PCs Remain Asia's Main Access Device

SINGAPORE (04/19/2000) - Asia is once more a boom market for PC sales, but an even greater opportunity exists in the region for vendors of low-cost Internet access devices, according to Dane Anderson, vice president of computing systems at International Data Corp. (IDC).

Although the installed base of PCs in the Asia-Pacific (excluding Japan) market reached 46 million by the end of 1999, PC penetration is still way behind those in leading-edge economies.

"How can the region move to e-business if it doesn't have the devices?" he asked at the IDC Directions Asia conference here today. "These access devices represent the missing link for e-business here."

In the U.S., the PC penetration rate is about one PC per 1.5 people, and the only countries in the Asia-Pacific region which come close are Australia (one PC for every two people), New Zealand (3), Singapore (3), and Hong Kong (4).

Other regional countries are way behind, including the huge trio of India (one PC per 352 people), Indonesia (132) and China (86).

Even the relatively developed economies of Korea (6) and Taiwan (7) lag well behind, arguing for a broader spread of access devices to encourage people to go online, Anderson said.

A trend towards lower-cost devices for Internet access is already visible in Asia-Pacific, according to Anderson.

In the region as a whole, PC sales grew 35 percent in 1999 over the recession-hit 1998 figures. But sales of low-end consumer desktops grew 75 percent in the same period, while commercial desktop sales grew only 20 percent, according to IDC figures.

Four of the companies whose sales grew quickest were local vendors -- China's Legend Group Holdings Co. and Beijing Founder Electronics Corp. Ltd., and Korea's Samsung Electronic Co. Ltd. and Trigem Computer, Inc.

The standout was Dell Computer Corp., which "defied gravity" to prove the success of the direct sales model which many analysts had said was impossible in China, Anderson said.

Non-PC appliances, however, will become increasingly more important for Internet access, driven by the entry of the large consumer electronics companies into the market, according to Anderson.

These devices will form a spectrum, from low-cost single-function devices such as portable MP3 players, digital cameras and e-mail terminals, to game stations, smart handheld devices and sub-notebook PCs. Worldwide shipments of these devices are expected to reach 25 million in 2000 and almost 80 million in 2003, according to IDC projections.

But these will not replace PCs as many of these devices would be useless without PCs to work with, according to Anderson.

"Many of these devices will in fact lean on PCs -- a digital camera without a PC to download your pictures and send them is pretty useless," he said. "The PC is not dead and buried -- opportunities will exist for multiple devices and services."

IDC is owned by International Data Group Inc., the parent company of IDG News Service.

IDC Asia-Pacific, in Singapore, can be contacted at +65-335-0711 or online at http://www.idc.com/.

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