As PC sales show signs of stabilising as companies again replace equipment, vendors move into "hyper-competitive" mode in a bid to boost market share despite a stagnant economy.
Preliminary local IDC figures for the second quarter, provided by Tarsus Technologies, show there is a close battle for the top spot; with a mere 7 000-unit gap between the top two vendors, with HP in the lead overall, followed by Dell. When it comes top desktops, this gap is even narrower - with Dell in the lead by a 4 000-unit margin.
Tarsus Technologies CEO Anton Herbst says there is a serious bid for market share gains in the absence of growth in the number of units being sold, a position he attributes to a stagnant economy. According to Trading Economics, the economy contracted 0.6% in the first quarter of the year.
Return to growth
This battle for market share is ongoing at a time when the market is stabilising locally, and it would appear tablet sales are slowing, says Herbst. He says the IDC's figures show desktops are still in decline, but not by as much, while notebooks only dropped 1% in the second quarter, compared to 27% in December.
The IDC notes PC shipments in Europe, the Middle East, and Africa reached 21.9 million units in the second quarter of 2014 - a 10.5% increase year-on-year and a clear return to growth after seven quarters of consecutive declines. However, it adds this was mostly driven by Western Europe.
Vendors are moving quickly to launch products with better capabilities and capacity, notes Herbst. He adds the refresh rate has picked up because companies did not replace equipment when the big shift to tablets happened, and then realised the devices are not useful for creating content.
Herbst adds PC growth is coming back to its long-term growth trend and is likely to move back to sales increases of between 4% and 5% a year as companies start refreshing machines again. He adds gaining market share comes down to either being cheaper, or the best. "I don't think tablets will rule the roost, [as] they have the same challenges as the PC."
Land grab
Herbst notes the move towards gaining market share would not be happening if the economy was growing at 6% or more. He says some initiatives - apart from financial services offerings - include after-care and virtualisation bids.
Recently, Lenovo Financial Services launched locally. This marked the African debut of the product, in a bid to grow its market share beyond the current quarter by enabling companies to manage their assets through regular refresh cycles on a subsidised rental basis, says Lenovo. The PC maker has joined other companies, such as HP, as well as channel entities, in offering financial solutions to grow market share.
Herbst notes many vendors are moving into financial service offerings because this makes it cheaper for entities to acquire machines. He explains the initial cost of a PC is high, which is why penetration is around 14% in SA, while mobile devices - which are financed when on contract - have reached saturation point.
Honing in
Vendors are being challenged in the enterprise space, as cost-cutting and virtualisation eat into sales, says Herbst. As a result, they are increasingly segmenting the market to focus on mid-tier companies, as well as small and medium enterprises.
Herbst says small and medium businesses - the "holy grail" - are increasingly coming under the spotlight as PC makers try to better understand this market to win it over. Multi-channel offerings are also starting to happen, as vendors attempt to find a way of "pinning down" younger shoppers, he adds.
Tiens Lange, communication solutions director at Westcon Group Southern Africa, notes most vendors are growing market share by offering full product sets, and are buying companies that can complete or grow their offering. Lange adds the local sector is currently "very competitive. A lot of companies are competing for the same chunk of business."
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