IT FIRMS HIT HARD

Thailand’s PC market is expected to see a 50-per-cent drop due to the severe damage suffered by major hard disk drive (HDD) manufacturer Western Digital and many other electronic parts factories from the flooding. 

 

Acer Computer’s senior marketing manager, Nitipat Praweenwongwuthi, said that the overall PC market in Thailand in the last quarter this year is expected to drop 50 per cent and this slump would continue into the first quarter of next year when it is expected to drop 15 to 20 per cent. The main reason is the shortage of HDD supply due to the floods. The world market is seeing a 40 to 50 per cent decline in HDD supply. 

 

The HDD shortage would push up the prices of computers by between Bt1,000 and Bt3,000 per unit. Customers will also have less choice of products. For example, they might have to settle for a PC with an HDD capacity far greater than their requirement. 

 

“They might want a PC with only 250GB of HDD, but there is a shortage of 250GB HDD in the market. They may have to buy a PC with 750GB instead. HDD with 250GB, 300GB, and 500GB are the most popular and are manufactured on a large scale. However, because of the flood crisis, these popular HDD sizes have vanished from the market. Customers might be offered computers with SSD [solid state drive], which is more expensive than HDD,” said Nitipat.

 

He said Acer has been affected by the floods and its sales might drop 30 per cent in this quarter. Acer’s main strategy is to focus on the upcountry markets so that its overall sales are not affected too much. Acer aims to focus more on the corporate and government markets as these are two major sectors expected to still invest in computers. 

 

“The consumer segment is impacted the most. Consumers make up 65 per cent of our total sales and corporates 35 per cent. In the consumer segment, we will focus on the upcountry market, while we will also focus more on corporates and government. We have set up teams to provide on-site service as well as leasing service for corporate customers in the industrial estates,” said Nitipat.

 

He said Acer would normally have grown 20-30 per cent in the first quarter of 2012 but in the current circumstances that might not be possible. 

 

Anothai Wettayakorn, managing director of Dell Corporation (Thailand) and general manager for the Indochina region, said that the overall computer market in Thailand was expect to decline 20 per cent in the fourth quarter of this year due to the floods. Many government projects have been delayed, while buying computer products will not be a priority for the people as they will have to spend their money on renovation and repairs of their houses, cars, or belongings. 

 

The negative growth is expected to continue to the first quarter of next year. On average, he said that during these two quarters the computer market would shrink by 5 to 20 per cent.  

The three main market segments – consumers, government and manufacturing – will all see a drop. However, small and medium enterprises (SME), which are located throughout the country, will to continue to grow as usual. 

 

“About 40 per cent of HDD supplies to the world come from Thailand. Major HDD manufacturer, Western Digital, was damaged by the floods. As a result, there has been a steep fall in HDD supplies since October. Also, many electronic parts used in computers are in short supply as factories manufacturing them were flooded,” said Anothai. 

 

He said there will be fewer options and models of Dell computers, while the prices of computers will be higher than normal. This factors the HDD price adjustment since the middle of November. The prices of Dell computers, both desktop and laptop, have also been increased since the middle of November. 

 

“We have dedicated teams providing service and consultancy to corporate customers in the flooded industrial estates, recovery service, and a 60-per-cent discount to customers hit by the flooding,” said Anothai.

 

Lenovo Thailand’s country general manager Jeerawut Wongpimonporn said that Thailand remains a key part of the company’s growth strategy in Asean. Thailand recorded the highest ever market share in the second quarter of 2011 and has seen phenomenal gains with a 37.9-per-cent year-on-year growth. 

 

“These gains have helped Lenovo become the world’s No 2 PC vendor with market share of 13.5 per cent. This is the best position Lenovo has achieved in worldwide PC sales, positioning the company as a strong challenger to ultimately become the global market leader. Lenovo has captured incredible marketplace momentum to accelerate past two competitors in the span of just two quarters, while outpacing the top PC vendors for eight quarters in a row.

 

“Recently, Lenovo Thailand has been focusing on upcountry markets and we have found a positive response to our products and our ‘For those who do’ campaign. Between now and mid-December we will be visiting cities in the North, Northeast, and South of the country, holding promotional events in Chiang Mai, Khon Kaen, Korat, and Hat Yai.”

 

During these events, it will offer extra value to those purchasing Lenovo products with three special offers – zero interest for 10 months when buying a Lenovo PC; up to Bt3,000 cash back on purchase; and a choice of product enhancements, including an 8GB thumb drive, an external hard disk or 4GB of additional RAM.

 

“We have strong relationships with all our vendors and a solid track record of handling similar natural disaster situations in the past.  We have seen substantial increase in HDD cost due to the floods. We will prioritise our customers but also monitor closely the cost efficiency.  That said, we expect key component supply and pricing to remain stable for the next few quarters. We will continue to monitor the situation closely,” said Jeerawut.

 

Meanwhile, Pornthep Watchara-Amnouy, managing director of ASUSTek Computer (Thailand), said the PC market this quarter could drop about 30 per cent and also affect the overall PC market in Thailand this year by 10 per cent, because of the flooding. Asus will lower its current target of 300,000 units of sales this year.  He added that due to the short supply of HDD, Asus products will see a price increase of at least Bt1,000 per unit. This situation will continue in the next quarter.

 

“We will develop promotions to activate demand, and also offer free check-up service and 30- to 40-per-cent discount on spare parts to our customers who were flooded,” said Pornthep. 

However, he said Asus is targeting sales of 400,000 units next year. It will focus more on the education and corporate markets, which are the ones with the most potential.  

 

Managing director Somchai Sittichaisrichart of SIS Distribution (Thailand), the largest IT distributor in Thailand, said the IT market has been severely impacted in the last quarter by the flooding. The total IT market this year will drop 10 per cent, while this quarter alone will see a drop of 20 to 40 per cent. This negative situation will continue until the first quarter of next year. He said it is too early to forecast growth next year as there are many factors that can drive the IT market in 2012, including the government’s relief measures and programmes. 

 

“During the one and a half months of flooding, total sales of SIS dropped about 30 to 50 per cent. The flooding created a huge impact on the IT market and on SIS, which is a distributor. Our customers – retailers, commercial and end-user customers – were closed and cloud could not be operated,” said Somchai.

 

However, the corporate segment will return to normalcy faster than the consumer segment. As most of the corporates have insurance, they will have the money to invest in IT and resume their operations and production quickly. They need to restart their operations and production as quickly as possible. Meanwhile, consumer spending will be low for some time as they will have to spend on rebuilding or repairing their homes and cars. They might not be in the mood for spending on IT products. 

 

“We hope the government will roll out measures or programmes to encourage spending by people in order to activate the overall economy next year,” said Somchai.

 

Western Digital accounts for about 60 per cent of hard drives manufactured in Thailand. In mid-October, the company suspended production at its two factories located in Nava Nakorn and Bang Pa-In industrial estates, which have been inundated by flood water, to protect its employees, equipment and facilities. The company’s other facilities in Malaysia, Singapore and the US are fully operational.