Pentium-based PCs will garner 80 percent of the total China PC market by the end of 1996, and the home sector will be the "most promising market" for PCs in China for the next five years, predicts research company International Data.
In 1995, Pentium PCs held just under 20% of the China PC market and 486-based machines dominated with 74% market share. But Pentium and 486 PCs are expected to completely reverse their market share positions in 1996, as 486 PCs are forecast to drop to below 20% of the total China PC market, according to Ken Xie, general manager for IDC Beijing.
This dramatic reversal of market share is primarily initiated by PC vendors. "It's not that the China market is ready for Pentium -- for most businesses, 486 is enough. But a lot of vendors are pushing Pentium [PCs], so it is [widely] available now," Xie says.
Xie added that the price of Pentium machines dropped in 1995, which is also spurring more Pentium PC purchases. Legend was the first vendor in China in 1995 to offer a Pentium 75MHz PC for less than 10,000 renminbi (US$1200), he says.
According to IDC figures, the number of PCs shipped in China in 1995 was just over 1 million, and PC shipments are forecast to reach over 1.4 million units by the end of 1996. By the year 2000, shipments of PCs in China are predicted to reach 5 million units.
Of the 5 million PCs expected to be shipped by 2000, the home PC market will contribute 1.5 million units, IDC forecaste.
In 1995, consumer purchasing patterns started to change, so more users are seriously thinking about owning PCs in the home now, Xie says. He adds that PC vendors' heavy promotional campaigns contributed to this change in attitude.
Another significant factor contributing to the growth of the home PC market is the introduction of multimedia products, Xie says. "The hot topic in China now is multimedia because it is closely associated with entertainment and education," he says.
Xie noted any device, such as a PC, that can be used as an entertainment medium or an education tool in the home is very popular in China now.
Prices for name-brand PCs are expected to begin dropping in China, which will further prompt price-sensitive home PC buyers, he says.
Most name-brand PC vendors have yet to reap the benefits of the growing home market, as brand PCs accounted for only 20% of the total home PC market in 1995, while clone PCs made up the rest of the market, Xie says.
He noted that users would prefer the better quality and warranties of name-brand PCs, but they have not been able to afford the pricier brand PCs in the past.
But as brand PC prices continue to drop and household incomes maintain a constant growth, PC brand vendors in China can expect to snatch up 80% of the home market by the year 2000, according to Xie.
"As prices for brand PCs drop, clones will lose popularity ... The market will become very competitive as prices for name-brand PCs drop," he says.