Fewer PC Sales Go Direct as Customers Move to VARs, Retail and DMRs

By Jessica Davis  |  Print this article Print

More PC customers prefer to buy their computers through retail, VARs and direct market resellers (DMRs), and that trend will continue, says market research firm Gartner. Gartner forecasts that 80 percent of PC shipments will go through an indirect channel by 2012. PC makers such as Acer, Dell, HP, IBM and Lenovo will need to keep a close eye on their go-to-market strategies.

PC customer buying preferences are pushing the market to one that favors indirect sales over sales direct from the manufacturer, according to a new report from Gartner.

The indirect channel—including VARs, retail and telecom providers—counted for 66.6 percent of worldwide PC shipments in 2004 and accounts for 74.3 percent of shipments in 2008. Gartner is forecasting that percentage to reach 80 percent by 2010.

The shift will mean that PC manufacturers must keep a closer watch on their go-to-market strategies and fine-tune their multichannel approaches to yield the best results, particularly now when market analysts are forecasting historic declines in PC sales.

"The direct sales channel is still showing customer preference in certain segments such as enterprise, government and education and some professional segments in mature markets," says Tiffani Bova, research vice president at Gartner. "However, strong consumer and small office/home office [SOHO] market growth will lead to consistent growth for the retail channel, and we can expect to see growth from a variety of nontraditional PC retailers such as Wal-Mart and Price Club in the U.S. and Carrefour and Courts in Asia/Pacific."

Bova believes that telecom retailers will also step up to a more active role as mininotebooks, also known as netbooks, are bundled with remote access in several geographies.

Expansion of home and SMB (small and midsize business) customers in both mature and emerging markets will help spur the growth of indirect sales because these customers prefer purchasing via retail and VARs, according to Gartner.

In the home and SOHO segment, most customers prefer retailers, says Gartner, which allow them to shop for multiple brands, features, functionality and price all in one place. But these customers will go to direct sales as their No. 2 choice.

SMBs prefer a combination of the direct and indirect sales channel for purchasing PCs, according to Gartner. The firm notes that the smaller the business, the more likely it is to prefer purchasing through the indirect channel, including VARs and DMRs (direct market resellers) due to price, availability and post-sales support.

Gartner notes that the fastest-growing indirect sales channel is DMRs. However, those companies will still only make up less than 5 percent of the total market by 2010.

"During the last two years, the channel has been particularly volatile with a declining average selling price [ASP], increased channels to market, consolidation, and the introduction of new brands and technologies to the market," Bova says. "Building a robust and comprehensive [go-to-market] strategy is critical to the overall success of a PC manufacturer. Building a one-size-fits-all product or channel strategy will not deliver the flexibility or responsiveness customers are looking for in today’s market."

That means meeting the customer where he or she wants to buy, says Bova, with the products the customer wants.

"With predictions of an unprecedented PC market slowdown in 2009, how PC manufacturers keep demand and brand loyalty high will come down to the attention spent on [go-to-market] and account coverage initiatives," Bova says. "Shoring up partnerships with channel companies [retail, VAR and telecom service providers] and distributors has the ability to provide tremendous competitive advantage. This building of multichannel sales avenues opens up touch points and customer contacts with reduced costs versus selling and supporting customers directly."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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