Inefficient PC businesses warned to smarten their acts

Beware the inefficient PC retailer--you'll be the first to flounder as the economy dips and the uncertainty of life under MMP bites.

Beware the inefficient PC retailer--you'll be the first to flounder as the economy dips and the uncertainty of life under MMP bites.

That is the warning of market researcher IDC, whose New Zealand manager, Graeme Penn, foresees challenging times ahead for PC retail managers.

Falling component costs are continuing to promote price competition among vendors, says Penn. "But they realise they need to stay competitive to sell those components now, or in three months the situation may change and they'll be left with stock."

Penn says retailers which do a good job of managing their logistics and components will do well, with local assembly companies such as PC General and PC Direct having the edge over international companies because of their short distribution lines.

"Some local assemblers are faster on their feet and quicker to change configurations to meet users' needs. With international companies, if there is a market boom in Asia, the smaller markets, such as New Zealand, are at the lower end of the supply pecking order."

As far as the falling cost of memory goes, Penn says price fluctuations will be a feature of the rest of the year.

"Japan or Korea could suddenly switch production from 16Mbit to 64Mbit and there would be a shortage situation. We can't dictate it in New Zealand. It's a spot market. Vendors have been trying to keep their margins up by shipping 16Mb of RAM as the entry level rather than 8Mb as memory prices have fallen."

In general, Penn says the PC market this quarter is healther than the first quarter.

"There is always a seasonal pick-up from quarter one and that has occurred, but generally it has done better than just a seasonal rise. There are not a lot of big orders around and it is not a return to boom times--but it is encouraging."

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