China: User Perceptions and Plans for PCs and PDAs in 2003

Transcription

1 End-User Analysis China: User Perceptions and Plans for PCs and PDAs in 2003 Abstract: The majority of the Chinese organizations' IT strategies and budget planning issues remain immature. It would not be difficult for PC vendors to find business opportunities from Chinese organizations. By Annie Chung, Lillian Tay and Jennifer Wu Strategic Demand Statements Of all Chinese organizations surveyed, 46.1 percent replace their desktop PCs within two to three years, whereas only 2.6 percent replace their mobile PCs within the same period. Only 7.9 percent of Chinese organizations surveyed rent or lease hardware. Recommendations Multinational vendors must give more autonomy to the local operations to execute local strategies. Vendors need to acquire more knowledge of the operational issues of Chinese organizations to offer better solutions. Vendors must educate organizations to understand the IT business value, total cost of ownership (TCO) and leasing options, as many organizations are inexperienced in such matters. China continues to exhibit strong demand for PCs, and major PC vendors must not lose sight of executing strategies to continuously capture the market and bring new products to the market. PC vendors must pay more attention to creating its brand image in the market, as brand recognition among Chinese organizations is important when selecting vendors. Publication Date:11 March 2003

2 2 China: User Perceptions and Plans for PCs and PDAs in 2003 Introduction A hardware End-User Wants and Needs survey was conducted in November This Perspective is an extraction, which focuses on the respondents' perceptions and plans for deploying PCs and PDAs in their organizations in China. Research Methodology Gartner Dataquest surveyed 76 qualified samples across corporations, educational institutions and government sector in China. More than 80 percent of interviewees were key managers who decide the hardware budget. Gartner Dataquest details the user's purchasing behavior, perception and budget planning for 2003, which will benefit vendors in understanding the realities of the environment, where end users are targeting their budget and to what extent end users are embracing new technologies. With effective planning and execution, strategies can be formulated. End users will obtain a better understanding of the adoption of trends to plan more effectively. Gartner Dataquest's Systems Asia/Pacific team designed the questionnaire, and a copy is available on request. Companies interviewed in South Korea were selected from Gartner Dataquest's Asia/Pacific database. Gartner Dataquest's Singapore and Sydney Primary Research Centers conducted the interviews. All interviews were completed in the respondents' native language and ranged from 20 to 40 minutes. Interviews were conducted from the list of respondents for each country sorted in alphabetical order. This provided a degree of randomness in terms of industry, IT infrastructure, staff size and budget allocations. All incomplete interviews were discarded. Also, to ensure a reasonable sample of respondents across each major industry group, interviews were conducted at random, until each major industry group contained at least five responses per country (10 in South Korea and India). The major industry groups were as follows: Communications/transportation/utilities Distribution Manufacturing Government/education/healthcare Financial services/services Mining, agriculture and construction/others Key Findings: User Purchase Plans, Vendor Perception and Selection in Chinese Organizations Key findings are as follows: 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

