Full of Eastern promise

Eastern trouble means it's time to build relationships. The economic troubles of the Far East may seem a million miles away, but don't underestimate the effect they could have over here - even on smaller resellers but especially on systems builders. The reactions from Korea is a mixed bag. The massive debt that it has run up will mean cheaper components for everyone. It won't necessarily mean that shortages will be abated. Korean manufacturers will have to pull back from their investment plans to keep the IMF happy, so they won't be able to increase their output in any significant way in the near future. But what they do produce will almost certainly be cheaper for UK importers.

The Korean won is falling like the proverbial lead balloon, and with a strong pound, importers are going to get much better deals. This is good news for wholesalers and distributors such as Datrontech, Enta, Osmosis and Actebis. These companies - and many more like them - are flourishing as the demand for low-cost components from which complete built-systems can be constructed continues to rise.

But the news from Japan is less encouraging. The economic problems will weaken exports to Japan and ultimately put more pressure on the US vendors that are selling there. This will be a disappointment to them. After years of parochial behaviour by Japanese businesses, they have only really just gained a foot-hold in the market.

That trend may now be reversed. Consequently, US vendors will press sales harder within their own market and in the relatively healthy environment of Europe. That may well mean a return to channel stuffing by some vendors and increased pressure on lifecycles and prices.

The resellers and systems integrators that build PC systems will have to respond to this trend, and the heat will be turned up in the OEM market as well. The importers may find that they get some benefit in the short term, but in the long run they will have to start reducing prices. With competition soaring, this will be an increasingly competitive sector over the next few months.

What does it mean to the dealer business?

Continued dominance of the major US brands - in the quality conscious market - Compaq, Dell, HP and IBM. Keen prices and fast moving product ranges mean you have to watch what you specify. In the built-systems market, your suppliers should make money hand over fist while there is a shortage.

But when supplies ramp-up production - Singapore, Taiwan and other so-called 'tigers' will be watching all this with interest - they will start to feel some pressure. That could mean lower prices, but also some volatility in terms of supply and service.

The message here - be choosy about who you work with and try and build a good working relationship.

Simon Meredith is a freelance IT journalist