IDC Korea: Education Sector Surpasses Public Sector with 230,000 Cumulative Shipments from January to September
As the proportion of indirect sales increases, channel collaboration and expanding product exposure are important.

According to a recent analysis of the domestic PC market by IDC Korea, domestic PC shipments in the third quarter of 2016 reached 1.02 million units, a 3.5% increase year-on-year. This is encouraging when compared to the 3.9% decline in global PC shipments during the same period.

The education sector shipped 67,000 units, a 45.2% increase from the previous year, and the cumulative total from January to September was 230,000 units, a 66.5% growth compared to 137,000 units during the same period last year. As education offices have been continuously replacing outdated desktops in school practice rooms since the beginning of the year, the volume of shipments in the education sector in 2016 is expected to surpass that of the public sector.

▲ Samsung Electronics PC Summer Academy held last July (Reference photo)

The consumer segment shipped 549,000 units, growing 5.8% year-over-year, and there is high demand for budget gaming laptops equipped with external graphics cards priced from 800,000 won to 1.2 million won. For consumer desktops, all-in-ones declined by 25.2% year-on-year, while general desktops grew by 4.7% year-on-year as the user base enjoying graphics-enhanced games expanded, and products equipped with mainstream Core i5 and FX processors and external graphics cards GTX, R9, and RX are popular.

On the other hand, the public and corporate sectors shipped 64,000 and 344,000 units, respectively, declining by 9.9% and 2.7% year-on-year; despite bids from the National Police Agency and the financial sector, they recorded negative growth due to a reduction in overall IT spending.

▲ PC shipments by domestic market, Q1 2015–Q3 2016 (thousands of units, Source: IDC, 2016)

▲ Domestic PC shipments by channel, Q1 2015–Q3 2016 (thousands of units, Source: IDC, 2016)

The channel is gradually shifting from direct sales to indirect sales. As of the third quarter of 2016, direct sales totaled 278,000 units, a 7.1% decrease from the previous year, while indirect sales totaled 746,000 units, an 8.0% increase. While vendors can directly compete for large-volume bids from large corporations, channel partnerships are becoming increasingly important for small and medium-sized enterprises (SMEs) purchasing small quantities, as they must expand their reach to clients through strategic collaboration with dealer channels.

To compensate for the decline in offline sales volume, the consumer division focuses on offering premium products that consumers wish to experience and select in person, while online stores utilize mobile apps and social networks to expand product exposure and attract customer interest through differentiated promotions. Furthermore, online stores directly operated by vendors offer the advantage of allowing customers to choose from a wide variety of specifications, despite limited stock.

"In order to meet customer demands, it is becoming increasingly important to provide not only product design, specifications, stability, and price, but also collaboration with channels, sales and inventory management, changes in purchasing methods such as rental and leasing, and differentiated solutions," said Sang-Jun Kwon, Senior Research Analyst at IDC Korea. He suggested that "vendor and channel profitability and customer convenience must be enhanced through segmented strategies by product and segment."