3 The average product life cycle for a desktop PC is about 3.5 years. The average product life cycle for a mobile PC is about 5.4 years. Of all organizations surveyed, 46.1 percent replace their desktop PCs within two to three years, whereas only 2.6 percent replace their mobile PCs within the same period. Of all organizations surveyed, 47.4 percent replace their mobile PCs after five years, while 30.3 percent said they don't know. Only 7.9 percent of organizations rent or lease hardware. Of those that rent or lease hardware, only 50 percent do it for desktop PCs and 16.7 percent for mobile PCs. The maximum tenure of a leasing agreement is 24 months for desktop PCs and 36 months for mobile PCs. Legend Computer and IBM are perceived to be the leading desktop and mobile PC vendors, respectively. HP is perceived to be the leading PDA vendor. The average life cycle of a desktop system seemed to be aligned with most of the other markets in Asia/Pacific. However, 47.4 percent of the Chinese organizations surveyed said they would keep a mobile PC for more than five years (see Table 1 and Figure 1). Chinese organizations are at the early stage of adopting mobile computing in the office environment. Higher prices were paid for mobile PCs than desktop PCs, and, generally, Chinese organizations would expect to keep the mobile PC longer to optimize the product. The life cycle of mobile PCs will shorten when the market has a wider acceptance of office mobility and the price declines for mobile PCs. Only a small percentage of surveyed organizations rent or lease hardware in China (see Figure 2), of which 50 percent rent or lease desktop PCs and 16.7 percent rent or lease mobile PCs (see Table 2). Renting or leasing hardware is not popular among the Chinese business organizations, as many of these companies remain immature in terms of IT infrastructure. Most of them need help to improve their awareness on issues, such as business value, TCO, security and so on. Vendors must understand the general organization structure, company operational behavior and culture of Chinese organizations to illustrate their ability to offer the best solutions to these Chinese organizations. Table 3 shows the typical desktop and mobile PC leasing terms in Chinese organizations. The longest they lease desktop PCs is 24 months and 36 months for mobile PCs. After years of holding the record of having the highest number of PCs sold in China, Legend, not surprisingly, was perceived as the leading vendor of the desktop market (see Figure 3). However, when it came to mobile PCs and PDAs, surveyed Chinese organizations chose IBM and Hewlett- Packard, respectively, as the leading brand names (see Figure 4 and Figure 5). IBM has developed its corporate customers' relationships in China and has successfully built up its brand image as a total solution provider Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

4 4 China: User Perceptions and Plans for PCs and PDAs in 2003 among Chinese organizations. The technology capability and stylish look of HP's ipaq helped the company become the best-known PDA vendor in the Chinese corporate world. However, HP will continue to face pressure in the PDA space because of an increasing number of PDA vendors that areeyeingfuturepotentialinthecorporatespace. Table 1 Desktop and Mobile PC Replacement Life Cycle Trends in Chinese Organizations (Percent) Less Than 2Years 2to3Years 4to5Years More Than 5 Years DK Total Average Product Life Cycle (Years) Desktop PC Mobile PC DK = Do not know Figure 1 Desktop and Mobile PC Replacement Life Cycle Trends in Chinese Organizations Percent Desktop PC Mobile PC Less Than 2 Years 2 to 3 Years 4 to 5 Years More Than 5 Years Don t Know Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

5 5 Figure 2 Percentage of Organizations That Lease or Rent Hardware in Chinese Organizations Yes (7.9%) No (92.1%) Table 2 Percentage of Organizations That Lease or Rent Desktop PCs and Mobile PCs Yes No Total Desktop PC Mobile PC Note: The data are taken from the 7.9 percent of Chinese organizations that said they rent or lease hardware. Table 3 Typical Desktop and Mobile PC Leasing Terms in Chinese Organizations Less Than 24 Months 24 Months 36 Months 48 Months More Than 48 Months Total Desktop PC Mobile PC Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

6 6 China: User Perceptions and Plans for PCs and PDAs in 2003 Figure 3 User Perception as to Who Is the Leading Desktop PC Vendor in Chinese Organizations Percent Legend Dell IBM HP Founder Figure 4 User Perception as to Who Is the Leading Mobile PC Vendor in Chinese Organizations Percent IBM Dell Toshiba Legend HP Acer Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

7 7 Figure 5 User Perception as to Who Is the Leading PDA Vendor in Chinese Organizations Percent HP Legend Mingren Sony Key Findings: PCs and PDAs as Part of Hardware Budget Plans in 2003 Key findings are as follows: Organizations plan to replace and expand their PC systems, with a large percentage being new purchases. The desktop PC remains the dominant choice of form factor purchase. Few organizations plan to purchase PDAs. Eighty-eight percent and 92 percent of organizations, respectively, agreed that service and customer support was the most important criterion when selecting desktop and mobile PC vendors. Of the surveyed Chinese organizations, 72.2 percent plan to purchase desktop PCs and 59.7 percent plan to buy mobile PCs in 2003 (see Table 4). Of the desktop PC purchasers, 47.2 percent said these purchases would be new, expanding their PC installment rather than replacing it; of the mobile PC purchasers, 41.7 percent said these purchases would also be new. This indicates that the Chinese PC market is far from maturity, and strong demand for PC systems is expected to continue for at least the next five years. Vendors should continue to maintain and expand their market share in terms of PC volume, thus maintaining their ground in the industry and being able to introduce their other products to PC customers Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

