Consumer PC market is for resellers

Some might argue that the consumer PC market is not an ideal fit for the IT reseller channel. However, the possibilities and the potential of the product segment are limitless. Spawned by declining prices, which brings power and technology into the hands of the users, possibilities for resellers of

desktop and notebook PCs are on the rise. Primarily fuelled on one end by the concept – and reality – of the digital home, combined with the (now) basic requirement of computers for schoolwork, the importance of home computing has never been stronger. As a result, consumers are more tech-savvy than ever before, which translates into increased demand and strong inventory levels within the consumer market, which bodes well for the reseller channel. One of the strengths and key benefits of the reseller channel is product knowledge and customer service; both of which are critical to the consumer purchase.

Vendors in the first quarter consumer PC market experienced both a sequential and annual increase in unit activity. Total Q1 05 product shipments, including both desktops and notebooks, were a combined 351,880 PCs. This figure represents one-third of PC unit volume, is up 14 per cent from Q4 2004 and six per cent over Q1 2004. Both product segments experienced annual growth, with the notebook form factor slightly out-performing the desktops (up seven per cent annually, compared to the desktop’s five per cent). Pushing through 2005 and into 2006, the notebook segment is expected to increase in popularity, as it has done in the past. However, aggressive desktop prices, combined with well-positioned peripherals, will continue to push the desktop segment.

Retail powerhouses such as Best Buy offer in-home set-up and extended warranties (long proven as the revenue generating aspect of the PC market) combined with robust inventory levels. Boutique-style retailers offer extensive product knowledge and a selection that is not, by contrast, overpowering to the consumer. Extended warranties and extra service are also prevalent.

Diving deeper into the Q1 05 consumer notebook PC segment, total shipments were 85,206, up 27 per cent sequentially and seven per cent annually. Traditionally, the annual growth rate is used as an indicator of market growth and maturity. However, in the case of the notebook segment, the sequential figure is worth noting. This is the growth between the traditionally strong consumer fourth quarter and the strong corporate Q1. A rise in consumer demand between the two is indicative of a growth in that segment.

Also occurring is the influx of vendors on the market. From relatively new notebook vendors (in the Canadian market) such as Averatec, to the more seasoned Toshiba, Acer, HP and Sony, the landscape is increasingly more competitive.

Factors contributing to the growth in notebook demand include: advancing technology, strong inventory levels, increased customer awareness and declining prices. Advancing technology is pivotal to the IT market.

CPU vendors, such as Intel and AMD, are continually evolving their processors. Intel’s activity with their Centrino processors is worth noting, as is AMD introduction of 64-bit computing to the notebook form factor. Nvidia and ATI are bringing advanced graphics cards to the PCs. Considering the other factors, the global market plays a role. Strong inventory in Asia contributes to the increase in the number of vendors, which is directly affecting the robust inventory levels and the declining prices in Canada.

And customer awareness is one of the most critical areas for the reseller community. While the Internet has certainly contributed to accessibility of information, so have educational institutions, and the growth of the IT industry in general (most individuals know someone with some computer knowledge). However, disseminating through the jargon, understanding what the marketing literature says, and what it means to the average consumer, listening to their requirements, and offering solutions that fit, are qualities of good customer service. Good customer service, in a sea of increasingly stiff competition, is one method of distinguishing one’s business. One of the many strengths of the overall reseller channel is good customer service. As a result, the consumer notebook PC market offers critical opportunities for the IT reseller channel.

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