AFTER starting the year on a high, sales of desktop compu-ters plummeted by 20% in the third quarter, while notebook sales surged 27%.
Although 2003 kicked off with high consumer PC sales, driven largely by the introduction of sub-$1,000 desktops, preliminary figures from research group IDC show this had fizzled by the end of the third quarter.
According to IDC hardware analyst Liam Gunson, sales are always slow in the third quarter with corporate spending easing as many organisations reach their financial year-end in the second quarter and consumers shore up cash for the Christmas season.
However, IDC’s figures show that sales between the second and third quarters this year dropped by 9% more than between the same quarters last year, when sales reduced by 11.5%.
And while desktop sales showed year-on-year growth of 24% in the third quarter of last year, the market shrank by 2.6% in the third quarter this year over last year.
Gunson says the surge in notebook sales, boosted by the introduction of lower price points that have now reached the sub-$1,400 mark, robbed the desktop market of sales.
According to IDC’s figures, the notebook market grew by 51% in the third quarter of 2004 over the same period last year.
Meanwhile, the excitement caused by $999 desktops earlier in the year waned by the third quarter, as this became the standard entry-level price point, says Gunson.
The two market leaders in the local desktop market, Hewlett-Packard and Dell, both saw large drops in sales in the third quarter despite exceptional growth in the first half of the year, he adds.
Gunson expects the pressure on the desktop market from portable PCs, as well as thin client machines, to continue in the foreseeable future.
Local PC assemblers, meanwhile, are straining under lower hardware prices and the shrinking market, says Peter Shirley, chair of the Computer Manufacturers Association of New Zealand (CMANZ).
“This year we have seen a decline in numbers and margins are a lot less than before — it is very tough for local assemblers,” he says.
Local companies cannot match the marketing dollars of large multi-nationals such as Dell and HP to compete in the consumer market, says Shirley, but adds New Zealand assemblers will remain strong in the SMB space where they can provide better local support.
To succeed, local builders need to move away from the mainstream desktop market and focus on niche markets, and make the most from convergence with technologies that may have been at the edge of business in the past.