Who are the big players?
The big players appear to be HP, Dell and Lenovo in the corporate space, with Acer making an appearance in the SMB and consumer markets and Toshiba doing pretty well among consumers too. “HP and Dell have 44 percent of the overall market in the UK, which is extremely concentrated,” says Morvay.
All these things, combined with or possibly because of a national obsession with perceived bargains, lead Morvay to announce: “The UK is the most price competitive market in Western Europe and a lot of the volume growth is in entry level SKUs.”
So, who makes money out of a £300 laptop? “In order to make any kind of money on a £300 laptop you need to sell enormous volumes,” says Morvay. “However, while there are still a lot of first-time buyers out there, there are also an ever-increasing number of renewals, which tend to be 17-inch+ sizes, as opposed to the 14 and 15-inch sizes that entry level models tend to be.”
PCs as loss-leaders?
I suggest that entry-level notebooks seem to be being sold in much the same way that cheaper printers have for years: as loss leaders to stimulate demand for other products, on which there is presumably some margin.
Cheap printers are famously sold as loss-leaders to stimulate demand for notoriously expensive ink, which costs more per volume than angel’s tears or dragon blood or something. Notebooks are obviously far more versatile devices than printers and yet consume nothing, so the question here is: if they are loss-leaders, where is the compensation?
“The challenge for basic notebooks is that you’re not making any money on the notebook so it’s necessary to attach telco contracts or things like that in order to create profit,” says Morvay. “The good news is that telco companies are not set up to sell hardware.” To illustrate, she mentions Carphone Warehouse, which is effectively bundling together notebooks, phone contracts and broadband packages in order to entice punters into committing for them for a paltry two years.
A screenshot from www.carphonewarehouse.com, after clicking on 'FREE gift offers'. Note there are 177 offers and some of the gifts on offer are listed on the left
