Points of contact

The headlines may belong to the cloud and hyperconvergence, but people still need to interact with office IT with something. What does computing look like from the perspective of end-user devices? The Margin put together a roundtable of industry insiders to find out.

The Margin: Last year seemed like a pivotal year. There was a slight growth in the PC market for the first time in years, but smartphones look like they’ve peaked. What are the trends in South Africa?

Traci Maynard, Microsoft executive, Axiz: What we’ve found in the last 12 months is that there’s strong demand for a good value product that’s well priced and well specced. There's a South African mentality of wanting to believe there’s a good deal for a hardware product. I think our challenge has been exchange rates – how do we find something that fits that and gets it right?

Michael van Lier, Southern Africa district manager, HP Inc.: We’ve seen big growth in the entry-level notebook space. I daresay the tablet space has seen a bit of a decline in the last couple of years – which not everyone predicted – and niche markets such as gaming are becoming increasingly prominent. Certainly we’re looking at that. Thin and light devices are also doing well, built with cloud in mind.

Jaco Oosthuizen, lead for mobility, Rectron: A lot of entry-level products aren’t going out as they land from the factory. The guys are buying an affordable product up-front and customising it. For an Intel i3 or i5 product, around 85% are being upgraded to 8GB of RAM. Drives get taken out and SSDs get put in, and in most cases where there’s the option for a hard drive and an SSD, they go for that as well.

People are transitioning to SSD from a performance point of view, especially now that SSD pricing has come down. You have to do a lot of education in the channel to help people understand how to manage a laptop with two drives in it, because it’s not a regular occurrence.

Michael van Lier, HP Inc.: No doubt those customers are looking at a cloud or hybrid solution where some of their data is sitting in the cloud.

Traci Maynard, Axiz: Enterprise customers have a different view. They want thin and light devices so that they can travel and work from wherever they are. And the challenge with that is what do you do with the 500g of accessories you need to take with you?

Enterprise customers are happy to pay the premium, though, but I think the bottom line is that Microsoft is helping us change the way we sell by marking out the 'hero' products.

They almost encourage us to stock the high-value products and then offer rebates to help sell them out. They’re certainly driving the Windows 10 Pro message, and making it exciting for distributors to hold these highvalue SKUs. They’re certainly driving the Pro angle more than they did even five years ago.

We can sell a cheaper notebook ten times over, and if expensive SKUs don’t move, we have to destock them. So it’s a fine line between what you’re selling and who you’re selling to, and working with Microsoft has helped incentivise us and drive the channel.

Jaco Oosthuizen, Rectron: What we’ve found is that if you get the spec wrong, it doesn’t matter what the features are. We’ve brought in some of the top-of-the-range Lenovo P1s, a top-of-the-range Xeon, that people still want to upgrade. If it’s 32GB RAM, they’ll want 64GB. They’ll take a R60 000 product and make it a R70 000 (one), because they’re going to sweat that thing for three to four years. The upgrade cycles are much longer.

Michael van Lier, HP Inc.: What we’re all seeing now is that clients are sweating their assets. Consumers are the same, buying at the top of their budget and buying the best they can for that price. I’m seeing a lot of requests for longer warranty periods. No longer are you trying to upsell to a three-year, on-site warranty, that’s expected. Now people are looking for four or five years.

JP Gough, enterprise solutions development lead, Mustek: The delta between what’s available in South Africa and available internationally is decreasing. It used to be a six-month or 12-month delay. But people are way more informed than they were three or four years ago. They know what technology they want, and if you’re quick to get it to market, that’s what they see as success.


The Margin: People aren’t prepared to settle for less than the latest anymore?

JP Gough, Mustek: Absolutely. The age of the informed consumer is here and we need to align with them.

Michael van Lier, HP Inc.: Enterprise customers are definitely thinking that. They’re very worldly, they travel a lot and they want the latest phone on the same day that the Americans get it. The entry level I think is slightly less concerned about that. That’s a challenge in some ways, but also an opportunity because we have a lot of people craving technology and connectivity.

Andrew Firman, Microsoft product manager, Tarsus: It’s really important to identify what the user needs. You can’t give a graphic designer a Celeron; it would chase them away.

