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PC resellers need support in Latin America

PC resellers need support in Latin America

Latin America's smaller PC markets are dominated by resellers, so PC vendors that want to succeed in these markets must help their channel partners provide software, services and integrated solutions in order to succeed, an International Data Corp (IDC) analyst said last week.

Two key factors that will allow vendors to differentiate themselves from their competitors and increase their market share are logistics support and technical support, said Andrew Newman, senior analyst at IDC's Latin America research unit, during a briefing on Thursday titled "Central America, Caribbean and Andino PC Outlook: New Trends and Channel Dynamics".

US-based vendors and distributors in the Miami area should concentrate on these two aspects in order to grow their business in Latin America's smaller markets, which includes countries such as Peru, Ecuador, the Dominican Republic, Costa Rica, Guatemala and Panama, and territories such as Puerto Rico.

The IDC study showed that in 1998 very few sub-$US1000 PCs were sold in these markets, with the exception of Guatemala, where clones make up about 65 per cent of the market, said Newman. In 1998, most of the activity was seen in the $1000 to $1500 category, he added.

However, the retail prices of PCs are expected to drop in the year 2000 and beyond as the PC increasingly becomes a commodity item in these markets. This will cause resellers' margins to shrink and thus cause them to refocus their strategy and concentrate on providing additional services and products to stay afloat, he said.

Therefore, the most successful vendors in the medium and long term will be those who support their channel, not only to resell their products but also to help them provide additional products and services, such as support, Newman said.

Regarding logistics support, which includes all activity related to order fulfilment and technical support, the average vendor in the region had a negative rating, IDC found, so there is room for improvement in both of these areas.

Newman mentioned Toshiba as a company whose technical support has been lacking in the past but which has begun investing quite heavily in technical support around the region by establishing local partnerships. IDC expects the company to do well in this area.

He also cited Hewlett-Packard as a company that has been very successful in the field of technical support in the past and continues to be well positioned.

According to the IDC study, resellers in the region on the whole are satisfied with the sales support they are receiving from vendors. In fact, the study showed that some vendors are perhaps focusing too much effort on this area and not enough on logistics and technical support.

Marketing support will continue to be important in the region, said Newman, especially for major corporate value-added resellers for whom it is important that the brands they sell be supported through marketing strategies.

PC shipment growth is expected to be above 20 per cent in these smaller countries and territories, with Puerto Rico, a Spanish-speaking US territory, expected to lead the pack with a 59 per cent growth in 1999, compared to 1998, followed by Guatemala and Costa Rica, both with 28 per cent, the Dominican Republic (26 per cent), Peru (25 per cent) and Panama (23 per cent). Ecuador, which has been plagued by economic troubles this year, is expected to grow only 2 per cent.

The PC sector is the bell-wether of the IT markets of these smaller countries and territories and is expected to account for about 40 per cent of their total IT spending in 1999, as opposed to about 20 per cent in some of the larger markets.

A total of 545,720 PCs were shipped in the markets that make up the "rest of Latin America" segment in 1998. Peru led the market in shipments with 147,754 units and was followed by Puerto Rico (105,163 units), Ecuador (87,908 units), Guatemala (59,421 units), Panama (51,634 units), the Dominican Republic (47,334 units) and Costa Rica (46,507 units).


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