Market saturation forcing vendors out

Researcher IDC claims 2006 will be a critical year for many hardware vendors, as saturation in the hardware market forces companies out.

Vendors will find it hard to attain growth and this will create a war in aggressive pricing in both retail and commercial business, said IDC.

The short term effects are already being felt with price wars affecting many hardware markets.

Michael Sager, IDC research manager for hardware said post holiday season and aggressive back to school specials were much more extreme than in past years.

“Also the IT growth in retail channels such as BigW, Kmart, Target points to the increased focus on lower price points in hardware markets,” said Sager.

"Strong competition in hardware markets from new vendors such as Acer, Asus, BenQ, Lenovo, LG and Samsung is one of many factors that hampers the growth of the local system builder market”.

Sager believes thousands of system builders in Australia will seek further support amidst heavily discounted pricing from multi-national corporations, who want to grow their own share.

“The message for vendors and their channel partners is that Australia is an attractive market for overseas vendors with its solid economy, English speaking background, and mature IT spending,” he said.

This study was part of IDC's top 10 predictions for 2006.