Second and third line PC brands are on the verge of survival

When the domestic PC Founder Technology (600601.SH) has no choice but to abandon the Founder PC brand operation, including Great Wall Computer (000066.SZ), Tongfang (600100.SH) and Qixi (002027.SZ), etc. What is the future of the second and third line PC brands?

"In addition to Lenovo can make money from the mass retail market, the vast majority of other domestic second and third-tier PC brands are based on the industry customer orders to survive, but it is only on the verge of survival." Great Wall Computer, a middle-level yesterday on the "first Financial Times said that the current status of the second and third tier brands in the mass retail PC market is that notebook computer products are basically running at a loss, subsidizing with the meager profits earned on desktop PCs.

"Even if the notebook computer product is not profitable, we must stick to it. Because the desktop PC market will soon be replaced by notebooks, there will be no future if we don't insist on it." The above middle level said.

Perhaps from the data released by the second- and third-tier PC brand manufacturers in the first half of the year, they can better understand the current difficulties faced by these manufacturers.

In the first half of the year, PC revenues of Great Wall Computer, Tongfang Shares, Founder Technology and Qixi Computer were respectively 23.346 billion yuan, 2.39 billion yuan, 3.655 billion yuan, and 341 million yuan, an increase of 1136%, 37.23%, 21.72%, and 0.18%, respectively. However, none of the PC makers mentioned above has obtained any profit from the PC business.

Because, after deducting non-recurring gains and losses of the company's net profit, Great Wall Computer only 4.43 million yuan, a year-on-year decrease of 83.37%; Tongfang shares was 38.09 million yuan, a year-on-year decrease of 65.29%; Founder Technology was 35.81 million yuan, a year-on-year decrease of 31.91%, Qixi Computer lost 1 million yuan, but the loss was 2.59 million yuan less than the same period last year, which has narrowed.

What makes these PC makers feel embarrassed is that the proportion of PC business to their total revenue is basically around 50%, or even higher, but they cannot generate profits. Great Wall Computer PC's gross margin was 6.24%, Tongfang’s shares were 5.29%, Founder Technology was 5.17%, and Qixi Computers was 3.68%. Compared to the same period of last year’s gross profit margin, they all declined in different degrees.

"PC business does not make money, and the reason why listed companies are still insisting, mainly because the listed companies also need PC business income to expand their revenue scale." A high-level domestic PC manufacturers pointed out that because these PC manufacturers are already very familiar with the PC industry Operation, compared with other IT digital products such as mobile phones, the market risk of PC business operations is much smaller, and generally will not lose money.

Great Wall Computer related sources pointed out that for a long time, most domestic PC manufacturers rely on Intel's rebate to survive, and now Intel's rebates to PC manufacturers year after year, many third-tier PC manufacturers and regional PC brands rely on the survival of profits no longer exist Therefore, it led to the collapse of a large number of small PC manufacturers. "For example, 800 million time and space, Hang Seng, and other regional PC brands have disappeared."

"Everybody hopes that the situation is that PC manufacturers will become less and less, and the domestic PC market will become more and more stable." The relevant personage said that there is another reason why second-tier PC brands are trying hard to keep up with the mass market. Because, if the lack of mass market adherence, industry customer orders will certainly shrink year by year.

An insider of Qixi Holdings also admitted that the gross profit margin of the industry orders is much higher than that of the mass market, and Qixi also hopes to gain a share in the industry market, but the orders of industry customers are not as easy as they might think, otherwise, Qixi Computer’s market share It will not shrink year by year.

In fact, not only the domestic PC manufacturers are pessimistic about the future, even the domestic manufacturers of the PC industry chain are also planning for the transition.

Wu Fulu, general manager of the motherboard manufacturer, said that the company has no longer received orders from PC manufacturers and turned to provide custom motherboards for commercial POS machines, electronic medical device manufacturers, and network security manufacturers, or commercials. Platform hardware solutions.

"The gross margin of products exceeds 15%." Wu Fulu said that when the US market also had many PC brands, it was only Dell and HP. Therefore, the development of China's PC market should also be the same. In the end, only two or three PC manufacturers may dominate the Chinese market.

The middle section of the Great Wall Computer stated above that Great Wall Computer’s acquisition of TPV Technology is in pursuit of scale expansion. We hope to bring a lower cost through scale, while transforming EMS (electronic manufacturing service providers) on the one hand, and sticking to brands to seek market opportunities on the other hand.