Low charge

The growing popularity of laptop PCs has been evident for quite some time now. With each passing month, the proportion of laptops sold compared to desktops shows that the consumer market is increasingly seeing these devices as a primary home PC, rather than just an additional purchase.

Significant reasons for the sales growth of laptops include a steady decline in retail price in the time preceding the recession and an explosion in computational power, primarily driven by the success of Intel’s Atom processor.

With the onset of the recession, IT consumers are placing a greater emphasis on value for money than ever before. Happily for them there are many devices available that meet their needs at a relatively low price-point. Unfortunately for retailers, the cost of stocking these items is likely to see a steady rise over the coming months.

“I think that with the current climate, consumers feel they are in a better position to make tougher demands to ensure they get the maximum value for money,” observes Chris Bloxham, VIP’s notebook product manager.

As consumers look to reduce expenditure, it tends to be the high end that suffers and the low end that prospers. However, the appetite for laptops is not solely down to price; many customers are increasingly aware of the benefits of PC ownership, and the fact is that the laptop device meets the everyday needs of a large proportion of consumers.

“The demand for lower priced laptops has increased substantially – the laptop is now considered an alternative to a desktop even for office-based staff,” comments Caroline Spillane, marketing manager at Target Components.

“They have also become the must have, not only for travelers and those on the move, but for university and college students and even school pupils. The applications most commonly required by users are internet access, emails, word processing and spreadsheets as well as multi-media. All these are ideal applications for laptops and do not require massive computing power.”

The market saw a decline in recent retail prices when vendors looked to make shipments despite their products decreasing in value, but this situation couldn’t continue forever as manufacturers began to count the cost of slashed prices. And unfortunately for retailers, customer budgets are not likely to increase significantly in the foreseeable future, which places them in a very difficult position.

The early months of the recession also saw the retail prices of these devices steadily fall, as Asian component manufacturers ramped up production only to see Western demand rapidly drop off after the collapse of the housing market. The resulting surfeit of components saw manufacturing costs for PCs drop. This led to lower retail prices and meant that the IT industry was slower to decline than many other sectors.

However, many of the component manufacturers have scaled back production in an effort to stabilize prices and to reduce their own costs, which in turn has led to steadily rising prices on the High Street.

“Prices were dropping after Christmas and continued to do so until the summer when prices began to rise,” agrees Spillane, although she accredits this rise partially to a trend towards equipping the latest devices with dual core processors.

Bluepoint’s senior sales manager, Hyder Badami, has also noted an increase in prices: “Prices haven’t come down; in fact prices have gone up recently due to increases in the prices for memory, HDD and displays.”

These increases in costs are bad news, especially in what has effectively become a buyers market. Increased cost set against a demand for low prices can only have a negative effect on the margins of retailers. Fortunately many vendors have recognised this and have released a slew of products that are stripped down to the bare essentials, with enhanced hardware available as an add-on for retailers.

While additional sales can be made from upgrading a customer’s hardware, it doesn’t mean laptops are unable to meet the basic needs of the customer.

“There are not as many compromises as would have historically been made,” Bloxham comments. “Nowadays, entry level notebooks tend to fulfill most basic computing needs, so there aren’t too many features that need to be sacrificed to achieve a low price point.”

ENTRY LEVEL COMPUTERS
Badami notes that basic functionality shouldn’t be sacrificed. However, some of the more advanced features that we have become accustomed to may not be included. “Compromises would be to choose a laptop with the most basic specs. These include an entry-level CPU like Intel’s Celeron or Sempron, 1GB RAM, a 160GB hard disk drive and forgoing extra features like finger print recognition, Bluetooth, integrated camera and wireless LAN.”

The popularity of entry-level PCs is not entirely bad news, since the opportunity for further sales over time can offer a reliable source of additional margin.

“The notebook price trend is pretty important to us from a memory module perspective,” adds Hitesh Kothary, sales and marketing manager at M2M Direct.

“From this angle, some of the price pressure put on notebook builders and resellers has come from the sustained increases in memory module pricing. However, this has certainly opened up the value add channel.

“Manufacturers are building machines with minimal memory and thus limiting their liability in build cost. Subsequently, resellers are able to sell memory modules as an add-on product and service which allows for more bespoke solutions for the customer and also builds customer loyalty from a customer service point of view for the value add reseller.”

This opportunity for additional sales could prove very important for retailers, and it doesn’t need to be upgraded components. Many of the cheaper laptops available today still have sufficient storage capacity and enough performance to perform a media role, and there are a host of peripherals that can be added to the sale.

