Editorial: Corporate business thin on the ground

Editorial: Corporate business thin on the ground

As if the local PC hardware market wasn't tough enough already for resellers, signs are that it is likely to get worse before it gets any better. So much so, in fact, that one leading market analyst has predicted as many as 20 per cent could be forced out of business in the next couple of years (see page 1 of ARN May 31 edition).

IDC's hardware research manager, Mike Sager, issued the warning after the company's Q1 PC and notebook figures revealed stagnation in the corporate market. Sales slumped by a worrying 5 per cent compared to the same period last year and - with every drop now squeezed out of the Y2K refresh cycle - it isn't easy to see anything on the horizon that will make life easier.

From a broader local industry point of view, one bright spot last week was the announcement that Optima had landed a $15 million contract with ACT Department of Education and Training (see page 4). It's no secret that the country's largest PC manufacturer has been doing it tough for some time now but this four-year contract suggests it can still beat multinationals to the punch some of the time.

While IDC's Sager said there would still be some big-ticket business up for grabs in Q2, the smaller deals that the majority of those operating in the corporate dealer channel survive on look likely to be thin on the ground. This again strengthens the case for consolidation and, as the market continues to mature, it looks like a lot of generalists will disappear. Now more than ever, the channel message has to be one of specialisation.

While it doesn't lighten the mood, this problem isn't specific to the local market. Chinese vendor, Lenovo, recorded a significant global sales spike for fiscal year, which ended March 31, but profits for the same period fell through the floor. Its annual revenues jumped from $US2.9 billion to $US13.3 billion following the purchase of IBM's PC business, but profits for the same period dropped by 85 per cent to just $US22.3 million.

The picture in the local retail market, particularly for notebooks, looks a lot brighter. Toshiba captured 8 per cent of the Australian PC market, according to IDC figures, despite not playing in the desktop market at all. Interestingly, its 34 per cent year-on-year growth was exactly in line with numbers released by the market analyst firm.

The only thing likely to slow sales here is the revised date for Microsoft Vista. Originally slated for November this year, just in time for the consumer holiday sales rush, the software giant recently announced the new operating system would not ship until January 2007.

Now Microsoft CEO, Steve Ballmer, has hinted that it could slip back a few more weeks. Incredibly, he claimed the original decision not to make it available in November had been taken because a change in PC line-ups and operating systems during the end-of-year sales season could cause problems for vendors.

My guess is PC manufacturers and retail stores would have gladly handled the confusion rather than have their biggest upgrade tool miss the sales rush altogether.

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