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AFP: Dollar drop means costly Xmas
 
CONSUMERS expecting to put a low-cost, ultra-portable laptop under the Christmas tree may find themselves with lighter wallets this year, as the falling Aussie dollar threatens to push up the price of devices.

Retailers aren't expecting a drop in desktop and notebook sales leading into the Christmas period either, despite consumer sentiment worsening as the economic turmoil savages markets worldwide.

NSW retailer Bing Lee said manufacturers of sub-$1000 notebook computers had warned that prices of the devices could increase because the falling dollar was making imports more costly.

"The indication is they are not going to be able to provide price points like that any more," Bing Lee general manager Phil Moujaes said.

"That's going to change because the Australian dollar has lost a lot of value in the past couple of weeks and as you know most of those products are imported, so I think the price erosion in those categories in the past few years is not going to be there any more.

"We might see that price not drop any more or it might go up a little bit."

The first signs of this could emerge as early as next month when a number of notebook vendors were due to bring new models to market.

"With the new range that's going to be available from November you're not going to see a reduction in prices," Mr Moujaes said.

"They import the product and their cost has gone up because of the currency devaluation."

The market was turned on its head last year when Taiwanese notebook manufacturer Asus introduced the Eee PC, a small, low-specification computer priced around $500.

Since then competitors such as Lenovo, Toshiba, and Dell have flooded the market with offerings in the sub-$1000 range.

Vendors are concerned the declining dollar will affect their ability to bring new equipment to market, according to IDC PC hardware associate market analyst Felipe Rego.

"It makes some sense that we'll probably see prices not declining as fast, or even stabilising a bit," Mr Rego said.

"If it is a macro-economic problem, not only the sub-$1000 products will face price pressure, but also the next price tier, and then everything."

Asus, Dell, Lenovo, Hewlett-Packard and Acer all declined to comment on whether their price structure would change over the next couple of months in response to the falling dollar.

JB Hi-Fi managing director Richard Uechtritz isn't expecting manufacturers to raise laptop prices.

"Computers are priced at levels that are acceptable to the consumer now, so any upward movement in price could receive some backlash," he said.

"Very rarely do things go up in price. People keep forgetting but it wasn't that long ago that we had a dollar worth about US60c and laptop prices then were coming down, so explain that."

Retail giant Harvey Norman is confident the falling dollar and worsening global economic climate will not force a slowdown in sales of desktop and notebook computers leading into Christmas.

"Unless something in the world like Armageddon breaks loose I don't see why October, November, December won't be a better quarter," Harvey Norman chairman Gerry Harvey said.

"I don't see any great problem because you've still got very high employment, lower tax than last year and on the other side you've got higher petrol prices, so there will probably be lower interest rates."

JB Hi-Fi is a newcomer to selling computers, Mr Uechtritz said, but it expected to make a strong debut in the sector.

"We expect laptops in particular will continue great sales figures because they have become a must-have item for people to connect with the world."

Bing Lee's Mr Moujaes said its technology sales had remained strong in the current climate, avoiding the downturn that had affected its whitegoods sales, which he said was traditionally closely tied to the housing market.

In 2007, IDC recorded 4.1 million desktop PC and notebooks sales in Australia, and it expected that figure to grow 15 per cent in 2008 to 4.7 million.

IDC expects sales to break the 5 million unit sales milestone in 2009, but the rate of growth is expected to halve to 7 per cent.

Mr Rego said premium products would be hit hardest next year, but he expected the sub-$1000 notebook category to weather the financial storm.

"High-end machines will suffer first because they are products that consumers spend discretionary income on," he said.

"If vendors want to continue reaping growth they need to position themselves with aggressive prices across a range of products."

Source