It has been the year of the two ‘Teks’ in the industry—MRO-Tek and Microtek. While the first one continued to hold its sway in the leased line category, Microtek came from nowhere to reach the No. 2 position in the dial-up category. The dial-up modems market was Rs 198.16 crore and the digital modems market was Rs 128.20 crore. The broadband market, too, took off on both the cable and ADSL front. 3Com has done very well in this space in which the other vendors include GI, Com21, Terayon, Katherein and Scientific Atlanta. And, new distributors like Capital Technologies, etc. started to enter the market. However, for our analysis, this year, we are considering only the top two product categories for want of adequate data on the broadband modem space.

The FY 2000-01 has been the year of consolidation in the modems market in the dial-up segment. The squeezing margins in this volume segment and easy availability across the counter positioning led to a few of them moving away from that business. For example, PowerTel Bocca, which used to carry the Bocca range of products got out of the business to become Citrix. This range, today, is being carried by Convergent Communications. Similarly, Priya International, which carried GVC, also distanced away. In the process, D-Link consolidated its market share, and Dax and Microtek emerged as strong brands in the South and North respectively. Bangalore-based Select Technologies entered the market with ACE brand of products. The trend clearly was that of the volumes’ king, D-Link, by its pure reach and collective portfolio of networking products, held its ground strongly, and new and young distributors through their sheer energy carved out a space for themselves.

The exploding Internet growth, which has a direct influence on the modem sales, fuelled a very strong growth in volume, but saw stiff reduction on the per unit price. As a result, the total dial-up modems sold in the country were over 9.7 lakh and with sales revenue touching Rs 198.16 crore. The external modems (56 Kbps) were available at a low rate of Rs 2,700 and 33.6 Kbps ones at a price of Rs 2,000. The internal modems were about Rs 700. And the prime reason for the fall in the prices has not just been because of competition. But almost all the players who distributed the modems had manufacturing units in the country and have looked at value-additions to make it suit to the Indian environment. There are also a few original product manufacturers like Hyderabad-based Team Engineers, which does its own branded products.

The real star performer this year has been Microtek. It not only filled the gap that was left over last year by the departure of Powertel Bocca and Priya, but also captured a significant market share of over 24 percent with total revenue of Rs 46.05 crore. This has been possible due to two reasons, first, its strong distribution network and second, the customer has found it easier to relate to its monitor brand image and extend it to the Internet connectivity. This year could be a real battlefield for each of these players, as each one of the top five has carved out a niche for itself, and entering into anothers’ territory could be a tough call.

From a total sales of Rs 22 crore in 1998-99 to Rs 136.6 crore in 2000-01, the digital modems market has really grown exponentially. In 1999-00, the sales soared dizzily due to the steep cut in cost of leased lines, and it was estimated that sales in the period under review would race ahead. But unfortunately, due to delay in the ISP sector and telcos to go ahead with their projects, this segment had its tale of woes. Further, delay in the availability of Cisco routers, too, choked the situation. Because of these two factors the digital modems sales grew by 22 percent only with estimated revenue of Rs 136.6 crore. The total number of units sold during the last fiscal was 34,188. Like the previous year, FY 2000-01 too, belonged to MRO-Tek. It did a total sale of 25,000 units and a business of Rs 81 crore.

The bulk of the sales has primarily come on account of the 64 Kbps products. However, this year, the DSL modem sales too grew sharply. Tellabs and Ericsson, were the real major players. While Tellabs continued with its consistent performance and perseverance, Alcatel, Ascom and Ericsson gained on account of a few key wins from service providers and ISPs. Among the distributors, MRO-Tek and Convergent were the well-known names.