Hardware News

NEC may struggle to sell PC arm

Tags:
Notebook

Tom Espiner ZDNet.co.uk

Published: 22 Jun 2006 17:05 BST

Analysts believe NEC will struggle to find a buyer for its PC business in Europe.

The hardware manufacturer is currently in talks to sell Packard Bell, in a move that would see it pull out of the European home-use PC market.

However, Gartner analysts believe that Packard Bell will be on the market "for quite some time" before finding a buyer.

"Packard Bell will be on the market for at least a year," predicted Ranjit Atwal, principle analyst for Gartner. "None of the established PC vendors would gain any benefit from purchasing it, as they're already in the channels Packard Bell exists in, and it wouldn't be easy to ensure incremental shipments simply by purchasing it," Atwal told ZDNet UK.

Atwal also said that any company acquiring Packard Bell would have to contend with the problem with merging complex groups of people and systems.

Jon Collins, principle analyst with Macehiter Ward-Dutton, agreed that "big companies would have little to gain" from buying Packard Bell, as the profit margins would be minimal, and competition fierce.

"There's so much price erosion from the bottom end of the market. Packard Bell has a low-spec, low-price, white goods approach — you can get a fairly decent PC for a couple of hundred pounds. It's much harder to sell commodity items from this point of view, [rather than] ship high-spec, high-price goods," said Collins.

"Even Dell is having difficulties, which is why it's trying to move up the market chain into services," Collins added.

However, there is some speculation that Lap Shun Hui, cofounder of eMachines, a maker of low-cost PCs now owned by Gateway, is reported to be engaging in discussions about the purchase of Packard Bell for under $87m (£47m).

But Gartner believes said that more likely buyers would be businesses eyeing up European PC retail channels. Existing manufacturers of notebooks such as BenQ, LG, and Asus may expand into manufacturing and selling PCs, according to Atwal.