Despite Australia overtaking Korea as the second-largest PC market in the Asia-Pacific region, traditional distribution models for the Australian PC market are slated to change, according to research by the GartnerGroup.
The market analyst is pointing toward a "zero-friction business model" for vendors and resellers by focusing on core competencies.
Announced last week at the GartnerGroup Predicts '99 conference in Sydney, Ian Bertram, principal analyst for the GartnerGroup, claimed the Australian channel is set to undergo major restructuring in an attempt to reduce costs within organisations hoping to generate profit from shrinking margins.
"The bottom line - distribution is going to change, and you all better be ready for the change. Start gearing up to it. It's going to start to fragment what you actually do. Are you an order taker? Are you a demand generator?" said Bertram.
"And there are going to be new compensation methods for these. Previously, the vendors got their percentage cut and they got their rebates. Now it's like, I'll pay you for the actual work you do - you want to do the order taking? I'll give you the money for the order taking." Bertram claims that despite "phenomenal growth" in the Australian PC market, it is becoming "harder and harder for resellers to make a buck. The PC market isn't as stable as we all first thought."
"In Australia, unit shipment growth for 1998 was 22.5 per cent, while revenue growth was negative 2 per cent," he said.
"The trick is to make your buck smarter. You can't compete against the vendor's agenda, you actually have to dovetail into the vendor's agenda," claimed Bertram, with nonlinear distribution models set to rapidly replace linear models over the next three years.
Bertram reported that the GartnerGroup sized the Australian PC market in 1998 at $4.482 billion, forecast to grow to $6.401 billion by 2003, representing an annual growth rate of 7.39 per cent.
Citing business and education as the biggest growth areas in the Australian PC market, Bertram said much of this growth came late in the year, such as Acer's big deal into education and Apple's return to consumer focus.
While Bertram claimed that Hewlett-Packard was 1998's "dark horse", Gateway is one to look out for in the Australian marketplace. "They're doing some very unique things with their services business as well as some unique things with their channel. Gateway has always been a direct seller, but have a look at what they're doing with the Telstra shops."
Bertram also claimed one of the big issues facing PC sales this year will be Y2K, which will stall the uptake of Windows 2000 and the mobile market "replacement cycle" until midway through the next year before the market picks up again.
He said that, contrary to popular belief, the desktop market grew faster than the mobile market, and that trend will continue. "You'll still see desktops being the major market growth contributor out to the year 2002," said Bertram.
New technology will also be a major driver in the marketplace, with the convergence of business and entertainment technology paramount at a consumer level. Corporate technology directions for 1999 will entail small form factor PCs, desktop LCD growth and security of information.
According to Bertram, overall 1998 showed strong growth, and this is unlikely to be repeated at the same rate in 1999.