Malaysia PC Market To Experience Moderate Growth With SMB As Key Growth Driver

Lenovo value added resellers expresses cautious and optimistic sentiments for local PC market growth

PETALING JAYA – March 12, 2011: Lenovo recently organized a training seminar for the company’s network of value added resellers (VAR), and the mixed sentiments received indicate that 2012 will be a year of uncertainties, especially in the small medium businesses (SMB) sector. VARs believed that the local PC market will remain stable and continue to grow this year at a moderate rate, but businesses will be very cautious in their purchasing decisions – with an extra emphasis on getting the best return of investment possible.

The sentiments expressed by the VARs echo the general views of industry observers. Research firm Gartner reported that the latest worldwide PC shipments totalled 92.2 million units in the fourth quarter of 2011, a 1.4 percent decline from the fourth quarter of 2010. For the year of 2011, worldwide PC shipments totalled 352.8 million units in 2011, a 0.5 percent increase from 2010. The results affirm that while demand for PCs will remain constant, growth will be minimal.1

“Lenovo continues to outperform the PC industry and our competitors for the past 11 quarters, and we are optimistic on maintaining the momentum in 2012,” said Khoo Hung Chuan, Country General Manager, Lenovo Malaysia. “SMBs will be a key growth area for Lenovo in Malaysia, on top of our healthy consumer and enterprise business. We expect to see demand for PCs to remain healthy, especially when more local SMBs embrace technology for the first time.”
Local SMBs tightening budgets and prioritizing on value for money.

About 80 VARs of all sizes attended Lenovo’s “Meeting of the Minds” seminar designed to aid Lenovo VARs cope with the business challenges ahead, and address the needs of customers from all sectors. In light of the ever changing dynamics of the local business landscape, VARs are finding it increasingly challenging to address the needs of customers, especially for SMBs.
The general consensus from the attendees of the seminar is that 2012 will be a year of unique challenges. Most believed that the PC purchases will continue to hold steady – but it will not be business as usual. Aside from the global uncertainty that is curtailing IT spending, VARs are also cognizant of other factors, namely the incessant pressure to stay cost competitive, emergence of alternative computing devices such as tablets and smartphones penetrating the business, and the introduction of new technologies such as Intel’s Ultrabook platform and the upcoming Windows 8 operating system.

The demand for personal and business computing devices required to participate in today’s networked world of business information, electronic communication, social media and online entertainment have increased tremendously in emerging markets. This is especially true for Malaysia where is it estimated that only 20 percent of SMBs leverage technology on a daily basis in their business. As more SMBs embrace technology for the first time, PC consumption patterns show that growth is moving to the secondary cities, where many customers are first-time buyers.

Jamie Soh, owner of a local medium-size VAR and PC rental company, shared at the seminar that her customer base of mostly SMBs has been tightening their wallets in the event of the global economy heading south. She noted that for the past six months, there are considerably fewer new SMBs purchasing PCs, and an increasing amount of SMBs are considering leasing or renting PCs to reduce their IT expenditure.

“2012 is going to be a challenging year not only for resellers, but for businesses in general. SMBs today are very cost sensitive and are avoiding purchasing assets that they consider not essential to the business. However, some SMBs do realise the importance of PCs or technology for the business, but they are also finding it difficult to keep up with the fast pace of innovation with their limited budget. They often only consider solutions that offer them the best value for their money,” said Soh.

Daniel Goh, Solution Manager of a large local VAR that has a mix of large and SMB customers, on the other hand, believes innovation is helping the PC market to grow despite the uncertainties. He is seeing more of his customers considering devices such as tablets and smartphones for the business, but at the same time, he also believes that this has helped businesses see the PC in a whole new light.

“Even though tablets and smartphones are increasing in popularity, businesses still turn to the PC as it is the best tool for productivity and the most suited for a corporate environment. What customers are prioritizing today are the right solutions that can best serve their business needs. Thus, resellers or PC makers that listen to what customers want, and offer innovative solutions for their needs, they will have no shortage of business opportunities,” said Goh.

In view of the year that is poised to be one of the most difficult yet for IT vendors and VARs, Lenovo is committed to ensure that it continues to succeed in the marketplace together with its partners. Distribution is the ‘last mile’ of the selling process and ensuring good and steady sell-through is crucial in sustaining any business. For Lenovo, distribution is a highly complex affair due to the sheer environmental, ethnic, cultural and economic diversity of each market. Through careful observation and segmentation of the numerous target markets, Lenovo has managed to adhere to its fundamental principle of aligning core values and behaviours with the channels, in order to succeed together. The proof of the success is Lenovo has grown faster than the industry for 11 consecutive quarters while continuing to improve profitability. The combined effort of Lenovo’s channel partners has enabled the brand to accelerate past two competitors in the span of two quarters to become the second-largest PC vendor worldwide.