Figures bring gloom for computer sellers

By PETER GRIFFIN

The gloom is settling over New Zealand PC industry as forecaster IDC predicts zero growth for the market, compared with the 3 per cent growth it was picking before September 11.

IDC has scaled back its growth forecast for the IT sector as a whole and is picking growth of 2.2 per cent for next year.

How that compares with IDC's previous forecast is unclear as the group has changed its methodology in the past year, but the trend is certainly downwards.

Despite the PC market slump, IDC still predicts overall IT sector revenue will be worth $5.2 billion this year, up 7.6 per cent from $4.8 billion last year.

The remaining life was squeezed out of the PC market during the third quarter, the events of September 11 and the slowdown in IT spending wiping the little growth that was expected.

A total of 79,236 PCs were sold in New Zealand in the three months to September 30, down from 92,302 in the same period last year, a drop of 14.2 per cent.

IDC analyst Darian Bird said the decrease was not as dramatic as it looked after adjustment for the sales surge in the third quarter of last year.

"The third quarter last year was record breaking.

"The second quarter last year was big. So it's coming off two big quarters and that skews the growth rate."

The desktop market took a big hit, declining 17.6 per cent for the year. Compaq still has the No 1 spot but its market share has slipped below 20 per cent, from around 25 per cent in the previous quarter.

Hewlett-Packard made some gains after launching its notebooks in the retail market, but is still well down the list in this segment in seventh place.

Its marketing director, Joanna Burgess, said the year as a whole had been tough, but quarter-on-quarter commercial desktops sales had grown by 16 per cent.

"There's a lot of confusion in the market. But we've grown our market share in a market that's going backwards."

Compaq continues to play second fiddle to Toshiba in the market for notebooks, but Toshiba's market share has dropped from 30.8 per cent to 28.3 per cent.

The Intel server market was the only bright light, with annual growth of 36.8 per cent.

Mr Bird said that increase, and IBM's rise to take the No 1 spot, was influenced by a deal the vendor sealed with New Zealand Post during the quarter as well as ongoing business with Air New Zealand.

"It was a good quarter for IBM. But I would expect Compaq to take No 1 again in the fourth quarter."

For the PC market and the IT markets as a whole the outlook for next year is grim, a clutter of fallen companies littering the sector.

Unit shipments in the PC market are expected to increase by 6.8 per cent next year, but that is not expected to result in increased revenue.

Tightening margins on PCs will cut revenue growth by 5.7 per cent next year in the PC market, says IDC, which was earlier forecasting a fall of 4.5 per cent.

It says its forecast of a small increase for the IT sector next year is due to the "Y2K" sales cycle kicking in by the third quarter, steady Windows XP take-up and growing interest in wireless computing.

The lower growth forecasts reflect the fact that many IT companies have been laying off staff and cutting spending. This year has brought the local loss of familiar names such as Asia Online, OneZone, Gateway, WebMedia, FlyingPig, Genie Systems and and Brocker Technology.

Others like CSC, Walker Wireless, Gen-i, Red Sheriff OwlCentral, CallTime and Mi Services shed staff, bringing the collective loss to more than 500 jobs and millions of dollars in revenue.

Others, including NetRatings and Ariba, took some of their operations back to Australia, which meant further redundancies and job losses.

Listed tech stocks also took a hammering this year as revenue failed to live up to expectations.

Notable listed stocks to suffer included Advantage, IT Captial, Strathmore, Spectrum Resources and E-cademy, which have contributed combined losses and asset writedowns amounting to more than $120 million this year.