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Harvey Norman PC Strategy Dented As Gaming PC Sales Soar

A decision to buy tens of millions of dollars’ worth of PC’s prior to Xmas including exclusivity on a new Lenovo range of gaming machines, has backfired on Harvey Norman with the big retailer forced to run a $50M PC stock clear out sale.

According to sources Harvey Norman is shifting their PC stock at cost or below cost with several Harvey Norman franchisees telling ChannelNews that a decision to go after “exclusivity” on the Lenovo gaming PC range had “backfired” with dealers left with stock they could not sell.

One leading Victorian franchisee said “We were allocated a set number of the new Lenovo gaming machines; they were not cheap at up to $4,000 each. Weeks on from when we first ranged this stock we still have the same level of these machines in stock”.

At IFA in Berlin back in September 2015, Lenovo revealed their new gaming PC range to much fanfare, with journalists from around the world packing into the Berlin based press conference.

Shortly afterwards ChannelNews was told that both JB Hi Fi and Harvey Norman were set to range the new Lenovo offering.

Then Harvey Norman stepped in with an offer to range the new gaming machines exclusively, a move that now appears to have backfired.

According to JB Hi Fi who exclusively ranges the #1 PC gaming machine from Alienware their sales of gaming machines have continued to grow.

According to analysts the demand for PC gaming machines is growing with 50% of the market now made up of females who are not only investing in high powered PC’s but large screen flat and curved monitors.

Gaming Market

Industry analyst Newzoo over the weekend reported that PC gaming is now projected to generate $31.9 billion in game software sales annually, or 32% of annual global games market revenue, the biggest market is Asia Pacific that includes Australia.

Its closest and longest competitor, console gaming, is projected to generate $29.0 billion in 2016 (29%) with a +4.5% YoY growth.

Despite this growth pattern, both device categories are expected to stagnate in marketshare through 2019, their segments beset upon by mobile devices.

The report offers broken-down measurements of “casual web games” and “PC/MMO” (our more traditional version of PC gaming), and also splits portables into “personal screen” (phones) and “floating screen” (tablets + handhelds).

Standalone, phone gaming revenue is set to reach $27.1 billion, an impressive number – with a 23.7% YoY growth.

Handheld games comprise $1.8 billion (-24.1% YoY decline) of the Floating Screen category, with tablets accounting for the remaining $9.8 billion (+15.1% YoY growth). Casual Web Games make up $5.2 billion in PC revenue, but are declining by 7.5% YoY; PC/MMO games consist of $26.7 billion of the total $31.9 billion PC revenue.

The total games industry market is projected to hit $99.6 billion in 2016, consistent with previous analyst projections. VR is accounted for in each of the above core categories.

Perhaps unsurprisingly, the global games market is largely fuelled by the Asia-Pacific region (58%), with North America following at 25%. The US and Canada jointly drive $25.4Bn in revenue to the industry, Europe, the Middle-East, and Africa (a single group) drive $23.5Bn, China alone pushes $24.4Bn, and Asia-Pacific as a whole drives $46.6Bn.

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