Computers & Peripherals

Shipments of China's desktop PCs reached 5.38 million in 2Q 2008, up 9.5% YOY, while revenues reached 20.72 billion Yuan, up 2.7% YOY. Growth has slowed, due to notebook substitution effects, slowing of China's macro-economic growth, and natural disasters of the winter snowstorm and Sichuan earthquake. Consumer and SMEs are still the growth sectors.

source: ccid consulting, July 2008

Lenovo, a worldwide partner for the Beijing 2008 Olympics, launched products and promotions around the Olympic theme. HP launched a whole line of commercial desktop PCs, and has actively developed Tier 4 and 5 cities, while laying out strategies for even Tier 6 cities. Dell has been executing its channel transformation, with sales through 3C (computing, communications, and consumer electronics) retailers and business IT stores, and enabling the vendor to rapidly develop channels in China's small and medium cities.

Chip vendors drive multi-core PCs.
 

Intel launched its 45nm products during the quarter in China, and AMD its Phenom triple- and quad-core products. This has enabled PC vendors to refresh their high-end desktop PCs, and CCID Consulting expects vendors to launch PCs in 2H08 with upgraded processors; multi-core desktop PCs will increase, while single-core PCs will gradually decline.

Vendors focus on China's more rural, smaller cities.

Vendors are developing channels to serve Tier 4, 5 and even 6 cities. Vendors are selling desktop PCs with bundled broadband services. CCID Consulting expects competition to heat up in these rural regions, and believes that vendors should target products to meet the specific requirements of these rural areas, along with a supportive services network.

"3C" stores are the channel of focus.
 

In China, most vendors have an optimistic view of 3C stores, as convergence acclerates. More vendors have established channel relationships with consumer appliance chains such as Gome and Suning. Vendors have also established complementary channels such as TV and online.
 

The Beijing 2008 Olympics advanced vendors summer promotions.

Vendors summer promotions efforts started earlier this year in China, due to the Olympics. As expected, marketing was centered on the Olympic theme, while products were highly segmented with different marketing strategies. High definition became popular as vendors released "high definition" PC products.

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Unless otherwise specified, all information provided is sourced from CCID Consulting.

Ó 2008 CCID Consulting Co., Ltd.