8 8 China: User Perceptions and Plans for PCs and PDAs in 2003 About 90.7 percent of the surveyed organizations said they would not consider, or were not sure, whether they would purchase PDA or handheld devices. Consumers, rather than corporate users, favor handheld gadgets in China at the moment. Many of the working class who work in major cities might have already bought PDAs for personal use, but it is not yet a corporate standard for staffs to own one. Only the management level executive of organizations would consider purchasing, but the number of these purchases remains minimal. Therefore, it is not surprising to find that more than half of the surveyed organizations said they would not allocate any hardware budget for PDA devices (see Figure 6). Regarding the IT budget for PC systems, the majority of surveyed organizations said they would allocate more than 40 percent of their total hardware budget for desktop PCs (see Figure 7). However, in the case of mobile PCs, the majority of organizations surveyed said less than 20 percent of their total hardware budget would be allocated for mobile PC purchases. These data reveal that, in many of the Chinese organizations, desktop PCs remain, by far, the favorite choice when making client system purchasing decisions. The reasons are as follows: Space, in general, is not a problem in the Chinese office environment. Prices of commercial desktop PCs are lower than mobile PCs. Desktop PC systems can be fully utilized by organizations, as the systems are easy to upgrade. Organizations, along with their general administrative staffs, still do not require mobility. When selecting either a desktop or mobile PC vendor, surveyed organizations said service and customer support was the most important criterion (as shown in Table 5, Figure 8, Table 6 and Figure 9, respectively). Many Chinese organizations do not have a proper IT department, so they rely heavily on PC vendors to provide them with technical support and service maintenance. Surveyed organizations also consider brand recognition very important. It is culturally believed that famous big-brandname products are good products. PC vendors, therefore, must pay more attention to creating its brand image in the market. Another important factor that organizations consider is how easy it is for them to conduct business with PC vendors (for example, organizations look at whether the ordering process is complicated, whether lots of paperwork would be involved, or whether there should be a direct contact person, and so on). Although Chinese organizations want a simple process, they still demand a relationship between the seller and buyer, especially at the management or decision-making level of organizations Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

9 Table 4 Chinese Organizations' PC and PDA Purchasing Plans for the Next 12 Months (Percent) New Replacement New and Replacement Not Planning DK Total Desktop PC Mobile PC PDA DK = Do not know 9 Figure 6 Percentage of PDA Budget in Total Hardware for 2003 Don t Know (14.67%) 10% to 19% (6.67%) 5% to 9% (9.33%) 0% (56.00%) 1% to 4% (13.33%) Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

10 10 China: User Perceptions and Plans for PCs and PDAs in 2003 Figure 7 Percentage of PC Budget in Total Hardware for 2003 Less Than 20% Desktop PC 20% to 39% 40% to 59% Mobile PC 60% to 79% More Than 79% Total PC Percentage of Organizations Table 5 Factors Taken Into Consideration When Selecting Desktop PC Vendor (Percent) Less Important Medium Importance Very Important Total Service and Customer Support Reliability of the Supplier Ease of Doing Business With Brand Recognition Brand Loyalty Established Relationship With Vendor Price Competitiveness Established Relationship With Vendors' Resellers Order Tracking Facilities Recommendations Provides End-to-End Solutions Breadth of Product Offerings Online Ordering Facilities Note: Some columns do not add to totals shown because of rounding Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

