Building a new niche

indicate, as OEMs in the first quarter were still selling excess inventory shed by AMD in the fourth quarter.

While data for the Australian chip market is still preliminary, it appears there was a very slight quarter-on-quarter and year-on-year growth in the PC market in Australia. However the desk-based PC market is slipping at the expense of mobile PCs. Desktop sales appear to have fallen by 10-12 percent while laptop sales continue to flourish with an increase in sales of around 30 percent year-on-year and quarter-on-quarter in unit terms.

That’s great news, isn’t it?
The mass consumerisation of PCs means there is high demand for products from low end-users. People want to have at least one computer in their home, so system builders should be able to cash in on this demand. Unfortunately the demand for cheap PCs only benefits big name vendors who can afford to mass produce products and dump them on the market, long before a system builder has built its first customised machine.

Jeff Li, managing director of local company Pioneer Computers said an IDC report he recently looked at showed that the local builder market share dropped 50 percent to 22 percent.

According to Li, the analyst organisation expects another 10 percent drop in the next year, signifying tough times ahead for the local builder.

“If you go to an Asian country such as Taiwan, you will see a street which only sells IT products. At least 99 percent of those resellers on-sells notebook products and it’s really hard to find a desktop PC,” said Li.

He said this alternative market reflects what could potentially happen to the Australian market and believes “what’s happening there is going to happen here.”

According to Li, multinational desktops are why the market is smaller and smaller.

“HP has a policy that if it has extra stock, it will dump it for dealers to sell at a very cheap price,” he said.

Kevin Hartin, managing director at motherboard maker Nvidia said he also believes the biggest issue from everyone’s perspective is while the overall PC market is growing by three percent a year, local builders are seeing their market shrink by five percent.

“Retailers jumped on the HP and Acer bandwagon. The other thing is as notebooks are taking over, more and more people are moving away from having a desk station, which eats into any opportunities for local builders,” said Hartin.

Li said the Australian market is 20 times smaller than the US market, so there are very small dealers in the local place, compared to that of the US.

“The cake is already being halved, it used to belong to local builders, but in the past five years it has gotten smaller. In another five years that cake will get even smaller. Dealers rely on selling cheap components such as motherboards and video graphic cards will only receive half the margin,” he said. “It’s cheaper for the end-user to buy a whole PC than to buy bits and pieces for it,” he said.

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Local builders, both at the commercial and government sector are seeing their business being taken away by big name vendors. Just

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