SMEs key to PC market's success

SMEs key to PC market's success

The small business sector will come into its own in the first half of 2000, driving the PC industry as corporate sales lag.

According to a report by IDC, sales to the SME market as it prepares for the GST will fuel the expected 4.7 per cent increase for the PC market over the next few months, rather than the traditional corporate sector.

Underlying this prediction is the Federal Government's 100 per cent deduction on all GST-related hardware and software between July 1, 1999 and July 1, 2000 for companies with revenue below $10 million. The deduction includes the ongoing costs of professional advice and training.

"That's a big incentive to get on with purchasing," said Bernie Esner, an analyst with IDC.

And with the second quarter of the year traditionally the largest for the PC market, GST-generated sales are the icing on the cake for those focused on small business. "This is a double whammy for some companies, especially seeing that the Australian Bureau of Statistics estimates that 20 per cent of small businesses don't even have a computer."

Contrasting this healthy outlook for the PC industry is the troubled corporate sector, with 15,000 jobs to be lost in the finance industry alone, according to the Finance Sector Union.

"Most of the jobs have been full-time employees in bank branches, suggesting a surplus of PC hardware will flow into auctions," said Esner.

The end result will be huge discounts and sales incentives by companies such as Compaq, Hewlett-Packard and IBM, who together cover about 51 per cent of the corporate market. Intel has already started the ball rolling with up to 54 per cent discounts on its Mobile PIII range.

Yet Esner rates this strategy as short-sighted, both as a corporate incentive and as a means to take advantage of the GST bonanza he envisages. He suggests a collective IT industry marketing campaign, similar to what the car industry is currently undertaking, in which the ramifications of the GST and possible solutions are explained.

"The PC industry has not even decided whether or not PC products will be cheaper or more expensive under the GST and I haven't seen a single bundled solution package," Esner said.

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