Toshiba's triumph hides shift

By RICHARD WOOD

A large sale by notebook-only vendor Toshiba to the Ministry of Education has impacted the PC market share of competitors and helped hide a shift in the PC market towards local PC stores.

Figures from research firm IDC put Toshiba in the number two spot behind Hewlett-Packard for first-quarter PC unit sales, but almost half of the Toshiba's sales were to Education.

Country manager Steve Ford said 4000 units had been delivered to Education - the bulk of the deal, so the impact won't spread into following quarters.

That and other growths in the notebook market led to first quarter sales of notebooks across suppliers being 24,360 units compared with 16,606 units for the same quarter a year ago.

By contrast, desktop PC unit sales were stable at 67,972 units compared with 67,381 in the the first quarter last year.

Growth in the volumes of local PC assemblers is hidden in the results. The assemblers as a group managed to retain their 38 per cent marketshare compared with the first quarter a year ago, which the Herald calculated at an additional 3210 units sold, while leading PC vendor Hewlett Packard dropped from 37 per cent to 31.3 per cent marketshare.

Small local PC assemblers are proliferating. Microsoft competitive strategy manager Brett Roberts said there has been 40 per cent year-on-year growth in the number of local outlets requiring Windows to sell, and he said it was a "fundamental shift" in the local market.

He said many of the firms had been started by ex-employees of similar businesses laid off during a tight period last year. They might only sell 30 to 50 PCs a month.

"There are no barriers to entry. The components are [readily] available. These guys can leave their employer on a Friday, start their own on a Monday."

Roberts said Sydney went through a similar cycle where it seemed there was a PC builder on every corner.

The Herald rang three local PC stores and all confirmed that sales are up.

Brian Avent, managing director of three-year-old firm NetPC, said his sales so far this year were double the figure for the whole of last year.

He said many Asian assemblers he knew were also experiencing high growth. "They don't make a lot of money, but they do very high volume".

Consumers are also benefiting - getting fast PCs for less than $1000, a price point reached late last year, albeit usually advertised excluding GST. A typical configuration local shops offer includes a Celeron 1700MHz processor, 256MB of memory, 15 inch monitor, 52-speed CD Writer, and 40GB hard disk.

NetPC and the largest local assembler The PC Company were two out of 24 battling it out in the Trade & Exchange last Thursday.

And despite the similarity of ads, the Herald found little in common between the target markets of the PC retailers - a situation Roberts said was typical.

"The commonality is there is no commonality. They have all found a niche," said Roberts.

Many are building to order - an approach that works well for the second- or third-time PC buyer and allows them to be "tightly connected" to their customers, he said.

"They are able to install and provide a bit of training. It comes down to small business supplying to small business."

QMB Computers sales manager Paul Lovett said people were getting smarter and wanting custom-built PCs. He put QMB's growth at around 10 per cent for Q1 on Q1 a year ago.

Wayne Jia, manager of ETC Computers, said he had experienced rapid spurts of growth, built on the back of the international student demand. Jia said one of the drivers in the market was that a new fast PC was often cheaper than a second-hand one.

But Roberts said suburban and small business centre PC shops had not picked up all the business lost by larger retailers.

He said while small to medium-sized businesses were buying a lot of PCs, consumer PC volumes were down.

Most PCs sold had Microsoft Windows on them and Microsoft could largely distinguish between retail and business sales by which Windows was sold.

Questions remain about how accurate PC market figures can be. As an example, NetPC's Avent said he had never had a call from IDC, most of his processors come through parallel importing, and not every PC sold with Windows on it.