Retailers in laptop price war

A laptop price war is in full swing with some mass market retailers promoting selected sub-$1000 models.

Mass market retailers Big W and Officeworks -- in conjunction with Acer Computer Australia -- have initiated an advertising campaign selling Acer's Extensa 2355XC notebook for $997 (retail). Big W advertised this model as "our lowest price ever for a laptop".

It is believed that this Acer laptop has been discontinued and would only be available to these retailers -- not the rest of Acer's channel -- during the promotion.

The 2355XC includes an Intel Celeron M processor, 40GB hard drive, 256MB of RAM, DVD and CD-RW combo and 14.1 inch screen.

Meanwhile, Australia's largest retailer Harvey Norman has initiated a television advertising campaign promoting "ex-leased" laptop models from major vendors for $767 (retail).

That promotion lasted for four days and was now completed, said Jeff Woodhouse, product and marketing manager, computer hardware at Harvey Norman.

Woodhouse said there was a lot of growth in the laptop market and the retailer was being aggressive in this area. "It's an indication that the notebook market is very competitive and it's a growing category," he said.

The retailer's website is also promoting an ex-leased IBM R30 Thinkpad for $787 (retail) and a Compaq Presario M2045AP notebook for $1182 with HP giving the customer $100 cash back after purchase ($1082).

The sub-$1000 prices, while good for consumers, have left one reseller concerned following the promotion with Big W and Officeworks.

David Wu, director at reseller group Computer Australia, felt that the promotions with Big W and Officeworks directed customers to mass market retailers and that these retailers were being treated better.

"Their [Acer's] strategy towards the channel is lacking -- they're going for the numbers game basically," he said.

Wu believed that there has been increasing pressure from the large retailers on the smaller OEM channel and the latest notebook prices should "ring another alarm bell for distributors and retail stores".

He said that many vendors claim that they push products to the mass merchants in order to obtain market presence which may help the OEM channel, but the recent deals with Big W and Officeworks show a strategy shift.

He questioned whether other laptop vendors were going to strike similar exclusive deals with mass market retailers. "How can stores in the OEM channel compete with these kind of vendor-exclusive deals," he said.

Others feel the same. Greg Campbell, director at Melbourne laptop specialist City Notebook Centre, said aggressive pricing through mass market retailers is hurting his business and "has been doing so for a while".

The reseller offers free labour support for one year on laptop purchases and relies heavily on services to make money. "It's definitely getting very hard for small retailers, particularly those who look after their customers. We're not the cheapest, but the best as far as support," he said.

"Laptops are almost like a toaster -- it's crazy, but that's the way it's going," he said.

He added that over the past few years, mass market retailers have been able to sell laptops cheaper than City Notebook can buy them through distributors.

Greg Mikaelian, channels general manager at Acer Computer Australia, said the move with these retailers is part of a wider strategy which he would discuss with CRN in July. It was part of a major campaign which would support all Acer channels. He declined to comment further.