The PC market is fragmented and the changes taking place have caused instability, particularly in the distribution arena, according to IDC.
Senior IDC PC analyst Bernie Esner said the Australian PC industry is experiencing "profound changes" as it comes to terms with continual price decreases, new microprocessors, end-user segmentation and societal changes.
"Vendors must sell where their customers buy," Esner said. "This is a simple and obvious rule of selling, yet many PC vendors either ignore it or do not even know who their potential customers are.
"Having 200 resellers or three distributors will not guarantee increased market share or financial stability."
Esner said direct vendors, like Dell and Gateway, knew their audience intimately and use a "customer-centric database-driven" approach to sales.
"The indirect channel is not going away," he said.
Although PC dealers account for 45 per cent of PC shipments, IDC's research indicates it is decreasing as vendors seek to utilise the channel to reach new buyers and provide better service to existing customers.
"To put this in perspective, our research indicates that direct sales represent one-third of all PC sales in 1997," Esner explained.
"This has implications for the peripheral, software and accessories markets as well."
He said vendors were searching for "creative new ways" to build market share, including managing their sales models to encompass more elements. As a result, the channel has become a mish-mash of intertwining sales models, Esner said.
"Vendors have been trying innovative programs and experimental partnerships in both the consumer and business segments: some vendors have even mixed channel and sales strategies across customer categories within the same segment," he said.
"On the other side of the fence we have companies like Dell and Gateway testing the outsourcing waters with selected systems integrators."
Esner said Hewlett-Packard's initiative to partner Harris Technology in an online site augmented the direct model in a more channel friendly manner. The Web site shows HP products only, and Esner said other vendors would similarly align themselves with their channel partners.
He predicted direct suppliers would be more likely to align themselves with system integrators.
"In short, indirect vendors and channel partners in all segments and markets must deal with the growing success of the direct model", Esner said.
"The benefits of a customer relationship, combined with a more efficient, lower-cost distribution model, will continue to attract sales to direct vendors," he said.