HEre's some news that will make you feel real good about getting back in today. El Another gloomy PC-sales report
for retailers
By Brooke Crothers and Joe Wilcox
Staff Writers, CNET News.com
September 1, 1999, 12:50 p.m. PT
Despite an expected surge from back-to-school buyers, computer
retailers watched sales slip and prices continue to fall in August,
according to a new survey.
PC retail sales dove 8.2 percent last month while the percentage of
sub-$1,000 computer sales jumped to about 77 percent, according to Allison
Boswell Consulting, a San Francisco-based market researcher. The survey
includes only sales at brick-and-mortar stores and does not include direct,
catalog, or Web-based sales.
"This should be a good time-period...going back to school--but it's not
boosting sales," said Allison Boswell,
who heads the well-respected research
firm.
Retails stores have been stung by
plummeting profits from an increasing
percentage of low-cost computer sales
and the selling of these computers and
"free" PCs through a host of small direct
marketers. These include companies like
Dell Computer, which now push
sub-$1,000 boxes as well as easy-to-buy
leased computers.
Last month, CompUSA, the largest
computer retail chain, delayed its
earnings report and then reported a net
loss in the fourth quarter of about $64
million. The company also said it is
cutting 1,800 jobs from its sales force as
it continues to close stores.
OfficeMax, another nationwide retailer,
has also stated that its computer sales
have become a drain on the bottom line. Good Guys, a large
California-based chain of electronics stores, said recently that it is
transitioning out of PC sales completely.
Maybe just in time, too. Amid the drop in unit sales, the percentage of sales
of sub-$1,000 PCs is rising, Boswell said. Sub-$1,000 PCs now represent
76.9 percent of all PC retail sales, up from 64 percent in July, she said.
Stephen Baker, analyst with market researcher PC Data, agreed with some of
the findings, particularly the rising popularity of sub-$1,000 PCs. But he said
Boswell's estimate for sub-$600 PCs--17 percent of retail sales--is too low and
is likely closer to 35 percent.
"On the Net, people are more likely to buy more expensive products," he
said. Many people will opt to buy ultracheap PCs at stores, he said.
Online resellers seem to confirm this trend. Insight Direct, one of the top
online resellers of PCs and peripheral devices, said in the most recent
quarter that revenue was up 54 percent and earnings 68 percent. These
sales are being generated by a focus on small and medium-size businesses,
according to Brian Burch, senior vice president of marketing at Insight. So
far, retailers have had trouble capturing that market.
Small and medium-size businesses tend to buy more upscale computers as
well as a host of peripherals and services as they gear up for the Internet.
"Sales are fast and furious [at small businesses] because of the Internet,"
Burch said. Among other brands, Insight sells Gateway and Compaq
custom-configured PCs.
Among other statistics in the report, Boswell also said the average selling
price of a PC was off 2.1 percent at retailers during August.
In market-share ranking, Compaq remained the top brand during the month
and Hewlett-Packard held on to the No. 2 spot. Emachines bumped IBM out
the No. 3 position, while Apple Computer remained No. 5.
Apple sales have been hit or miss within retailers, Boswell added.
For example, though sales at CompUSA are steady, sales at Sears
have been dismal, she said.
"You would expect Apple to do well because less-sophisticated
buyers shop there, but no."
See Story in Context
Related news stories
• "Free PC" offers boost June sales by 35 percent July 22, 1999
• Freeing up the PC July 15, 1999 |
