Christmas in July

Christmas in July

Deck the halls with walls of holly . . . say what? OK, how about this . . . ' Tis the season to be jolly . . . All right, all right . . . I hear your pleas, don't give up my day job! Christmas might still be five months away but it's time for Santa to start thinking about stuffing that sack and looking around at what goodies will slip down the chimney most easily.

Although they will not necessarily all be PCs, the market will be buoyed by an influx of a new style of CD-ROM, executive gadgetry, lifestyle software, entertainment software and, of course, games.

To get a taste of what the consumer end of the market can expect during the annual silly season, ARN stuck the microphone under the nose of Harvey Norman's computer product specialist, Tony Gattari.

The scene that's being set by the major PC vendors is driving the market and is highly likely to carry PC resellers into the new year.

It's so aggressive in fact that Gattari says he's never seen such a to-do. "There's a major price war happening in consumer brand PCs. I know some companies that may even be losing money in order to maintain their market shares.

"I haven't seen the market so aggressive in the branded players for such a while. The major brands that are offering extremely good value for money are Compaq, Hewlett-Packard and Packard Bell. They are all doing very, very good deals on existing stock in order to clear the shelves to make way for new models."

Leading up to Christmas, Acer and IBM have already introduced their new range, and the new models of all the other major PC manufacturers will be released in August, in line with what starts appearing on the shelves in the US.

"The products that start hitting the shelves from this time frame until September are the ones that will be filling Santa's sack at Christmas," says Gattari.

In particular, what you will see at Christmas is an increase in speed. The entry level box will move up from the Pentium 100MHz with 8Mb of memory to a Pentium 133MHz with 16Mb of memory. It will come with an eight-speed CD-ROM drive and because of the surge of the Internet, it will have a very fast modem, probably a 33.3 data/fax modem.

Consumers can look forward to major improvements in the audio side with 3-D surround sound, along with an integrated telephone and answering machine built into the PC. Additionally, there will be some major improvements in the software to make the whole box more user-friendly.

For video graphics, MPEG in its hardware form will give way to MPEG driven by software. Why? "Because," as Gattari explains, "as the speed of the processor increases, the differences between software and hardware MPEG are not so noticeable and software MPEG is substantially cheaper."

These boxes will hit the streets with the traditional price tag of $2,999 and will come bundled with a printer free of charge.

"This is done to offer the customer a total 'home package' which leaves them with nothing else to buy," says Gattari.

Will this rollout of new and aggressively priced models and bundled product bolster the market enough to improve on last year's poor sales performance at Christmas time? Gattari thinks not. "January is better than Christmas. It will be a bigger month than December, as it has been for the last two years," he says.

According to him, any PCs sold specifically for Christmas Day will be sold in the first two weeks of December or late November.

"You need to understand that a PC is a big ticket item, the third largest purchase they'll make in their life in many cases. There's a risk associated with buying a PC and in order to reduce that risk they want to take time to visit all the shops and find out all about what they're going to buy. This can't be done a week before Christmas because there are too many people. Alternatively, with the Australian customer now conditioned to expecting a January retail sale, many customers will hold out on their purchase till January."

Moving away from the big ticket items to products for people who already have a home PC, or those hooked on gadgets for the executive office, Gattari sees a huge surge in what he calls "productivity software".

"Electronic street directories on CD-ROM, lifestyle programs on diet and exercise are becoming more and more in vogue," he admitted. Certainly there will also be a huge amount of entertainment software sold over Christmas, along with the latest and greatest games that always get released around this time, he said.

Great presents for adults are the hand-held devices and organisers of every description, which Gattari expects will be sold in volume. "They have come down in price quite dramatically to where they are sometimes starting in price at $99."

For handwriting recognition, however, customers will still need to look specifically at the Apple Newton and Sharp products, although they are still quite expensive and haven't taken off in the marketplace as well as those companies would like, according to Gattari. "These certainly aren't as big sellers as the $499 organisers which have the QWERTY keyboards, loads of memory and can be linked up to the PC."

