Up­beat in a down mar­ket

SA’s ven­dors ex­pect to buck global de­clines

Finweek English Edition - - Business Strategy - SI­MON DIN­GLE

LO­CAL COM­PUTER Ven­dors Sa­hara and Mustek (MST) have strate­gies in place to en­sure South African sales buck the global down­trend. In­ter­na­tional IT re­search and con­sult­ing agency Gart­ner re­cently pub­lished anal­y­sis of last year’s com­puter sales fig­ures, re­port­ing car­nage for most ven­dors but with odd ex­cep­tions, such as Acer and Toshiba, which showed pos­i­tive growth. In­ter­na­tional ven­dor Dell has also con­ducted its own re­search into the dy­nam­ics gov­ern­ing this mar­ket.

Mika Kita­gawa, prin­ci­pal an­a­lyst at Gart­ner’s Client Com­put­ing Mar­kets group, says: “The United States ex­pe­ri­enced steeper than ex­pected ship­ment de­clines due to the re­ces­sion. The Europe, Mid­dle East and Africa re­gions were also af­fected by the eco­nomic slow­down across key coun­tries. Asia/Pa­cific recorded the worst ship­ment growth since Gart­ner started its PC statis­tics re­search.”

Gart­ner says the growth driver for the 2008 Christ­mas PC sales sea­son was the mini-note­book – “net­book” – seg­ment. With more ven­dors of­fer­ing creative sales pro­mo­tions, the mini-note­book seg­ment out­paced over­all mo­bile PC growth.

Dell’s re­search agrees with the growth op­por­tu­ni­ties of­fered by net­books. Rob Nunn, mar­ket­ing man­ager at Dell South Africa, says: “Our re­search has also shown that South Africans are ex­tremely pos­i­tive about the fu­ture eco­nom­i­cally but that a strong fo­cus is be­ing placed on im­prov­ing op­er­a­tional ef­fi­cien­cies. Mo­bile is an­other key area of in­ter­est.” Nunn couldn’t con­firm when Dell’s Mini 9 net­book can be ex­pected in SA.

Gary Naidoo, deputy MD of South African com­puter ven­dor Sa­hara, says the com­pany will also be fo­cus­ing on the net­book mar­ket seg­ment. “There’s a crunch on IT spend but con­sumers are looking for good deals. The mo­bile space is promis­ing as the mar­ket moves away from desk­top so­lu­tions. Sa­hara has man­aged to main­tain quar­ter-on­quar­ter growth.”

Sa­hara also en­joyed suc­cess with its mar­ket­ing ac­tiv­i­ties in ma­jor sports in SA. Naidoo says a fo­cus on brand­ing will help Sa­hara com­pete with the mar­ket depth of in­ter­na­tional play­ers, such as HP and Len­ovo. “Well-es­tab­lished in­ter­na­tional brands are en­trenched in the cor­po­rate space but the con­sumer is now more aware of what’s avail­able, thanks to the In­ter­net. We stand an equal op­por­tu­nity as an SA ven­dor based on prod­uct of­fer­ings.”

Mustek founder and CEO David Kan also dif­fer­en­ti­ates be­tween con­sumer and cor­po­rate with pub­lic sec­tor spending. “Fourth quar­ter sales were slightly down on pre­vi­ous years. The im­pact was big­ger in the con­sumer and SME sec­tor. But a ma­jor­ity of the mar­ket is dom­i­nated by cor­po­rate and Gov­ern­ment and the im­pact has been smaller on those sec­tors where bud­gets are in place and spend is con­sis­tent. Those cus­tomers also want to have op­er­a­tions run more ef­fi­ciently and have to in­tro­duce new tech­nol­ogy to achieve that.

“We’re in our tra­di­tional PC quar­ter: we can see the pipe­line. The con­sumer mar­ket will con­tinue to strug­gle for the first two quar­ters of 2009 but should re­cover in the third and fourth, helped along by in­ter­est rate cuts.”

Kan says that Mustek has in­tro­duced Toshiba’s range of note­books to its prod­uct mix fo­cused on con­sumers, while in the cor­po­rate and pub­lic sec­tor Mustek will con­tinue to push its Mecer brand.

He also dis­agrees the desk­top mar­ket is a lost cause. “Desk­top is here to stay – it’s not go­ing to dis­ap­pear from the mar­ket. If you look at to­tal cost of own­er­ship desk­top is still sub­stan­tially lower than note­book. Note­books are ser­vice-in­ten­sive prod­ucts.”

Kan be­lieves SA brands com­pete favourably with multi­na­tional ri­vals. “In SA we’re luck­ier than lo­cal brands in the US and Europe be­cause we’re ge­o­graph­i­cally re­mote. Lo­cal play­ers in SA have breath­ing space due to the com­pli­ca­tions of lo­gis­tics for desk­top sys­tems, which are more com­plex than note­books. That’s why we do OK on desk­tops. I don’t see that sit­u­a­tion chang­ing much be­cause of the phys­i­cal bar­ri­ers.

In terms of the gen­eral mar­ket, Kan ex­pects things to be flat in 2009. “If we do see growth it will be sin­gle-digit. But I don’t think the mar­ket will go neg­a­tive.”

Mo­bile is the mar­ket.

Desk­tops aren’t dead.

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