capabilities to more affordable price points, Mathur said. Also read: Bhavish Aggarwal curbs ambition, seeks to raise $300mn for AI venture Krutrim 'We have had the number one position. But in businesses, numbers are not as important as revenue and profitability. From the previous years, the larger direction was probably to be at number one. Now with the changing preferences of consumers towards mid-to-premium, our strategy is shifting more towards that as we still need to build brand saliency there," Mathur said, adding that estimates suggest 2025 would be flat for the smartphone industry's volume growth. Xiaomi's move to target the over ₹ 20,000 smartphone segment assumes significance as the company once led India's smartphone market for nearly five years from 2017 to 2022, purely on high-volume sales in the budget segment. The company, however, is now seeing some weakness in its volume market share due to increased competition and challenges for brand presence in offline retail, analysts said. Tarun Pathak, research director at Counterpoint India, said, 'For Xiaomi, the majority of sales come from the mass market (sub- ₹ 15,000). To focus on premium segment, they need to work on the offline retail point of sales and improve their brand messaging, which they have done well recently." According to Pathak, the strategy of focusing on products with higher average selling price (ASP) worked well for Xiaomi in China and improved its retail image, which also came from the launch of its electric vehicle SUV. In India, however, the company will have strong competition as many brands are banking on the premiumization strategy, in which companies sell higher-priced, feature-loaded products. Also read: Don't waste your money: These are the best Android tablets you can get in India right now Even as Xiaomi focuses more on premium offerings, it will continue to have product presence across the price ranges starting at ₹ 6,500, Mathur said. In FY24, Xiaomi Technology India's revenue fell 3.3% year-on-year to ₹ 25,816 crore, whereas its net profit rose 21% to ₹ 288 crore, according to data sourced from business intelligence firm Tofler. In 2021, Xiaomi had a 24% market share in volume terms, which fell to 17% in 2024, according to estimates from Counterpoint India. In the January-March quarter, the company's share is estimated to have fallen to 12%, according to Counterpoint. A few years ago, a cluttered portfolio of smartphones was also leading to a pile-up of inventory and lower sales for Xiaomi, hurting its market share. 'In 2022, we had around 28 products in the portfolio and now we have 10, which is almost one-third. We have fewer but more impactful and better products now, which follows the innovation across price segments," Mathur said. In India, Xiaomi makes smartphones, smart TVs, smartwatches and audio products through contract manufacturing partners such as Dixon Technologies, BYD , Optiemus Electronics and DBG. According to Mathur, 99% of Xiaomi's smartphones and 100% of its TV sets are being made in India. 'Our local manufacturing strategy is moving in the right direction and as we continue to launch new products, we will try and ensure that they are locally produced," Mathur said, adding that the company does not have any plans to export the products from India as of now and the focus of local manufacturing remains on serving the domestic demand only. The company on Monday launched its first locally manufactured smartwatch, the Redmi Watch Move, in the country. The smartwatch, priced at ₹ 1,999, is being manufactured at Optiemus's factory in Noida, thereby saving a 22% import tax through local manufacturing, Mathur said. Also read: Uttar Pradesh aims to triple exports by 2030: Bold vision or too ambitious? When asked about the possibility of participation in the newly introduced components incentive scheme, Mathur said, 'We are still evaluating, we will see what the options and opportunities are. Currently, 35% of the non-PCB (printed circuit board) bill of material (BOM)—cables, chargers, plastics, etc., is locally sourced." For brands like Xiaomi, local manufacturing and sourcing of components also helps in cost reduction. The company will continue its model of local manufacturing via electronic manufacturing services (EMS) providers. 'There is a pricing benefit that you get (with localization), and we pass it off to the end customer," Mathur said. Last month, the government launched a ₹ 22,919 crore, or $2.7 billion, scheme that will offer incentives of up to 10% of turnover and up to 25% of capital expenditure in setting up electronics components manufacturing in the country.
