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The PC market is not dead, it is merely sleeping

NIPC > Information Blog > Computing > The PC market is not dead, it is merely sleeping
The PC market is not dead, it is merely sleeping

We keep hearing from people that ‘the PC is dead’, with Smartphones, Tablets and their derivatives being the way forward. Even some well-respected online publishers have referred to the death of the PC market as a foregone conclusion.

Certainly the PC market has restructured, and there are less Desktop boxes being shifted, but it is certainly a long way from being ‘dead’. The Laptop and Netbook PC market had gone through a bit of an explosion a few years back, and had already begun a demise in the Desktop PC market, but there was still a need for the Desktop PC then, and there is still a need now (albeit a lesser need).

I cannot disagree that the Tablet and better Smartphones (I say better, because I’ve saw some shockers) are taking the place of the PC for basic online tasks, and they have carved out a great market with their handy App’s and catchy games. They handle Facebook and Twitter very well, and are really useful to have email on the go. Nowadays everyone has pretty much instant access to their contacts, regardless of location.

Most domestic users and a large number of business users find they can send online messages, emails, etc. much quicker as they have their Smartphone already switched on in their pocket – whereas they’d maybe have to fire up the Laptop/Desktop PC and it would take a few minutes.

Let’s examine what is happening, then we’ll understand better where all this ‘PC market in crisis’ talk is coming from. Firstly, when we refer to a PC (Personal Computer) here, we mean a Netbook, Laptop or Desktop PC. Personally I don’t think a Tablet is anything other than a new type of PC, but that’s another discussion, and here they are being referred to as a different device, classed along with the Smartphone in today’s IT marketplace.

PC sales in rapid decline

In actual fact, the latest report from IDC on global PC sales has shown a fall of 13.9% in the last quarter, nearly double their estimate of a 7.7% reduction, and the largest single-quarter decline since records began. This is a nightmare scenario for the smaller PC box shifters, and it has been those who could diversify their product range and offer more Value Added Services who are coping best.

The IDC suggest that this decline will continue, maybe not just at such an alarming rate, but without some reshaping at the manufacturing level, the industry will stay under serious pressure.

‘The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer. Vendors will have to revisit their organisational structures and go-to-market strategies, as well as their supply chain, distribution, and product portfolios in the face of shrinking demand and looming consolidation.’ (David Daoud, Research Director, IDC)

Why such a decline?

The reason for the rapid decline has been laid at many doors, but it pretty much adds up to:

  • The latest rapid developments in Smartphones and Tablets have accelerated their rise to the fore. They are becoming more capable, and their price makes them very attractive. They are devilishly handy little devices to browse the Internet and for Social Networking, which is a massive daily requirement.
  • Windows 8 has been released and a large portion of PC users cannot get used to the layout, the lack of the normal Desktop, the missing Start button, and the slide towards ‘Touch’ technology. We have actually been shocked at the resistance it has met among users, particularly business users, and we thought we’d seen it all when Vista was released.
  • The cost of the new generation of PC’s designed to cope with Windows 8 and the new ‘Touch’ mentality has put a large portion of buyers off, driving them towards the smaller, cheaper, Tablets for their basic uses.
  • A large number of manufacturers have ceased producing inexpensive Netbook PC’s, instead favouring the development and production of inexpensive Tablet computers, leaving a space in the low-end of the market, and driving the bottom rung on the Laptop and Desktop PC pricing scale up a little. PC’s have not become more expensive, it’s just that someone has nicked a bottom couple of rungs off the scale.
  • The rise in younger kids making use of Tablets cannot be ignored. Yes, they are probably playing games, but we’ve all seen the 5 year-old happily playing away with his mother/father’s Tablet or Smartphone, when he would probably never have been allowed to go near the family Desktop PC, or the adult’s Laptop – at least until he was old enough not to be ripping the keys off the keyboard, etc. This made them very attractive devices to have lying around the family home.
  • Malware has just not caught up with the Mobile devices just yet, no doubt it will though. The average domestic PC user has been plagued in some way with malware, and they perceive the Smartphone or Tablet as malware-free – it isn’t but what can you do?

What we see ‘on the street

We have noticed a serious rise in Smartphone and Tablet use, with a large portion of the domestic market using these exclusively, with little or no PC use at all. Many homes we visit for repairs tend to have a Laptop being used by the teenage kids (who need it still for their educational assignments), but the mother/father are using a Tablet or just their Smartphone to perform their basic tasks – usually meaning there is a slightly older Laptop or a Desktop sitting practically gathering dust somewhere in the house, wheeled out every now and then when required for something specific.

