At 27 Derek Merdith cashed in his only asset, superannuation, to start up his business, Laptopland.
Seven years on things are definitely looking up. Only recently, Merdith was playing pool with Olympic sprinting legend Linford Christie in Laptopland's boardroom.
Merdith's business idea was simple enough, but no one else was doing it. He opened a showroom of notebooks and became a specialist in mobile computing.
"At the time notebooks were pretty much an executive product, or an executive toy, and the nature of dealers back in the late '80s was very stand-offish." People tended to meet in a boardroom, with no products on display, to discuss what the client needed and to provide a quote, Merdith said.
"Very rarely did the client see the product they wanted to buy, and these are very expensive and personal, so whoever is going to buy them really wants something they like the look and feel of. It's more of a personal decision than a desktop and there was nowhere you could go to actually look at a notebook."
Although he had a marketing background and had been account manager for companies such as Toshiba, Merdith readily admits he knew "diddly squat from any customer out there". But he put an advertisement in the paper and within the first month of business he sold $80,000 worth of products. His formula worked, and still does.
Today, Laptopland is selling the same type of product from its street level showroom in North Sydney.
Along with brand manufacturers, Merdith has experienced many steep learning curves and has watched as the names of key market players have been replaced. For instance Sharp, once one of the biggest names in the market, has gone, along with Zenith and Texas Instruments. According to Merdith, Toshiba is on a roll, and its products have 40 per cent market share. "They have great supply, great momentum and a very reliable product out there. They have good infrastructure and will always be very popular." Compaq and IBM are also top sellers.
In the past, the greatest threat to Merdith's business has been vendors, the reli- ability and supply of their products.
He says vendors once demanded total commitment to their products. "This can't work any more because supply is too flaky. If they have a bad run, which a few vendors have, it can dampen enthusiasm out in the market and internally here. So it's hard to get the momentum back up to sell that product.
Replacing the desktop
With a balanced portfolio of suppliers, Merdith has overcome some of these issues, but he makes the point that vendors need to become more realistic in their approach to resellers.
Laptopland's main client base is mid-sized corporates. Unwilling to provide names, Merdith said they are companies that know what they want. "They are experienced users that want a relationship with someone who is always there to supply them with the gear and advise them."
Looking to the future, Merdith believes more and more people will migrate to notebooks, continuing the strong demand.
Australia's take-up rate of technology points in that direction. Laptopland frequently does deals in excess of 100 units and has a regular customer base that buys monthly. Last year the company sold well over 1000 Toshiba notebooks.
"Every year we hear of more companies moving towards a mobile-only IT strategy. It hasn't happened yet where the whole market says 'okay no more desktops' and I don't think that will happen. The fact is that the products people are buying will be out of date within 18 months."
Merdith recalls an estimation that in around 20 years, 80 per cent of what will be known then won't even be thought of now. "In the case of the IT industry, that's for sure because the products we're using now with MMX chips, XGA screens, ten-speed CD-ROMS and 200MHz processors weren't even thought of a year-and-a-half ago. The first Pentium chip came on to the market at 75MHz and that just blew everyone away - that was just a year-and-a-half ago."
With possibilities ranging from videoconferencing to in-built wireless communication, Merdith doesn't see an end to development and predicts that fully featured palm-tops will take off.
Without giving much away, he said: "I think the new products coming at the end of this quarter will set the world on fire. Watch this space in June."
While many executives are beating a path to become the next "Road Warrior", equipped with all the mobile trappings, Merdith says his number one criterion this year is to enjoy business. "It's no good trying to be a zillionaire and dying of stress. It's a stressful industry because we are dealing with executives that want gear yesterday. But at the same time we get to enjoy the work environment."
Shooting pool with Linford Christie, who Merdith sponsored for the Botany Bay Gift held in February, will surely set him on the desired track.