Local Pc Makers Losing Out To Cheaper Imports
Sydney Morning Herald
Monday March 17, 1997
It is fast, powerful and its price has just tumbled by at least $1,000.
For nearly a decade, the price of a state-of-the-art personal computer (PC), hovered around $3,500, but in recent weeks, consumers have been able to buy the latest machines for as little as $2,500.
However, the cost-cutting spells trouble for Australian PC makers, squeezed out by aggressively priced imports aimed at the burgeoning home-user market.
Australian modems, software and other computer equipment are also being hammered by bargain-basement alternatives stamped out in their hundreds of thousands on United States or Asian production lines.
At Hypertec, which last month closed its PC manufacturing business after less than a year, the general manager of sales and marketing, Mr Colin Lillywhite, said prices were falling because the price of silicon chips had been cut. "I wouldn't call them price wars; I'd call them cost wars," he said.
Competition meant the savings were passed immediately on to customers, so to keep their profits up, the largest companies such as Compaq, IBM, Gateway 2000 and Hewlett-Packard then had to sell more computers, Mr Lillywhite said.
The marketing manager of local modem manufacturer Banksia, Mr John Papanidis, said: "It used to be a NetComm and Banksia race. Now we're finding our market share eroded by the Taiwanese suppliers and by US Robotics."
He said consumers were opting for no-frills, ultra-fast modems - which favoured overseas suppliers who bought components in vast quantities.
NetComm's marketing manager, Mr Chris McPherson, said: "Being the biggest player in the smallest pond doesn't mean you have the cost structure to compete with the biggest players in the ocean." The company announced last week that it would retrench up to 50 of its 150 workforce in an attempt to become more competitive.
Overseas companies now claim 60 per cent of Australia's PC market, a proportion which is growing "slowly but steadily", according to a PC market analyst at research firm IDC Australia, Mr Bruce McCabe. Only one Australian firm figured in the 1996 top 10 suppliers here - Melbourne's Ipex - compared with five in 1994's list.
Home-user PCs especially, traditionally a stronghold for the local industry, are under siege by the importers, who are deflecting their attention away from sales to government because of a spending freeze in Canberra.
Harvey Norman had bought 4,000 IBM Pentium PCs, said the retailer's group computer controller, Mr Tony Gattari. The PCs were sold to home users for $1,999, including an ink jet printer. An "Australian-made" tag was not sufficient to lure buyers, Mr Gattari said. "It may be a factor if everything else is equal but it can also be a drawback because there's a perception that Australian technologies are not world standard."
COMPUTER PRICES - HOW THEY'VE FALLEN April 96 Hayes Accura 28.8 kbps V.34 modem $549 Gateway 2000 Pentium 75MHz Family $3199 PC 8M RAM, 850mb hard drive Feb 97 Hayes Accura 33.6 kbps modem $295 Gateway 2000 Pentium 133MHz Family $2699 PC 16M RAM, 1.2G hard drive
© 1997 Sydney Morning Herald