11 11 Figure 8 Proportion of Desktop PC Selection Criteria Rated as Very Important by Chinese Organization Service and Customer Support Reliability of the Supplier Ease of Doing Business With Brand Recognition Brand Loyalty Established Relationship With Vendor Price Competitiveness Established Relationship With Vendors Resellers Order Tracking Facilities Recommendations Provides End-to-End Solutions Breadth of Product Offerings Online Ordering Facilities Percent Table 6 Factors Taken Into Consideration When Selecting Mobile PC Vendor (Percent) Less Important Medium Importance Very Important Total Service and Customer Support Ease of Doing Business With Brand Recognition Established Relationship With Vendor Brand Loyalty Price Competitiveness Established Relationship With Vendors' Resellers Reliability of the Supplier Order Tracking Facilities Recommendations Provides End-to-End Solutions Breadth of Product Offerings Online Ordering Facilities Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

12 12 China: User Perceptions and Plans for PCs and PDAs in 2003 Figure 9 Proportion of Mobile PC Selection Criteria Rated as Very Important by Chinese Organization Service and Customer Support Ease of Doing Business With Brand Recognition Brand Loyalty Established Relationship With Vendor Price Competitiveness Established Relationship With Vendors Resellers Reliability of the Supplier Order Tracking Facilities Recommendations Provides End-to-End Solutions Breadth of Product Offerings Online Ordering Facilities Percent Key Findings: Usage of Wireless LAN in Chinese Organizations Key findings are as follows: Eighty-seven percent of the Chinese organizations surveyed have not installed wireless LAN (WLAN). Sixty-eight percent of the Chinese organizations surveyed said no immediate requirement exists for installing WLAN. The IT market in China remains immature. Eighty-seven percent of the surveyed organizations said they have not installed WLAN in their organizations (see Figure 10). Another 4 percent said they have not installed but are planning to install WLAN. Wireless connectivity is not popular among the majority of the Chinese organizations, and they do not see the urge and need for it yet. Of the surveyed organizations, 68 percent said they would have no immediate need for WLAN installation, while another 12 percent said no budget can be allocated for this kind of technology (see Figure 11) Gartner, Inc. and/or its Affiliates. All Rights Reserved. 11 March 2003

13 13 Figure 10 Percentage of Installation of WLAN in Chinese Organizations No, but Planning (4%) Yes (9%) No (87%) Figure 11 Reasons for Not Installing WLAN No Immediate Requirement Lack of Budget Lack of Awareness Lack of Security Have Not Heard of the Technology Others Don t Know Percent Gartner, Inc. and/or its Affiliates. All Rights 11Reserved. March 2003

14 14 China: User Perceptions and Plans for PCs and PDAs in 2003 Gartner Dataquest Perspective and Recommendations This document has been published to the following Marketplace codes: HARD-WW-DP-0437 The survey results revealed that the majority of the Chinese organizations' IT strategies and budget planning issues remain immature. The surveyed organizations are in the early stages of implementing IT infrastructure. It would not be difficult for PC vendors to find business opportunities from Chinese organizations. However, multinational vendors should give more autonomy to the local operations to execute local strategies. Doing business in China is distinctly different because of different cultures and beliefs. Vendors should educate users so they can understand and uncover the IT business value of their organizations. Many organizations are inexperienced, thereby giving vendors the opportunity to demonstrate their expertise and other value besides price to compete. By far, public relations is a must to do business with most organizations in China, and vendors must not undermine the significance of this. While the desktop PC segment continues to drive the Chinese PC market, especially in large corporations, the survey revealed that the mobile PC segment continues to gain ground in the business environment and, increasingly, organizations' hardware budget will be allocated for mobile PCs. Although acceptance of mobility and wireless technology is slow in the Chinese market, PC vendors should consider the mobile PC business a high market opportunity. In the business environment, the PDA is considered an executive and luxurydevice,eventhoughmanyworkersownoneforpersonaluse.the majority of these PDA users own low-end PDA devices. Over time, these users may demand more features in the products, which could lead to better value, price offerings and higher capabilities. Key Issue How rapidly will different market segments adopt each computing hardware platform? For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice