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Legend boosts made-to-order in anti-Dell effort

Snapping at Legend's heels

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ComputerWire: IT Industry Intelligence

Legend Holdings Ltd, China's biggest computer manufacturer plans to build up its made-to-order business as a means of warding off increased competition from overseas players, and from Dell Computer Corp in particular.

"The configuration market will be very important to Legend because we expect by 2003 about 20% of our consumer PC shipment will be from replacement buyers," Mary Ma, Legend's chief financial officer told an investment conference in Hong Kong. She said that strengthening Legend's made-to-order operation is a direct move to counter the threat from rivals such as US-based Dell, which shot to the top of the global PC-making league on the strength of its made-to-order sales model.

Consumer PCs made up a smaller share of Legend's computer sales last year, and the firm also suffered from shrinking margins as a result of dumping by competitors and consumers holding off purchases in anticipation of newer models or lower prices, she said.

PCs for the consumer market accounted for 31.7% of Legend's total revenue in the quarter ended December 31, compared to 32.9% in the year-earlier period. Profit margins on consumer PCs dropped to 10.6% from 12.9%.

Dell has made inroads in China, which is set to surpass Japan in 2003 as the world's second largest PC market with projected unit sales of 13 million, according to IDC. Legend had roughly 30.8% of the China PC market in the fourth quarter of 2001, while Dell's share was 4.6%, IDC said. However, Dell achieved this position in barely 12 months, having charged into the market and aggressively undercut even Legend's low-end price structure.

Ma also said Legend would announce new investments by late March that would boost the company's capital expenditure in the financial year ending March 31 to about HKD 1.2bn ($153.8m).

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