Other areas that Gattari has spotlighted for profits at Christmas time are Logitec's new range of joysticks with an unusual design to attract the eye of the customer, and the Iomega Zip and JAZ drives for add-on storage.

"These storage devices will sell very, very well because a lot of people are reaching the storage capacity of their existing PC and are looking for ways to increase their hard drive size."

Of course, anything to do with the Internet will be a buzz word for Christmas, replacing the excitement that multimedia provided a couple of years ago. "The Internet is now giving people the justification they want to buy the PC and it's also driving modem and web browser software sales."

Products that Gattari expects to be snapped up include fax modems, web browsers and voice and videoconferencing products.

If five months still seems a long way off, consider this. If most of the more expensive products such as PCs are shipped in late November or early December, as Gattari promises, that means Christmas for some of us will come one month early.

Times, they are a changing

The seasons for selling are changing. Australian resellers who have traditionally made their money in May or June, in line with the financial year, are finding that the end of the calendar year is also shaping up as a prospective money-spinner.

The encroaching new year triggers our internal body clock to take stock and complete unfinished projects. US vendors have deadlines for achieving their annual overseas sales targets. Even the recently rainy conditions of the Australian summer are keeping customers at work until later in the year.

A quick whip round some of Australia's leading government and corporate resellers revealed some of the reasons behind the changes in this selling season and the factors driving these changes.

Charles Tim, managing director of Computer Integration Centre in Sydney, attributes the strength of the market in November and December to the end of quarterly budget periods or a specific project period.

"It's a time of the year when deadlines are all coming to a head and people want to get things finished in time for the end of the year," he said.

Operating very much in the services end of the business, Tim finds that his customers tend to schedule their work quite a few weeks ahead so there's little that needs to be done to prepare for this period.

There does, however, tend to be a few one-off purchases.

"In these cases the orders are usually for workstations, rather than services or network components, when people suddenly decide they need another 20 PCs to get a project finished by year end," he explained.

Historically, capital expenditure budgets have been tied to the end of Australia's financial year. More recently, Andrew Carter, managing director of BCA in Melbourne, has experienced some savvy changes in customer behaviour, based on better buy prices, making December, after May and June, the third best month of the year for his company.

"December can be quite strong given that a lot of our vendor partners like IBM and Compaq, as well as one or two others, are at the end of their fiscal year. As such, they are compensated and judged on what numbers they achieve during the calendar year. The vendors tend to get the price points down a little towards the end of the year and a lot of the buyers out there are very astute. Quite often if the customer is going to buy something in November they might wait until December so that they get a better deal.

"It is all based on the vendors trying to get their sales numbers for the year and if they haven't got them by November they'll quite often take some pricing action in December." Carter doesn't agree with the notion that come December 15 the silly season starts and business drifts off. He finds that the week leading up to Christmas is quite busy.

"That trend has changed significantly and we take orders up to Christmas Eve. Quite often people have to spend money by the end of December, or they are planning something and they're not going to be available early January, so they have to at least get orders placed before Christmas," he said.

Apart from a quiet time between Christmas and New Year and the first week in January, Carter is finding that his customers are not necessarily taking all their leave at Christmas time now.

"Times have changed." he asserted. "Such is the weather, especially in Melbourne, that we're finding that a lot of our customers are taking time off in February and March. Once upon a time nothing would happen until the third week in January; now we find things start getting pretty hectic in the second week in January," he added.

"Services are fairly cyclical and large projects ideally finish by the end of December and typically there are not a lot of services happening during January until it builds up again later in the quarter.

"Still, the business during December is enough to compensate the dip in cashflow between December and mid-January," he said.

He attributes this to having more project-based work, which tends to be more predictable than it once was.

