Analysts and vendors predict resurgent system sales

Following lacklustre sales of PC systems last year, analysts and vendors predict a resurgent local market as we enter the new millennium.

Stuart Fredman, marketing director at One Technology Group (OTG) predicts stronger than normal results in the notebook market as corporate South Africa takes note of the power and realises the financial benefits of owning a fleet of mobile systems.

BMI-TechKnowledge (BMI-T) analyst, Diedre Moller, says that unit growth for the local PC market last year was three percent. "That's moderate growth but was offset by the strong results of 1998 - a staggering 27 percent." She says the figure was influenced by Y2K spend, as well as a healthy small, medium and micro enterprise market, the rise of low-cost desktop systems and the rapid uptake of the Internet. She predicts the growth curve will normalise this year. "I believe the South African PC market will bounce back this year to double-digit growth, as corporate spend normalises in 2000, and other drivers such as the Internet explosion, growing demand for portable computing, and as new price points open up the market to new sectors. However having said this, growth is heavily reliant on the outcome of the SA economy. Growth rates are based on the assumption of a stable economy and normalised exchange rates. If the current economic uncertainty persists, a weakening rand and poor business confidence will result in all sectors, particularly the corporate sector, putting a hold on PC spend and adopting a wait and see approach," adds Moller.

"The processor race was dominated by Intel with 90 percent of the market last year, a drop of three percent from the previous year. Two of that three percent went to AMD to reach a total of seven percent of processor sales in South Africa last year," says Moller.

The comparison between notebooks and desktops last year was 13 to 87 percent, in favour of desktops.

Fredman says: "I think notebooks will gain on the desktop business this year, reducing the percentage split between the two. Notebooks are increasingly improving their price/performance ratio and there has been phenomenal growth in mobile technology of late. I think following this trend, data and voice technology will see an upswing in usage."

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The power of the notebook is increasing and currently is almost on a par with that of desktop systems, as new technology is released. "Notebook prices have stabilised and the market is currently showing us excellent opportunities," he says. Influencing the price of notebooks was the cost of displays. The general trend I'm seeing at the moment is a stabilisation in the costs associated with TFT screens as the newer fabrication capabilities are brought on line."

Fredman says one of the most critical aspects of the market is changing, and that is the perception, in favour of notebooks, of those individuals with buying power. A further influencing factor in Fredman's prediction of an expansion in the notebook market is that the corporate arena has reached saturation level when it comes to desktop systems. "The corporate notebook market continues to expand as more execs realise the potential of the notebook as a business tool for them," says Fredman.

Another driver behind the expansion of the notebook market is expected to be mobile computing devices or applications, such as WAP technology, PDA's and Sub Notes Books. Rather than invading notebook territory, Fredman believes they will slot in alongside notebooks, enhancing the technology and delivering a rounder, fuller solution to the market, driving the sales of notebooks up. "These mobile computing devices are becoming more powerful as well as Internet-centric. As they do this they will become more useful to businesses with e-commerce strategies and will be coupled to the more powerful, flexible and mobile notebook," he says.

Another trend users can expect is to see more competition in the processor market. "I expect AMD will take an even bigger percentage of the market from Intel this year as they focus on the corporate market, an area in which they still lack penetration, but which they are addressing," he says.