Hardware takes the hard road

While worldwide sales of smartphones are tipped to overtake PCs by the end of 2011, Romania is not showing signs of being in sync. On the contrary, soaring smartphone sales go hand in hand with computer sales locally, as they are different kettles of fish. Here, sales of IT products plunged to painful lows, and this year is believed to be all about survival for IT hardware firms, in spite of good future growth potential, given the dearth of IT infrastructure in essential sectors of the economy.

By Otilia Haraga

The prediction that global sales of smartphones will surpass sales of PCs by the end of 2011 is made in a report by RBC analyst Mike Abramsky, who estimates that by that time, yearly sales for both categories of products will near 400 million units. But local experts beg to differ, at least in Romania’s case.

“For now, at least in Romania, smartphone and computer sales move in parallel and we are not seeing such an effect. On the contrary, we have noticed that higher interest in the smartphone goes hand in hand with higher interest in notebooks, since a smartphone customer is generally a notebook customer and the two products were conceived for different uses,” Marius Ghenea, owner of FitDistribution, tells BR.

Read more about

Pepco Study: Romanians spend an average of 70 lei (14 EUR) per shopping session in store

read more

He explains that Romania has now reached a point at which a lot of people are first-time buyers of laptops, although many of them have already owned a smartphone for some time. “So, we could say that, in reality, the sale of smartphones stimulates notebook sales rather than inhibiting them,” he concludes. Ninety percent of FitDistribution sales are IT products – with 20 percent being desktop sales and 80 percent portable computers.

Cristian Moanta, marketing manager of Altex Romania, also doubts that PCs will lose ground to smartphones – not in Romania, at least. “Each category of product will have an important place in IT&C sales, due to their utility,” he says. Desktops make good business solutions in the office or for gaming and use by schoolchildren at home. Laptops will always be associated with mobility and performance, the possibility to work and communicate in almost any circumstances and place. By contrast, the main advantage offered by the smartphone is the opportunity to communicate ad hoc and gain rapid information from the internet. “You cannot work on the smartphone, so it will not enter into competition with computers,” says Moanta.

IT market prepares for hard times

Experts believe there is only one way for the IT market to go in 2010: upward. “The overall nosedive in the IT market in 2009 was so dramatic that a growth in 2010 is absolutely natural, since at the very low levels of 2009 Romania cannot supply the necessary IT products, at individual, corporate or governmental level. The public authorities, local and central, are often still substantially deficient in IT technology, the education system, the health system, etc,” says Ghenea. In the long run, if this need is neglected, there may be delays that are hard to compensate for and difficulties in connecting to the global information society. “Of course, this is just the theory why IT industry should go back to growing significantly in 2010. In reality it is government decisions, which have been very unsuitable given the crisis of the past year, that mostly determine the evolution of this market,” says Ghenea. So there is a direct influence – the lack of investments and IT investment programs supported by the government – as well as an indirect influence – the freeze in lending.

“The shock of the nosedive in the first half of last year, which was painfully felt, especially in the market of IT products, will be replaced in the first half of this year by a period of endurance. This period will greatly consume resources and will see a relatively low rate of sales,” says Moanta. But in the second half he predicts more action on this segment, which may lead to 2010 becoming a more positive year overall.

“Our forecasts for this year remain cautious and we do not think it will be much different from 2009. Potential will remain low, due to the difficult economic situation that will persist. However, the market will be characterized by a certain stability, and what is more important, more predictability,” says Moanta.

Retailer Altex posted a turnover of EUR 180 million, of which EUR 32 million represented IT sales, EUR 11 million of which were posted in the fourth quarter. The firm’s best-selling laptops were brands such as Asus and Acer, for computer screens LG and Samsung, and the most popular desktop was Altex’s own brand Myria.

Last year, PCs offered a convenient financial alternative. “Sales of this type of products have been influenced by the seasons and endured great turbulence last year, which did not happen in previous years when sales were constant,” says Moanta. The surge in the popularity of laptops was at the expense of desktops. Notebooks started 2009 in a strong position in 2009 with potential buyers still interested, so this segment fell by “only” 46 percent. By comparison, desktop sales plummeted 62 percent.

“This year will only bring a 3 percent growth compared to 2009,” says Moanta. The first half will have a relatively low rate of sales, but better than the same period of last year. In the second half of the year, there will be more action in this sector. “In these circumstances, we do not think we can talk about a re-launch,” he says.