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

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.”