Fears Aside, Retailers Are High On Modems
Computer Retail Week - 07/22/98; 1:47 p.m. ET
Despite falling margins and predictions that demand will
decrease, many retailers are maintaining sizable modem
sections.
Jay Buchanan, senior division manager of electronics for
Nebraska Furniture Mart, for instance, is looking to
widen his selection of modems to accommodate cable
and asymmetrical digital subscriber line products.
Buchanan said he believes the modem industry is in its
infancy and the Internet will continue to spur demand.
Other retailers said declining revenue hasn't prompted
them to scale back.
Yet modem vendors said the larger chains are paring
their modem selections, if only slightly, and cutting out
some vendors.
"We see retailers cutting down on the number of
modems they offer," said Jonna Stopnik, director of
channel sales for Thousand Oaks, Calif.-based Xircom.
"Pricing is an issue."
Many vendors and retailers said there's demand for
high-end, name-brand modems and for low-end no-name
devices, but retailers are telling makers of midrange
modems they'll only take products if the vendors cut
prices.
"The middle layer of the three-tier market is gone," said
Larry Hancock, director of marketing communications at
Norcross, Ga.-based Hayes. "We're seeing reduced
overhead and limitations to shelving."
Hancock added, however, that the total number of
modem SKUs offered by the average retailer has
remained constant.
Although many retailers said they believe the V.90
upgrade cycle will continue to fuel sales, Lisa Pelgrim,
senior analyst at Dataquest, in San Jose, Calif., said she
expects retailers to start limiting their modem sections by
year's end.
She pinned her forecast on the presence of built-in
modems in most PCs and the lack of a tangible upgrade
from 56-kilobit-per-second modems.
Meanwhile, some analysts said they predict analog
56-Kbps modems will hold their own.
"I believe there will be a reasonable retail market years
down the road," said Ernie Raper, an analyst at
VisionQuest 2000, in Moorpark, Calif.
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