Robert Grambo, European president of IT distributor Ingram Micro, said sales growth has slowed in 1999 from its "unbelievable" level last year, with the UK as the weakest economy in Europe.
In an interview with VNU Newswire, Grambo said sales growth is still "double digit and still over 20 per cent" but does not match the 70 per cent rise in sales last year when measured in dollars.
"Business is going very well but has slowed from last year when it was unbelievable. Last year it grew at 70 per cent and that is not continuing this year," he said.
"There are three major issues. The economy in Europe is not very strong. The UK is weakest. Then there is the Year 2000 problem. A lot of companies are focused on Y2K and not on more infrastructure," he said.
"The third factor is that the average selling price declines. Even if units grow at historical rates, revenues don't grow at the same rate," he said.
However, Grambo said Ingram Micro is outperforming the IDC forecast for the first quarter of 15 per cent growth in units sold and flat revenues, he said, noting that his group's sales and profits will rise this year.
One area for growth in Ingram Micro sales is in connectivity products, such as Internet, intranet or Internet telephony products, which merge voice with data, where products from Cisco will do well, he said.
Growth in products linked to Microsoft's NT operating system is "phenomenal" and on a par with connectivity products, he said.
Ingram Micro expects more from organic growth after last year's acquisition of Macrotron but is evaluating acquisition possibilities in Poland, Hungary and the Czech Republic, he said.
The arrival of the euro single currency in January, has not had much impact but manufacturers will have to sort out their different pricing philosophies, which mean that euro prices vary across Europe, he said.
"There are different euro prices in different countries. Once that is solved you will see bigger use of the currency," he said.
Grambo said Apple is one company to adopt a single continent-wide euro price and "others are moving as quickly as possible."
However clearer comparison will not necessarily bring lower prices. "That is hard to say, because a lot of things play. We do all we can to rationalise the market place and pricing," he said.
Direct sales by manufacturers to end users, such as over the Internet, are "competition, but also an opportunity" as services such as offered by Dell must also buy other products to sell and do this with Ingram Micro.
"Dell for instance is a big customer of ours. It is a reseller with a large successful business model. They need other products for their customers like other resellers need products to complete their offering," he said.
Grambo said that his company is "very supportive" of Microsoft in the ongoing US anti-trust trial, and sees no reason to break up the software firm.
"Our opinion is that we are very supportive and Microsoft has been a good partner. We have not seen behaviour in a way that should raise concerns about anti-trust," he said.
"We are their largest customer but we have not experienced what the US government has brought against Microsoft as concerns or issues," he said.
Grambo said he did not see any lack of competition in the industry and that the recent merger of Netscape and AOL and the valuation of Internet companies "bears out that competition is thriving."
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