In last week's feature on the home PC market, we set out to discoverive, the books they read and whether they use a PC at home. how many homes have a PC and what motivates people to buy a PC for home use.
These factors obviously have a huge impact on the health of computer retailer businesses, but equally important is the purchasing behaviour of those people who already have a Windows-capable PC at home. Many of them won't buy a new machine in 1998, but their spend in terms of peripherals and software remains vital.
Having estimated the size of the installed base, it is necessary to look at its profile. Who are the home users? Where are they? What do they like doing? What made them choose a particular machine? What are they likely to buy next?
As a source of statistics about home PC users, we have used a 1997 study conducted by Claritas, which analysed responses to questionnaires sent out by Easy PC magazine. What is significant about this particular report is not just that it draws on a high number of respondents - more than 7,000 - but that it asks questions pertinent to computer retailer businesses.
Claritas has also compared the responses with its lifestyle database of 10.8 million households - about half of the UK's total - so it can be seen whether the PC owner is average or exceptional, an important factor when targeting sales.
Other surveys and anecdotal evidence paint a picture of the typical PC owner - a relatively affluent married male with a young family, or a single professional male. These demographics are broadly reflected in Claritas' survey.
For example, 62.5 per cent of respondents were men who own their own homes and drive their own cars, and more than half the respondents said they shared the PC with their spouse or children.
But there are significant deviations from this picture which warrant closer inspection. PC vendors have frequently targeted the first-time family user, but with limited success. No wonder. A third of Claritas' respondents have no children, and families with children under nine years old are not well represented. This obviously has implications for how PCs are marketed, what software is bundled with them, and the viability of educational titles for the under nines.
We all know PC owners are affluent because they have stumped up about #1,500 to get hold of one. The Claritas survey confirms that more than half earn more than #20,000 a year. But those with family incomes between #10,000 and #15,000 account for nearly 17 per cent of the respondents, more than double the proportion of those earning #30,000 to #35,000. In fact, more than a third of the market is accounted for by those earning #15,000 to #25,000.
So many of those who buy a PC are making a considerable financial sacrifice relative to their income. It is no wonder they take a long time making up their minds and are annoyed by technological obsolescence. They expect a #1,500 purchase to last a number of years.
And once they have bought the hardware, they cannot be expected to continue to spend on peripherals and software - their incomes just won't support it. The fact that PC owners are not as affluent as some initially thought cannot be entirely attributed to age. The majority of Claritas' respondents are 25 to 44 years old, but the next biggest group is older - 45 to 54 - and not younger, as might be expected.
As indicated by the income profile, the majority of PC owners hold managerial or professional office-based jobs, but only half use a PC at work. This is surprisingly low, considering the prevalence of PCs in the office and the widespread belief that computer use at work is one of the main reasons for a home purchase.
This means that PC makers and dealers still have to think about the inexperienced user - even a second-time purchaser may not have had exposure to Windows 95 at work, and so the workings of word-processors, spreadsheets and email may not be that familiar.
It also means that support and service are very important, especially for the initial setup. The chances are that customers don't know how to set up a PC or install software. Even if they use a computer at the office, it's probably all done by an IT department.
The geographical spread of PC ownership in the UK broadly tracks the spread of the population at large, except in Wales and the West Country where incomes are lower.
As for interests, despite the popular image, PC owners are not one-dimensional technology-obsessed geeks. Their favourite activities tend to be low-key and indoor, such as reading and listening to music. Venturing out takes the form of gardening, going to restaurants and going abroad; high-cost, time-consuming sports like sailing or skiing are not high on the list.
And despite having the tool with which to do so, PC owners don't track share prices any more than the average citizen.
So why did these people buy any particular model? Price, brand, after-sales service and support were the four most significant factors, in that order.
All the respondents put price high on the agenda, and more than a third put brand in fourth place, re-opening the debate over just how important brand is. Vendors like Compaq - the Mercedes of the PC world - claim it matters a great deal, but then they would, wouldn't they? Those at the Skoda end of the market, unsurprisingly, say brand doesn't matter a jot.
The real answer is that it depends how much you earn. Claritas tracked Compaq, IBM, Packard Bell and Acer in its survey - which make up about half of the survey's PC sales - and found that among the income bracket up to #30,000, the difference between sales of branded and non-branded products is not significant.
But at incomes above #30,000, Compaq's share shoots up three times faster than that of its competitors. A discerning audience choosing a quality product, or people with more money than sense?
