Channel Partners Interviewed Across Latin America Expect 1998 Revenues To Be 28 Percent Higher Than Revenues In 1997, IDC Reports

MOUNTAIN VIEW, Calif., August 18, 1998 — According to International Data Corporation's recently released Latin America Desktop Channel Dynamics study, many vendors in Latin America are hesitant to invest in a channel where loyalty is rare and representing the products of multiple competitors is the norm. Yet investment in sales and technical training, lead generation, and financing are what top vendors are doing to grow a market segment which represents ninety percent of sales.

Large businesses attract the greatest amount of attention from desktop channels. Nearly 30 percent of their revenues are estimated to come from this market segment. Medium business represents 24 percent of sales and small business, 13 percent. Vendors will need to work hard and create new incentives to entice channels to focus more attention on small and medium businesses — the segments where vendors now see the greatest opportunities for growth.

When channel partners were asked to name vendors' strengths, quality was most frequently mentioned for Canon, Compaq, Epson, HP, IBM, Lexmark, Netscape, and Xerox. Marketing was cited as Microsoft?s greatest strength. Acer was the only brand to have price as its top strength, followed by marketing

It is IDC's opinion that product is becoming less of a differentiator to both the channel and to the end-user. Examination of vendors' weaknesses is much more enlightening as to how vendors can and should differentiate themselves. Service/support was the most-frequently named weakness of vendors by the channels interviewed. This weakness was most often cited for Compaq, Epson, IBM, and Microsoft. Lexmark, Okidata, and Canon were all viewed as weak in marketing.

Among the nearly 100 desktop channel partners interviewed across the Latin America region, the PC vendor named tops in providing marketing support to the channel was Compaq. HP followed closely in second place. Only in Argentina did HP pass Compaq as the number-one vendor for PC marketing support.

The World Wide Web is beginning to reshape desktop distribution in Latin America, but has a long way to go — especially compared with counterparts in networking and server channels. Of the nearly 100 desktop channels interviewed for this study, forty-nine percent had a Web site. Overall, IDC Latin America does not expect the Web to have a very measurable impact on the distribution of products until 1999. At that time, it will be repeat buyers of technology and users who are upgrading that will dominate the e-commerce landscape.

Marketing represents the most strategic use of web sites for forty-nine percent of desktop channels with this tool. This is followed by communications with suppliers and customers — the most strategic use for 34 percent of those

interviewed. Customer service and support ranked third in importance.

"The Internet will become a major differentiator amongst desktop channels," said Lauri Jones, director of IDC's research in Latin America. "This is based on the channel's need to develop more value add for users combined with the channel's financial limitations due to increasingly small product margins. As reinforced by this study, products are less and less distinguishable while, at the same time, users continue to demand a more effective array of services from providers. Only the Internet makes this affordable for desktop products."

IDC's 1998 Latin America Desktop Channel Dynamics can be purchased by contacting Daniel Cardamone at 305-267-2616. For more information on this study or related Latin American research, please contact Lisa Bloom at 508-935-4236 or Stephanie Kreitner at 650-962-6426.

With a network of six country offices in Latin America and two regional offices — in Silicon Valley, Calif. and Miami — IDC provides full market coverage of PCs, mainframes, UNIX systems and workstations, servers, desktop printers, professional services, local area networks, the Internet, RDBMS software, distribution channels, NT, and IT spending patterns in Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. An IT series for top Central American countries is also available. International Data Corporation is the leading supplier of IT market information on Latin America.

About IDC:

Headquartered in Framingham, Mass., International Data Corporation provides IT market research and consulting to more than 3,900 high-technology customers around the world. With a global network of 375 analysts in more than 40 countries, IDC is the industry's most comprehensive resource on worldwide IT markets, products, vendors, and geographies.

IDC/LINK, an IDC subsidiary, researches and analyzes the home computing market, leading-edge technologies in telecommunications and new media, and the convergence of computing and consumer electronics.

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