Weak margins dampen Christmas IT spend: HT

Weak margins dampen Christmas IT spend: HT

Technology spending will increase before year’s end but deflating prices combined with a strong Aussie dollar will keep a lid on the sector’s growth, according to Harris Technology’s (HT) managing director David Foster.

“We are seeing good pickup in the market, particularly with wireless, LCD screens, and notebooks,” Foster said. “However, I will be surprised if IT shows growth due to deflating prices and the value of the dollar. For example, last year 15-inch LCD monitors were selling for around $999 while this year they are selling for $699, and PC prices are down 30 per cent.”

Figures from the Australian Retailers Association (ARA) suggest that consumer spending will jump 5.1 per cent over last year and reach $27.4 billion for the period between mid-November and Christmas Eve.

The ARA’s NSW executive director Duncan Shaw said provided there are no “untimely incidents” consumer spending looks very positive.

“Computers and IT products comes under a broad category which includes electrical goods and recorded music,” Shaw said. “Although we don’t have a specific breakdown of how much of this year’s Christmas retail spending will be on IT, the category it’s in represents an estimated 13.8 per cent of the market.”

Shaw said the electrical market is “always very big”.

Although retail is only 8 per cent of HT’s business, Foster said it will be difficult to determine whether the IT market will be on a par with other sectors.

“We don’t have enough information to get a breakdown of IT spending,” he said. “The market growth also depends on what you define as technology such as cameras. In terms of unit shipments in retail we expect very strong growth as the market has been buoyant this year.”

Regarding the corporate market, Forster sees positive signs up until Christmas and into the New Year.

“Within the corporate market we expect a rush until mid December when it will quieten down when holidays begin,” Foster said. “Depending on the industry sector, corporates like to get spending out of the way before the holidays. Next year we see being quite big as there has been a lull in spending for the first half of this financial year.”

According to Foster, SME spending has been “particularly strong” with confidence being higher than that of the enterprise.

“SME software spending has been low but there are now a suite of new products coming onto the market,” He said. “Hardware has been strong and so has networking with wireless fuelling most of the growth.”

When asked about the amount of IT marketing that has been going on in order to tap into end of year spending, Foster said it is down.

“Vendors have been a bit soft on end of year marketing,” he said. “That said, a lot of marketing is done out of the US. We do a little but don’t tend to spend abnormally over Christmas. From February we spend most of our marketing dollars.”

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