The results of Claritas' survey make discouraging reading for those dependent on software sales - Microsoft Works and Office dominate software usage, and are found in more than 80 per cent of homes. Lotus SmartSuite trails way behind in second place. It proves only one thing - people use what they are given. Bundling rules.
Better news comes with people's planned purchases. More than half intend to buy a scanner and, linked to that, colour printers run a close second.
No surprises there - these two products were the saviours of many a computer retailer in 1997 as PC sales stayed earth-bound before Christmas.
A digital camera is seen as a luxury item by most, but happily within the reach of more than 13 per cent of respondents.
And where will they buy these items? Funnily enough, Dixons Stores Group comes out top as PC World and Dixons high street stores scooped up half the customers. Dixons' closest competitor is the independent retail sector with 29 per cent.
Big electrical outlets score over department stores every time. Despite the growth of mail order, not much more than one in five home users resort to it and then only for lower-ticket commodities. Software is a popular mail-order purchase, as Software Warehouse will no doubt testify to.
It may be encouraging for internet service providers that, although only 15 per cent use the internet from home, nearly 60 per cent intend to do so within 12 months.
However, the churn rate is high and many of those who have got online since the survey was published will have already resigned their accounts after the free 30-day trial. Nevertheless, more than a third expect to buy a modem over the next few months.
One of the technologies expected to boost interest in the internet and keep people online long-term is voiceover IP - using the local-call charge of internet access to conduct long-distance telephone calls.
Related to this is videoconferencing over the internet, the closest we have yet come to the holy grail of ubiquitous videophones without unholy high prices.
Videoconferencing for the home conjures up enticing images of well-groomed children talking to their 15-frames per second glamorous granny in Australia, all for the price of a local phone call.
But the application which is even more likely to catch on is home security.
Mounted alongside the infrared sensor and 1MW security floodlight which adorn many homes, it's not difficult to imagine a setup where a CCTV camera is linked to the home PC, either by induction loop through the electricity main or even on a short wave radio frequency.
Thus, the home PC becomes a high-tech burglar detection system, alerting the user to the presence of an intruder in the garden or the imminent absence of the Mondeo in the drive (or Mercedes for Compaq owners).
Then it's only a small step across the threshold to monitor the inside of the house. Is little darling asleep upstairs? No need to go up and check, just call up her bedroom camera. Is the child-minder giving darling the right input while Mr & Mrs are at work 12 hours a day? Remote access to the home PC wired to the cameras will provide the answer.
This may sound far-fetched, but it's already technically feasible. George Orwell thought it would be the paranoid state watching us on CCTV, but in the market-driven 21st century, we are the state, and we are watching one another.
CHRISTMAS COMES BUT ONCE A YEAR
As widely predicted, Christmas 1997 did not see significant sales of new PCs. Lack of consumer motivators, worries about recession triggered by the Asian currency crisis and an unexpected shift in seasonal buying patterns all contributed to a disappointing pre-Christmas period.
Even Dixons Stores Group, which accounts for half of the UK's computer retail trade and usually looks forward to fat Christmas takings, had a slow walk-up to Christmas rather than a run-up.
'Retail sales for the eight weeks from 16 November 1997 to 10 January 1998 increased by eight per cent, but were four per cent lower on a like-for-like basis,' says Dixons chairman Stanley Kalms.
Whereas Kalms praised PC sales for swelling the Dixons' purse in the past few years, this time he singled them out for the opposite reason.
'The main impact on trading was a fall in the pre-Christmas period in sales of personal computers, although software and computer peripherals grew strongly,' he says. 'A new Christmas trading pattern has become apparent, and a greater proportion of consumers are deferring large purchases. The January sale started strongly with sales in the first two full weeks ahead 29 per cent in total and 14 per cent on a like-for-like basis.'
Consumers remember 96/97, when PC prices were cut by as much as 50 per cent in January as vendors cleared stocks to make way for MMX-based machines.
They weren't going to be caught out again.
Not that this trend is confined to PCs. It seems customers now defer the purchase of any large item from December to the New Year sales. Computer retailers that have relied on Q4 sales to bring in 70 per cent of the year's profits will have to watch this trend carefully and plan accordingly - stocking small-ticket, high-volume items suitable for gifts until 24 December, then switching to high-ticket, high-margin products as soon as Christmas is over.
It all means that the growth rate of the installed base is slowing considerably and more emphasis is needed on selling to those who already have a PC.
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