Excess stock to pinch PC margins in H1

Channel players warn of continuing inventory surfeit

Market watchers and channel players are warning that inventory excesses and rising VAT could erode PC resellers' margins for the first half of 2011.

A report from Canalys published last week claimed that these factors, alongside an imminent Intel refresh, would result in "significant retail discounting" in the UK.

Canalys analyst Tim Coull­ing said vendors across the board will undertake "pretty aggressive price-cutting" to shift kit before the introduction of the Sandy Bridge microarchitecture.

"There is quite a bit of build-up with all vendors, some will be more affected than others," he added.

Outside of retail channels, public sector players could also face a tough climate for PC sales this year.

"The government-wide contracts will be drying up, which will have an impact on the big systems integrators," said Coulling.

Alex Tatham (pictured), sales and marketing director at distributor Westcoast, said Acer's yearly rebate programme, which closes in March, creates an "interesting" market.

"The channel is stuffed and no-one sells anything else," he said. "There are [price-cutting] deals, but then there always are. The market is very healthy."

Neil Berville, executive director for the UK, Ireland and Benelux at Lenovo, said softness during the back-end of 2010 had led to some ex­cess inventory in the market.

"I do not see any pressures on price that were not there going into Q4," he said. "The next few months are going to be tough, but activity around slates and new products will reinvigorate the consumer space around Autumn time."

But Andrew Henderson, commercial director of VAR Lanway, claimed there is no future in focusing on packaged systems.

"I do not know if there is any margin left in selling PCs," he said. "How much more pressure can be put on price before you're selling at cost-minus?"