Channel to get taste of cold Xmas turkey

Compaq and IBM forecast falling sales for the festive season as industry fails to provide hook to hang retail business on.

The retail channel will face a bleak Christmas after two leading PCustry fails to provide hook to hang retail business on. vendors warned of poor sales.

Hamish Haynes, consumer business unit manager at Compaq, cast grim predictions for Christmas this week by warning of low PC sales because there was no hook to pull retail customers into the stores this year.

Haynes claimed that the past two years have seen good sales because the advertising of Windows 95 two years ago pushed people into purchases.

He claimed education was the primary reason why people decided to buy computers.

Larry Smith, UK manager of IBM's consumer division, agreed that there was no one overriding reason for people to buy PCs this year. He said prices and specifications meant PCs were accessible to more people, but they still did not see computers as a way to solve their problems. He claimed a lot of retailers were having to increase marketing spending as a way to maintain sales figures.

James Morgan, retail manager at Frontline, claimed the lure this year was internet products. He claimed retailers were getting many enquiries from older customers wanting to be able to contact their relatives via the internet.

Steven Rigby at Byte Computer Superstores agreed, saying: 'This will not be the Christmas of the PC.' He claimed the retailers were pulling back revenues by increased sales of peripherals like scanners. He accepted it had been a hard year all round.

Michael Kraftman, marketing and technical director at Tempo, said: 'I don't think it will be quiet. We are seeing high volumes, but the problem is prices keep dropping.'

He also disagreed with the idea of retail as a solution market, claiming most sales are to first time users who only begin to understand the possibilities of their machines after buying them. After this retailers get a percentage of customers returning to upgrade or add peripherals to their machines.