Ingram looks to China for consumer electronics deals

Broad-based distributor Ingram Micro has tipped China as a future source for consumer electronics offerings as the convergence of consumer products and the IT channel increases in importance over coming years.

Steve Rust, managing director at Ingram Micro, said the distributor was negotiating with various Chinese vendors, partly with an eye on the burgeoning consumer electronics space.

"There is one area where I think there could be opportunities for us. That's in the consumer electronics space," he said.

China had already made a name for itself producing quality at low cost. Yet companies like Ingram might expect more opportunities there in consumer electronics than in PC boxes, he suggested.

"In the PC box space, it's difficult for a new vendor to be successful here and because there's so much choice and we're a mature market," Rust said. "[But] there's always a chance [China] won't have the brand awareness. What they offer in replacement of the brand is prices, very low prices."

Microsoft Media Centre in particular was going to promote "tremendous" demand for applications and hardware platforms. Consumers were soon going to expect much more from their home appliances, Rust said.

Alain Monie, executive vice president for Ingram Micro in the Asia-Pacific, said the distributor was working on "actual agreements" to distribute consumer electronics "in Europe or Asia".

"It's still at the beginning of it," he said. "We do have vendors that have started working with us."

Ingram wouldn't release any consumer electronics sales or revenue figures but it was a small amount, he said.

"We would hope to develop it," Monie said. "It's a convergence of the channel as well as of product that needs to be stabilised."

Rust said consumer electronics was a growth market of the future rather than here and now. Mobility was already "really booming", he said, and that was slowly converging with security needs.

"There are more vendors coming into the market in Australia and a lot of vendors are experiencing notable growth and a lot of that is through distribution and through Ingram Micro," he said.

Rust said that notebook sales were expected to stay strong for Ingram Micro right through to next year. All types of security offerings were also strong, as were flat screens and storage.

Flat screen prices were falling rapidly, activating a new market segment itself fuelling growth in demand for flat screens. A lot of people were also currently replacing their older screens, and many were buying notebooks and flat screens together, he said.

"We're selling these things like crazy and I don't see that slowing down. Larger screens are falling in price points," Rust said.

Storage sales were spanning from smaller storage areas to bigger enterprise storage devices. Ingram was selling "thousands and thousands" of hard disks every month, mainly to Australian system builders, he said.

"Storage is another category where demand is increasing and pricing is falling, and if pricing is falling it will generate more demand, feeding off itself," Rust said.

Rust said there were several "wild cards" that might further accelerate consumer electronics growth.

For example, broadband adoption in Australia was slow. That was a local peculiarity. However, broadband adoption tended to be assisted by pricing, he said.

"People aren't ready to move to it in a huge way. If the providers of broadband were to substantially reduce the cost of broadband it could generate very very high growth in the products," Rust said.

That phenomenon had been exhibited in Japan and South Korea, he said.

People were also getting more concerned about personal security. "If there were to be further significant attacks of terrorism, that could boost IT products for the home right through to the enterprise market," he said.

Rust pointed out that in the US after the World Trade Centre attack in 2001 there was a "big uptick" in purchases around disaster recovery and enterprise security in general.

"We saw a lot of deployment of back-up systems, for example," Rust said. "If it gets more personal to us, I think we'll all be more concerned and respond by investing in surveillance and security systems."