World Cup to blame for slower PC sales in South Korea and Japan

Preliminary Gartner Dataquest estimates indicate PC sales in South Korea and Japan dropped during the second quarter of 2002, mainly due to the World Cup. This slowdown was a limited phenomenon.

Event
The recently concluded 31-day-long World Cup, co-hosted by South Korea and Japan, produced a short-term downturn in PC sales in these countries. Although final numbers for the second quarter of 2002 have yet to be published, Gartner Dataquest expects quarter-to-quarter declines of 10 to 20 per cent for South Korean PC sales. For PC sales in Japan, Gartner Dataquest expects percentage declines in high single digits and low teens. However, while PC sales declined, items such as large-screen TV sets enjoyed some of their best sales in history.

First Take
In South Korea and Japan, watching football overshadowed most other activities, including purchasing PCs. Enthusiasm was so all-encompassing that PC vendors watched helplessly as their inventories piled up and sales promotions went unnoticed.

In South Korea, growth of the local PC market stopped in the final, most important month of the quarter as consumers and corporations alike - but especially home users - took to the streets to cheer for their national football team in more than 200 outdoor venues nationwide. The equivalent of an extended holiday period occurred during a quarter that usually sees low demand for PCs.

In Japan, PC demand dropped as retailers lost customers during the World Cup because people tended to watch television in the evening and on weekends rather than go out shopping.

Although June and July represent a peak shopping season for consumers, many of whom want to spend recently paid summer bonuses, those who went to retailers bought televisions with large-screen flat-panel displays - not PCs with TV tuners (common in consumer models in Japan). Television sales increased significantly in June while PC sales from retail channels declined, thereby causing channel inventories to swell and keeping PC vendor shipments stagnant.

Major PC vendors now have to reduce prices - by trimming margins on older models, dropping features from the newest models or both.

However, Gartner Dataquest believes that in South Korea and Japan, this PC sales slowdown was a limited phenomenon.

In South Korea, as inventories must be cleared and consumers and corporations get on with business in a generally positive climate, the third quarter could be a bonanza for manufacturers and vendors.

In Japan, consumer demand may not return as quickly as the industry hopes during July because people spent a considerable amount of their summer bonuses on large-screen televisions and could limit additional spending on items such as PCs.