Stories by: Ray Shaw

Many moons ago I studied micro and macro economics (an economist is a trained professional paid to make guesses about the economy). Micro was what happened in your backyard and macro was what happened up the road. The laws of each are totally different and often conflicting. At a macro level, for example, some local distributors reported record January sales. That measures up to what the economists are saying about the world's growth at four per cent but most of this is attributed to developing giants like China. There is no doubt also that the business is shifting from IT specialists to mass market IT/CE retailers. Harvey Norman sales increased about 18 per cent in Q3 compared to the same period a year earlier but that's not the whole story.

I predict 2007 will be remembered as a year of confusion where consumers, retailers and distributors are not sure what to buy, stock, support or recommend.

How many do you want? This is the first question a supplier asks when a smaller retailer tries to negotiate on price. Let's face it - the supply chain is now solely focused on volume.

Last time ('It's all about price, price, price', ARN, May 3, page 16), we looked at the adventures of Norman the specialist reseller. His lot was not a happy one because of major inroads into his business by CE stores, more direct sales being made by manufacturers and less channel support being provided.

ARN Home crosses the increasingly blurred boundaries between consumer electronics (CE) and information technology (IT). The market for Global Positioning Systems (GPS) is one that can be addressed by players from both camps.

Notebooks now make up more than half of all PC sales in major consumer markets. The desktop is, or will be, dead in a few more years. Simply put, it is cheaper to produce millions of smaller, lighter notebooks than larger desktop PCs. Economy of scale is driving the trend but there are some significant pressures on the notebook market.

Norman, a PC retailer once briefly worked for an unethical (and now bankrupt) company. He knows you can't support a massive advertising campaign and rapid expansion while selling at a 10 per cent margin without resorting to dirty tactics such as parallel importing, counterfeiting, carrying your own warranty (that makes it very difficult for users to get a repair), insurance scams and paying employees cash-in-hand to avoid superannuation and income tax.

Consolidation is shrinking the number of top quality resellers but there has been significant growth in one-man bands and smaller consultancies, according to Acer's A/NZ managing director, Charles Chung.

This year was the year of the unremarkable - nothing earth shattering happened that would change the face of computing as we know it. It was evolution, not revolution. But that is not a bad thing for the channel - less obsolete inventory, longer lifecycles and falling prices as economies of scale were realised gave resellers a chance to breathe easy.

In the red corner we have the traditional phone system providers; in the blue are computer retailers and network support companies. At this stage, both have equal rights to claim this emerging space but VoIP logically sits more in the IT networking domain than that of the phone suppliers. However, like the multimedia convergence battle, will the IT industry lose another market it is best equipped to service?

It is not hard to single out those IT businesses that deal ethically with clients. Conversely, or is that perversely, it is much harder to pick those who don't and you often don't find out until you have a problem.