Dormant PC retail market shows signs of spring thaw

The retail PC market, virtually dormant for the past two years, is beginning to show signs of life. The number of PCs shipped into New Zealand for the second quarter of this year increased 15% over the first quarter and 3.2% over Q2 of last year, while first-quarter figures for 1998 were 22% more than 1997. The lion's share of the growth was in the retail market.

The retail PC market, virtually dormant for the past two years, is beginning to show signs of life.

The number of PCs shipped into New Zealand for the second quarter of this year increased 15% over the first quarter and 3.2% over Q2 of last year, while first-quarter figures for 1998 were 22% more than 1997. IDC New Zealand manager Dinesh Kumar says the lion’s share of the growth was in the retail market.

It’s a welcome contrast to the past two years which saw retailers such as PC General close up shop. This year Christchurch-based Pacific Retail Group, which operates Noel Leeming, Computer City and Bond and Bond, once again began selling PCs in its Bond and Bond Stores.

Craig Bull, divisional manager for Computer City (which buys PCs for all three chains), says Bond and Bond stopped selling PCs at the end of 1996.

“At the beginning of the year we introduced our concept stores and re-introduced computers. There are six around the country [Christchurch, Wellington and four in Auckland] and we will continue rolling them out.

“A lot of people were burnt by small local assemblers who went out of business. Now people are looking to international brands and I think that big brand players are increasing their share of the retail market.”

In a move that also points to a more buoyant market, Pacific Retail Group and Australian retail chain Harvey Norman are to offer IBM home PCs to the local market from next week. This is despite IBM New Zealand pulling out of the local retail market last year.

Stores will reacquaint local buyers with the IBM Aptiva, a consumer PC which competes with the Hewlett-Packard Pavilion and the Compaq Presario. IBM distributors Tech Pacific and Melco will follow suit. All parties are dealing with IBM Australia as opposed to IBM New Zealand. Newly appointed distributor Electronic Resources has not yet decided whether to take on the Aptiva. John Dunbar, director of solution sales, says because the relationship between the two companies is new, Electronic Resources will initially focus on the corporate market.

Meanwhile, Harvey Norman has already taken more than 100 orders for the entry-level machines, says Tony Gattari, general manager of computers. The company’s IBM product manager, Jude Kronast, says Melco has also received enquiries about the product.

Gattarri says Harvey Norman leveraged its strong relationship with IBM Australia to allow its New Zealand stores to carry the Aptiva line.

“I don’t think the channel here was developed enough when the Aptiva launched a couple of years ago. The market has changed and the penetration of PCs into the home is growing. I think the market can now sustain another consumer brand.”

Despite a flat retail market overall, Gattari says the performance of the local operation has exceeded expectations. Harvey Norman, which opened a Christ-church store three weeks ago, is planning 10 more local stores in the next year, including sites in Mt Wellington and Wellington.

• Latest IDC figures for the New Zealand PC market put HP back in second place behind Compaq, despite leading in the previous quarter. Compaq currently has 18.2% of the PC market following its merger with Digital. IBM is number three, taking over from PC Direct.

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