From the Trenches: End of year price frenzy

OPINION: It was bound to happen sooner or later. In a frenzy to grab as much market share as possible, notebook manufacturers are hitting the retail market with end-of-line or ex-lease laptop computers at sub-$1000 prices.

Harvey Norman led the pack with a four-day end-of-financial-year television promotion, flogging ex-leased models from major brands for $767 (retail).

Big W and Officeworks were competing to move an entry-level Acer Extensa model for $997 (retail), in a promotion that was exclusive to these retailers.

Sure, they’re ex-leased or fairly low-end models (the Extensa runs a Celeron processor with 256MB of RAM and 40GB hard drive), but these types of promotions are a sign of things to come. And to the average punter, cheap laptops are good news.

For resellers, however, things are pretty gloomy. One reseller commented to me that laptops are almost like “toasters” as they are fast becoming even more commoditised. I kind of agree.

It reminds me of similar price wars that have occurred in the PC market over the years. During the mid to late 1990s as PCs became increasingly popular, we were seeing retailers get quite aggressive with sub-$1000 and even sub-$500 models. The same thing is happening in the notebook market.

The demand is so high these days, vendors need to hit their sales numbers and will use the popular mass market retail channels to move as many units as possible.

Some manufacturers would argue that mass market retail deals such as these create demand for the rest of the channel. I’m not so convinced.

While it’s true that the big boys of retail have big clout when it comes to creating demand in the consumer market, they are always going to have the upper hand over the smaller “laptop-specialist” reseller or retailer. We’re at a stage now where these street-level laptop shops cannot compete. As soon as the consumer finds out they can grab it cheaper at Harvey Norman or Officeworks, that laptop specialist or PC reseller has lost a sale.

The best they can do is push for some margin on break/fix and support services. It is about the only advantage they have over the big retailers. It’s a tough school.

What are your thoughts on the issue? Are traditional notebook retailers at risk of becoming totally irrelevant? Will the value be taken out of the notebook market? Click here to send me your feedback.