The key is the most basic edict of sales: know your product. With price being one of the prime factors behind a sale, advise the customer and make sure they know what the laptop is and isn’t capable of, what the limitations are and how they can be improved. This can then open the door for add-on sales in a way that top-end devices will never do.

HP COMPAQ 615
SRP: £425

Powered by AMD’s 2.2 gigahertz Turion X2 Dual-Core Mobile Processor mounted on the AMD RS780MN chipset, the HP Compaq 615 also carries 320 gigabytes of storage memory and two gigabytes of DDR2 RAM. It features a Duper Multi DVD drive, and a 15.6- inch display powered by an integrated ATI Radeon HD 3200

Distributor: Bluepoint

ACER E-MACHINE EM525
SRP: £392.97

e-Machine is Acer’s budget brand and this device features an Intel Celeron M processor, a gigabyte of RAM and an integrated Intel Graphics Media Accelerator 4500MHD with 64MB dedicated RAM, which is capable of handling most internet media and older games

Distributor: Target Components

HERCULES E-CAFÉ EC-1000W
SRP: £328.98

This device carries an Intel Atom processor, a gigabyte of RAM, and a 250 gigabyte hard drive with 50 gigabytes of online storage available. It has a unique moulded cover design, a ten-inch display, and comes with Windows 7 Starter and an intuitive software suite

Distributor: Interactive Ideas

ACER TRAVELMATE 5730
SRP: £399

The Acer TravelMate 5730 is equipped with an Intel Core 2 Duo processor mounted on either a PM45 or GM45 Mobile Intel Chipset, and can be upgraded to carry four gigabytes of RAM. It can be fitted with ATI’s Mobility Radeon HD 3270 or Nvidia’s GeForce 9300M GS graphics card

Distributor: VIP Computers

ASUS N10JH
SRP: £449

The ASUS N10Jh is powered by an Intel Atom processor, which offers energy efficiency and versatile multitasking capabilities, extended battery life and high-speed internet access. It can be equipped with a choice of hard drives ranging from 160 gigabytes to 320 gigabytes

Distributor: VIP Computers

ASUS K50IJ
SRP: £439

The ASUS K50IJ notebook is designed to provide a no-frills computing experience to users on the move. With an Intel Core 2 Duo processor and up to four gigabytes of RAM, it’s capable of handling audio and video entertainment

Distributor: VIP Computers, Bluepoint

XPLORA E16
SRP: £299

The Xplora E16 features AMD’s 1.6 gigahertz Athlon 64 TF-20 mobile processor, supported by two GB of DDR2 RAM upgradeable to four GB and a 250 GB hard drive. It carries ATI Mobility Radeon X1200 graphic support and includes Wireless N connectivity

Distributor: Novatech

ACER TRAVELMATE 5720
SRP: £399

The TravelMate 5720 sports an Intel Core 2 Duo mobile processor, with ATI Mobility Radeon X2500 GPU. WPA2 data encryption and wi-fi ensures wireless compatibility and security. Its Gigabit Ethernet with Alert Standard Format and Wake-on-LAN support offers secure connection

Distributor: Micro P

TOSHIBA SATELLITE PRO L300
SRP: £399

This device features a two gigahertz Intel Core 2 Duo processor, with 250 gigabytes of storage memory and two gigabytes of DDR2 SDRAM as standard. It can be upgraded to eight gigabytes if necessary. It has a 15.4- inch monitor powered by Intel GMA 4500M graphic support

Distributor: Bluepoint, Ingram Micro

SAMSUNG R519
SRP: £399

The Samsung R519 is powered by a two gigahertz Intel Pentium T4200 on a Mobile GL40 Express chipset, with three gigabytes of DDR2 SDRAM, 250 gigabytes of storage and carries integrated Intel GMA X4500 Dynamic Video Memory Technology 5.0

Distributor: Micro P

LENOVO IDEAPAD G550
SRP: £499

This device comes with a 15.6-inch display, powered by an Intel Core 2 Duo processor alongside either an Nvidia GeForce G mobile GPU or Intel’s GMA 4500M integrated graphics. It also offers up to 500 gigabytes of storage and up to eight gigabytes of DDR3 DRAM

Distributor: Ingram Micro

Contacts
Target Components: 01977 739 300
Interactive Ideas: 020 8805 1000
VIP Computers: 0871 622 7500
Bluepoint: 0844 571 8001
Ingram Micro: 0871 973 3000
Novatech: 0871 222 2812
Micro P: 01282 776 776