South African peripheral vendors tweak strategy

As the global economic downturn continues to affect African economies, South Africa recorded a decline in unit shipments of so-called hard-copy peripherals such as printers and copiers, though overall revenue increased, indicating a shift in vendor strategy.

South Africa's hard-copy peripherals market suffered a 3.4 percent decline in volume in 2008, according to the latest report by IDC. The number of devices sold declined by 24.3 percent in the last quarter but the annual value increased by 6 percent, reflecting a shift toward higher-end devices.

The economic meltdown forced vendors to rethink their strategies and make considerable adjustments to their operations, said Pondo Koetle, a research at IDC South Africa.

"Vendors are expected to employ strategies that aim to take advantage of a potential future boom in buying; but the main focus will be on supporting their channels and surviving the crisis internally," added Koetle.

According to the report, channel distributors are turning to electronic commerce and targeting end users directly in order to streamline sales and costs.

The country's 2008 single-function printer market declined 6.2 percent in volume and 10 percent in value, as users preferred multifunctional printers. The South African multifunction printer market declined by 0.5 percent in volume but grew 15.2 percent in value over the same period.

While the annual revenue increased, the market recorded reduced revenue for the last quarter. 

One of the reasons advanced for the revenue decline of the fourth quarter was the strengthening of the yen against the U.S. dollar and the rand. Most of the products are purchased from the Far East and suppliers had to increase prices to cover their additional costs, resulting in lower sales and falling revenue.

However, IDC expects the market to pick up towards the end of 2009 and to fully recover by 2010 due to the scale of current projects relating to the FIFA 2010 World Cup in South Africa and investments that are both ongoing and expected in the coming quarters.

Globally, hard-copy peripherals shipments declined by 17 percent while revenue from these shipments fell by 13 percent in the fourth quarter of 2008, according to IDC's Worldwide Quarterly Hardcopy Peripherals Tracker.

This is the second consecutive quarter that the worldwide hard-copy peripherals market experienced a decline in shipments.

"Over the next year, vendors will employ several strategies to weather the downturn," said Phuong Hang, IDC program manager, Worldwide Hardcopy Peripherals Tracker. "Vendors will also focus on offering cost-cutting and productivity enhancements to customer's existing document infrastructure as well as driving managed print services."