JP Gough, Mustek: It’s horses for courses. There was a discussion at some stage about the desktop being dead, and we certainly don’t see that. In fact, we see a lot more customisation in the desktop than ever before. The enterprise customer wants a slim and light laptop with low storage because that’s what their IT policies allow; they don’t want a lot of data hanging around on machines; that’s being driven by cloud. At the same time, that’s driving the uptake of entry-level devices because the consumer is happy with a device they can consume services on, and they don’t have to create or store anything.

Traci Maynard, Axiz: We rely on the Dells, HP and Lenovo to be at the cutting edge of technology and trends. Our role as a distributor is to get that kit and sell it out fast at the best price we can.

Our challenge is that there are so many products to choose from, and that’s where we rely on the channel for feedback. If you have a specific enterprise customer driving a specific experience, you need to be sure we’ll stock what you need. Each one of us does something unique for our reseller partners, and when we can get the best price to our channel, we do that.

Jaco Oosthuizen, Rectron: What’s interesting is how diversified our own channels are. We’re completely different in so many aspects. We’ve seen a big uptake in desktop sales, and that comes down to the country we live in. Businesses don’t want employees to take home their information; they’d rather get it locked down at the office. We’re seeing a transition from the normal tower to the smaller form factors; from the seven-litre chassis to the three-litre chassis, and the smaller Nucs (Next Unit of Computing), which are ending up at the bottom of board tables and the back of LED displays.

George Moss, Dell client business unit manager, Tarsus: Dell’s boardroom monitors have a slot around the back for a small form factor machine. It's definately pushing these. I can see the projector portfolio shrinking as people are moving to 55-inch smart displays. Traci Maynard, Axiz: We sell across the continent, and people still want a traditional desktop. People in Africa are still desktopfocussed on old form factor. The challenge is the operating system and the cost; we don’t want to sell without an operating system.

George Moss, Tarsus: You’re quite right. What we see in the SADC region is that it’s driven by price point. If you can strip off the operating system, it’s what people want. That’s one reason HP is doing phenomenally well in the region.

Jaco Oosthuizen, Rectron: We’re also seeing a lot of kids coming out of high school and varsity who are used to Chromebooks. Spark schools are standardising on Chromebooks. I don’t see the market shifting soon, though; it’s still predominantly Microsoft and will be for years to come.

I believe we haven’t seen the touch generation yet. They’re still to come. When that generation starts hitting corporates, that’ll be a shift. They don’t want to be locked into to a certain type of hardware.

Traci Maynard, Axiz: That’s down to the sophistication of the user. If you’re a user who wants to try that stuff, that’s okay. But it’s embarrassing when you get to the corporate space and a device-free boardroom, where someone is trying to tap their way through a presentation.


That’s one reason Microsoft has made Office free if you’re a teacher or a student. They want you to experience Office in a way that’s not challenging or daunting. When these kids use Chromebooks at university, then need to learn Office for the workplace, there’s confusion.

Michael van Lier, HP Inc.: We’ve seen that a lot from Microsoft. Every time Google starts making headway, Microsoft has a product that can counteract it; that’s compelling.

The Margin: What are the trends we should be watching for?

Traci Maynard, Axiz: The Vodacoms and MTNs and FNBs have probably become our biggest competitors, where the customer pays R299, R399 or R499 a month and just gets whatever the catalogue says for that price. There’s a new emerging customer we’re seeing who isn’t stressed about the technology, pays for it monthly and then upgrades when the contract is up, like a phone.

Michael van Lier, HP Inc.: That’s an opportunity. The telcos will be doing that with consumers, but in the enterprise space, we have a product like that, which is called 'Device-as-a-Service', that has all the bells and whistles, and at the end of three years, you upgrade the kit.

George Moss, Tarsus: It comes from the cloud business. We’ve created a bunch of spoiled customers and business people who are used to paying for what they use, and who are moving to datacentres and end-user devices. But enterprises have bigger challenges. They need a stable (disk) image platform, and need to think about cyber security and data sovereignty. People are looking to get a grip on where their assets are.