Follow the leader

There's a fair bit of money to be made out of mobile computing products and resellers are gearing up to meet demand.

Toshiba still dominates the portable market because, 'it producesoducts and resellers are gearing up to meet demand. quality products and delivers a quality service', says Martin Clarke, Lapland sales and marketing director. 'Toshiba is by far the easiest vendor to do business with.'

But other leading vendors do not receive the same praise. Clarke suggests there are some second-tier manufacturers making strong impressions once again. Compaq and Dell, he says, are struggling. And according to figures from market research firm IDC, they certainly are. Dell's unit sales in Europe were down by 25.3 per cent on the previous year and Compaq's were down 30.5 per cent.

Both companies are alleged to have reliability problems in the field.

One source states: 'The products are not good enough, and resellers are pissed off with them.'

According to Clarke, many resellers still resent Compaq for looking at direct selling options. Meanwhile, Dell, it is claimed, has suffered with support issues. The most successful vendors in the notebook business, says Clarke, are those that make their own machines, whereas those that sub-contract the building of systems often run into difficulties in the field.

AST believes integrated manufacturing is one of the reasons it has made a comeback in recent weeks. Marketing director Con Mallon says: 'About 70 per cent of the value of our product is now under the control of AST/Samsung and that is unparalleled in the industry. I think Toshiba has between 50 and 60 per cent, but most of the rest go around the Far East with a shopping basket.'

Mallon concedes the Korean crisis could conceivably hamper Samsung is some areas because it is an intrinsic part of the economy. But then Samsung is a $90 billion company with considerable cash reserves. It won't go away. In fact, the lower won (Korean currency) could even help AST.

'The steep devaluation will mean that the out-cost of goods will come down and, given the mix of the products and components we have, there is a gilt edge to what's happening there at the moment,' says Mallon.

It is also possible that some resellers could end up building their own systems within a few months. IBM is considering a build-to-order scheme, where notebooks are supplied in a kit form from the vendor. While there are plans to experiment with this scheme in the US, nothing is expected to happen in the UK until the end of 1998.

Even then, there is no certainty it will be introduced. An IBM representative comments: 'It may be more difficult in terms of the day-to-day running.

We have not looked at doing it in the UK yet. It depends on how it goes in the US and the response of distributors here.'

If it can keep making progress, IBM will not want to spoil its own party with a misguided tactic. Recently, it has leap-frogged into second place in IDC's Q3 UK league table - and for no apparent reason, although disappointment with Compaq and Dell products may have contributed. With 10.9 per cent of the market, it still remains behind Toshiba, which takes precisely one third of the cake.

Perhaps the most interesting news is the resurgence of vendors like Acer and AST. The latter, says Clarke, may be ready for a return to former glories.

'AST is coming on strong once again. In the past, it has not refreshed its product range quickly enough, but it is making a comeback. Acer is doing well too, and not because of the Texas Instruments relationship.

It is focusing on its own brand and offering good products at good prices - that's the bottom line in this game.'

IS TOSHIBA INVINCIBLE?

Toshiba supplies about one third of the UK and European notebook PC market and there is no sign of its grip loosening - if anything, it may be getting tighter.

Overall, Toshiba is in a strong position across Europe. The manufacturer claims that in Q3 1997, its European notebook business grew twice as fast as the market. Market research firm Context recorded Toshiba's growth as 28.4 per cent in western Europe, but only 16.8 per cent in the UK - a figure which research firm IDC also agrees with. But this rate still exceeds that of IBM, Compaq and Dell, proving there is a long way to go before Toshiba's dominance is under threat.

Toshiba is the clear leader in all the largest European markets - Germany, UK, France, Benelux and Spain. In the UK, Toshiba is in fourth position in the overall PC market, with a 5.7 per cent share, according to Context figures. This underlies its strength. In Western Europe overall, Toshiba is the sixth biggest PC producer with a 4.2 per cent share in Q3.

The Context figures also confirm Toshiba's claim it is growing faster than the overall market, especially in the UK. For the first nine months of 1997, UK sales were up by 50.8 per cent, compared with an overall rise of 19.5 per cent. Across western Europe, Toshiba's growth rate of 47.8 per cent outstrips the overall rise in PC unit shipments of 11.7 per cent.

Toshiba won't be able to keep this rate of growth up, but it should expand at the overall rate of growth in the market. The company has advanced R&D, slick manufacturing and all the right strategic alliances. The bottom line is, if you want to be in the notebook market, you've got to partner with Toshiba.