Low-cost PCs bridge the social divide

While there can be no doubt that PC home penetration is on the rise in Australia, concerns are growing regarding the increasing gap between the information rich and information poor.

While media sources have been quick to point out that 45 per cent of households with annual incomes over $50,000 are regularly using the Internet, only 14 per cent of households with incomes of les than that amount reported regular Internet use. Similarly, 69 per cent of households with incomes over $50,000 have at least one PC at home, while only 34 per cent of households with incomes less than $50,000 report PC ownership.

The gap becomes even wider when it is considered that over 60 per cent of households earn less than $50,000 a year.

From a social point of view, this is a major concern in terms of Australia's future role in the IT industry internationally. From a reseller point of view, these figures reveal a massive price-sensitive but as yet untapped market.

Although PC sales are growing across the board, the nature of these sales is changing, especially in terms of the home-user market. Retail outlets are on the run from the rapid expansion of Government-supported initiatives and Employee Purchase Schemes (EPS) targeted at low income sectors.

Analyst IDC figures for sales growth in Q2 are predicting a 25 per cent expansion in the Asian market, driven by lower price points and Government-sponsored programs aimed at promoting PC uptake.

IDC has also published a study on its Web site which supports the idea that initiatives such as an EPS can quickly impact upon the uptake of new technology. According to the 2000 IDC/World Times Information Society Index (ISI), Sweden now leads the world in terms of the general uptake of information technology and Internet adoption.

IDC's director of global IT market and strategies research, Matt Toolan, said: "Sweden's movement is proof that even the strongest information society must remain innovative both in terms of developing IT and integrating it into their [culture]." Although EPS programs are on the rise in Australia, they are by no means widely implemented.

IT retail players such as Harvey Norman have reacted strongly to launch of the Virtual Communities program which, after receiving the support of the ACTU and the blessings of the Catholic Church, is offering PC and Internet bundles at a reduced weekly rate.

While retailers are concerned that the Virtual Communities affiliate program allows them an unfair advantage in a competitive marketplace, the company's director of operations, Edward Smith, claims it targets people who were not in the marketplace initially.

"We're not just talking about prohibitive prices; we have made PCs more affordable and the whole process of buying a PC more simple.

"Even if they can afford a PC in one hit, many people are not game to walk into a PC shop because they are not experts and feel that they won't know what to buy, let alone get it home and connect to the Internet," Smith explained.

While Smith was quick to promote the philanthropic nature of the business and the company's aim to make PCs and the Internet accessible to all levels of Australian society, industry observers and sceptics point out that at the end of the day Virtual Communities is a company interested in profit.

However, as the Swedish experience has shown, there is no reason why social IT infrastructure cannot be commercially driven. In fact, resellers and local OEMS may do well to look out for such opportunities in these innovative new channels.

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More about ACTUHarvey Norman HoldingsIDC AustraliaNormanVirtual CommunitiesVirtual Communities

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