"We find that if we're running a couple of large projects towards the end of the year it doesn't really affect our figures at all. The discretionary spend is becoming less of an issue. All the customers are a lot smarter and more intelligent now in how they buy and they tend to buy in larger chunks. For instance, if they are upgrading equipment which is third or fourth generation, these upgrades tend to be happening in a more structured fashion.

"If the decision at a corporate level is to move to Windows 95, or the decision for everyone to have bigger and faster boxes with more disk and RAM, they tend to upgrade in totality as opposed to upgrading in dribs and drabs," he said.

Jonathan Fisk, CEO of Senteq, agrees the lead up to Christmas is generally fairly strong, but it is primarily people trying to get projects put to bed before they go away on holidays rather than sales people trying to meet budgets.

"Really, I don't think there's much more to it than that. I don't think it's a budgetary or an economic issue. I think much of it is just advancing a lot of the schedules so that people don't have to deal with them in January," he said.

Even with the recent acquisition of failed reseller, Future Technologies, Fisk doesn't believe this will make any difference to the ability to make more or less sales during the end of year period.

"The fact that we are now a larger organisation means that we see the same thing but just on a larger scale," he said.

Everyone interviewed for this story is involved with the business end of the market, selling to government or corporate users. With that in mind, it is interesting to note that even without the consumer content in their product line-up, which would naturally service the Christmas shopping market, a shorter month, project deadlines, sales figures and holidays all conspire to make December a reasonably good month for business.

Sharpening up

When it comes to the world of personal organisers there aren't too many features which distinguish one product from another.

Beyond the most obvious features: calendar, schedular, to-do lists, calculators, clock and memo functions, Sharp has managed to carve out a large niche in the market.

According to Tim Ives, assistant product manager for personal organisers and calculators, Sharp Australia, Sharp holds the lion's share of this specific market with 70%, while its two major competitors Casio and Canon battle it out for the remaining 30%.

"Sharp has the breadth of range which covers everything from a very basic model to top-end Zaurus," he says.

Sharp's ZQ series offers a few features not otherwise found on other products in its class.

The main differentiating characteristic is its BackLight feature which lets users view data, telephone numbers and daily activities in dim light at the touch of a button. This feature has proved to be so successful that between October and December this year, in the lead up to Christmas, Sharp plans to expand its BackLight range.

Prior to this, in August, Sharp will release its Pocket Brain product. This is a keyless organiser, a relatively new product which eliminates the hardware of keyboard layout and replaces it with software.

Lighter and slimmer than other conventional organisers, the Pocket Brain is pen-operated only. If you want to insert information into the machine you press the keyboard button and a QWERTY-style keyboard comes up on the screen. From there you use your pen to touch in the information you want.

"There's already a Casio machine out there which is keyless but it's very highly priced and we see ours coming out at a much more competitive price," says Ives.

"It sounds very fiddly, but once you actually use it you find it's a very efficient way to input data," he added.

Following on the latest craze to access the Internet, users looking to access their e-mail directly from the Internet will need to look at the Zaurus range, Sharp's flagship products.

These are the only products from Sharp with the PCMCIA cards (PC Cards) which people can use to hook into the Internet. By plugging a mobile phone into a digital data-card, which is the same as PCMCIA fax modem, you can dial up your Internet service provider and download your e-mail from anywhere.

"The big benefit of this is you can be virtually anywhere: on a train station, in the car or in the park to access information," says Ives.

Zaurus's other major feature, according to Ives, is the software you can get to hook up to your PC in the office which will let you dial in and access an Excel spreadsheet, such as a price list or sales forecast, download it directly into the organiser and then print it out using an inferred device.

The two latest products in the Zaurus range are the ZR-5700 and ZR-5800. The difference over the ZR-5000, which is now being phased out, is in the amount of memory. The ZR-5800 has 2Mb memory expandable to 4Mb with flash RAM cards. The other major feature is a cut-down version of MS Excel.

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