By 1 April 2009 | Categories: feature articles

TechSmart spoke to Arthur Goldstuck who heads up the Information and Communication Technology (ICT) research group,World Wide Worx. He is one of South Africa’s foremost commentators on the ICT sector, and we decided to get his take on how the world-wide economic crisis has impacted what we buy and how much we pay for it.
They say when America sneezes the world catches a cold. So should South Africans start sniffing or coughing?

According to Goldstuck we must all keep in mind that South Africa suffered its own credit crunch not so long ago, just after the steep rise in the interest rate and implementation of the new Credit Act.

So, in effect, we have had to deal with our belts being tightened by regulations locally, as well as whatever impact we ’d feel from beyond our shores. South Africa has not felt the full weight of the crisis as we were somewhat sheltered. Our banks were prevented, by our own banking authorities, from doing what so many banks abroad did. That is, buying into a whole heap of risky investment instruments, brought about by American banks providing unrealistic sub-prime loans to people who just couldn ’t afford to pay them back.

But just because we’ve been protected in the banking industry doesn’t mean that we’re in the clear for everything else. We will still very much feel the effects of the crisis, with the price of certain goods going up and the demand for South African exports, like flashy cars, going down as people tend to prioritise food ahead of luxury German engineering.

Not in the Clear

But what about the price of consumer electronics? Will you have to be content with your old TV for awhile and not the new LCD one you ’ve been eyeing? No, according to Goldstuck, who says that the largest growth in the purchase of electronics has been online buying. When it comes to buying a new car, you will probably have to pay more or less the same price for the same model, across the country, even if, like many people, you have done all the reading on the Internet first. The difference in the electronics game is that once you, as the consumer, have done all your research online, you can then also make the decision to buy online. This gives companies the incentive to give you the best price.

Good Sectors

Overall, in the retail sector, there are selected areas that are doing very well. The gaming industry is one of these. With gamers being a dedicated bunch; developers can rely on them to keep buying their titles, provided they keep producing decent content. You might find though, that in certain instances, prices have gone up somewhat in the gaming market. One of these is the steep rise in the price of the Xbox 360 console. According to Goldstuck, manufacturers should think twice when increasing margins on their most popular products as it could have the unwanted effect of driving demand for the product down.

Products that people want the most will also allow the market to grow. This means demand for LCD and plasma TVs will continue to increase and manufacturers will be able to deliver better products as the price point has dropped and continues to drop. This doesn ’t mean that all flat-panel TVs are going to be the right thing to buy, Goldstuck warns. Apparently older-generation flat-panel TVs are being dumped on South Africa. These are not nearly as good as the newer models and the picture quality is pretty shocking. So if the new 40" TV you ’ve just bought has a refresh rate of 50 MHz and you can see the picture smearing all over the place, you know you ’ve been had.

Exchange Rate Blues

Where you’re most likely to feel the impact of the financial mess the bankers have left us in, is in the exchange rate. Your money just isn ’t worth as much as it once was. But technology will continue to improve and as it improves the cost will continue to decrease. Goldstuck uses the example of flash drives. The largest capacity flash drive you can probably find at a shop will be a 32GB drive, and that could cost up to R900 (depending where you look), but only six years ago that money would have got you a 32MB drive. So within six years you ’re getting a drive that can store a thousand times as much data and you’re actually paying somewhat less for it, as the Rand has depreciated since then.

Opinions Online

A rather optimistic column from Michael S Malone on ABC News predicting a tech boom.

Is Silicon Valley recession proof? India’s The Economic Times tends to think so.

The other side of the coin from The Wall Street Journal saying that both venture capitalists and established companies are feeling the pinch.


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