China's top personal computer maker Legend Holdings Ltd said on March 20 it will step up its made-to-order PC operations to defend its market share against players such as Dell Computer Corp.
"The configuration market will be very important to Legend because we expect by 2003 about 20 percent of our consumer PC shipment will be from replacement buyers," Mary Ma, Legend's chief financial officer, said at an investment conference in Hong Kong.
Ma said strengthening Legend's made-to-order operation was a direct move to counter the threat from rivals such as US-based Dell, which shot to the world's No 1 PC maker partly on the strength of its made-to-order sales model.
"It sounds like a reasonable move by the company," said George Chan, an analyst at ICEA Securities Ltd.
Chan said it has been two years since the Internet boom and many consumers who bought a PC then would be looking for an upgrade next year. "That's why the growth of PCs in 2001 was not as spectacular as the year before," said Chan.
Consumer PCs made up a smaller share of Legend's computer sales last year, and also suffered from shrinking margins as a result of dumping by competitors and consumers holding off purchases in anticipation of newer models or lower prices, Ma said.
PCs for the consumer market accounted for 31.7 percent of Legend's total revenue in the quarter ended December 31, compared with 32.9 percent in the year-earlier period. Profit margins on consumer PCs dropped to 10.59 percent from 12.93 percent.
Dell has made inroads in China, which is set to surpass Japan in 2003 as the world's second biggest PC market with projected unit sales of 13 million, according to International Data Corp.
Legend had a roughly 30.8 percent share of the China PC market in the fourth quarter of 2001, while Dell's share was 4.6 percent, IDC said.
Ma also said Legend will announce new investments by late March that will boost the company's capital expenditure in the fiscal year ending March 31 to about HK$1.2 billion (US$153.6 million).
( March 21, 2002)
