Repeat of last year's PC firm crashes unlikely, says IDC

The crashes witnessed in the computer industry last year aren't likely to be repeated this year as everyone involved has learned their lessons, says IDC New Zealand general manager Dinesh Kumar. Late last year there were several receiverships - Best Buy, PC General and Lowes Technology - and significant layoffs at Renaissance.

The crashes witnessed in the computer industry last year aren't likely to be repeated this year as everyone involved has learned their lessons, says IDC New Zealand general manager Dinesh Kumar.

Late last year there were several receiverships (Best Buy, PC General and Lowes Technology) and significant layoffs (Renaissance).

Kumar says predictions will be easier once figures for the third quarter are available, but his gut feeling is that the problems experienced in the industry last year won't be repeated this year. "It normally comes in cycles every two to three years. You have a big shake-up."

He believes the industry went through enough of those last year and that everyone has learned to define and specialise in their market. "It's the ability to add value to the equation rather than just moving boxes. That's the difference."

Christchurch was hit reasonably hard during last year's shake-out (PC General, Lowes), and Ashley Newsome, a director of Christchurch start-up assembler PC Mania, agrees the key is not to just compete on prices.

"A lot of people come to us and say they can get product cheaper elsewhere. I say that if they still want us to be here in six months to look after them, this is our margin. Most people appreciate the honesty." He says margins are still low. "There's not a lot for money in it."

PC Mania started up 16 months ago, initially intending to aim only at the first-time PC buyer, but has also supplied small offices and other organisations. It is aiming to add value with extra service, delivery, installation and tuition.

Newsome says that over the past three months business has picked up, and the company employed its first full-time staff member last week. (The company's two directors both have other full-time jobs).

Another Christchurch company, Global Computers, has been operating for three months with a small business and home user target market. Sales consultant Austin Ellis — a former employee at Lowes Technology — says the market has improved.

Newsome believes the Christchurch market seems to have consolidated, but says there's some negativity in the market. "I think people will wait later this year to purchase for say Christmas."

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