I’ve personally watched as people struggle to perform what would be a simple PC task on their small handheld device – but they are happy to pay that penalty for the handy nature of their device. I actually watched someone today trying to recover their eBay username and password on a Samsung Galaxy S3 Smartphone, and it was laughable the efforts it took to get the link they wanted, yet this would have taken a matter of seconds on a PC. The person in question definitely has a Laptop PC, because we repaired it not long ago. They simply choose to leave it for their kids, or for the massive Xmas shopping final quarter of the year, and use their Smartphone for their day to day tasks in the meantime.

This is something we see on a daily basis, particularly among the ‘mother’ section of the populus. Who can blame them? Kids are becoming increasingly demanding, so anything that can save a few minutes is going to be popular. Also, the Smartphone or Tablet allows a mother to catch a speedy check on their Social Network, or email, which they might not have been able to do if they had to sit down at a Desktop PC or spark up a Laptop.

The domestic user seems to be content with this, knowing that some simple tasks will take a little longer on their mobile device. That said many homes still have a Desktop PC, and maybe more than one Laptop.

We repair computers, and I used to visit a lot of homes covering our mobile computer repair service, and I must share a few things I have personally noted. Now, before you go shouting that I’m ageist/sexist, or pointing out anything else, I am quite well aware that there is a lot of overlapping between ages, sex, etc, and I am purely generalising based upon what I have noticed.

What have we noticed about this new trend?

Young Children

Tablets are the device of choice for smaller children – they absolutely love the games (and foolish App’s) on there. Whilst iPads are definitely the desired favourite, they seem to be outside the price range of a vast majority of households, particularly when just for kids to play games etc. The standard Android-based device seems to be the most popular, priced so that even the lowest income homes can afford one. They make a great present, and most kids want one. There are many more free App’s and a lot of (sensible in our opinion) parents don’t like the thought of their expensive iPad in the hands of their kids, with all-too-easy access to running up a bill.

Teenagers & Students

Teenagers tend to prefer a Laptop – they can pretty much do anything they need on there, and keep in touch with their wide circle of contacts whilst working on their education. They use Smartphones when on the go, and also like to have a Tablet in their arsenal as well – mainly for relax time in front of the TV, or when tucked up in bed. Teenagers pretty much have one of each, and their general disdain towards the level of detailed care adults give their gadgets, make them our favourite (mainly because they break more devices than the rest of the population). We even had a run of Laptop screen repairs, which I kept a record of for a month, where over half of the screens were broken by teenagers using them in bed, setting them beside the bed when finished, then stepping out of bed in the morning, straight onto the closed Laptop – a computer repairman’s heaven, and behaviour that should be applauded, even encouraged!

Mothers are now reaping the rewards of Smartphone technology

Mothers

Smartphones (and Tablets a close second) are the device of choice for mothers, and I’d hazard a guess at them being the biggest iPhone user sector too. They need something that is handy, particularly to keep them in touch with their Social Network – which has opened up a whole new channel of communication for busy mums. Young mothers tend to be home during the evening, and are so busy with children, etc., that they would not have a chance to communicate with their wider social circle if it had not been for the advent of Facebook, Twitter and all the rest. The Smartphone puts this new channel at their fingertips, and a Tablet is a great source of additional relaxation on the sofa when the kids are tucked up, whether it’s for some general browsing, shopping, or media-playing. The excellent camera a Smartphone now gives makes them a handy device for a mother to keep a pictorial record of her family life. That all said, I wouldn’t like to try to get between a mother and the family Laptop when the Xmas shopping time of year arrives.

Fathers

Fathers are still using a cross section of all the available devices, with mobile devices on the move, and Laptops or Desktop PC’s for a lot of the tasks when at home. This might be down to their differing use of computing, the fact they might be catching up on some work, their reluctance to embrace change as quick as their partner, or maybe simply because they are bottom of the pecking order in a normal household when the gadgets are being snapped up after dinner.

The older generation

The older generation, who actually surprised us over the past few years with their jump into making good use of PC’s, are still generally using the PC – whether it be a Desktop or Laptop. They tend not to embrace change too quickly and find the Smartphone a little too small to be handy. Tablets are beginning to take hold in this sector of the market too – although we’ve noticed that most of our older clients who are using Tablets are doing so because a family member purchased it as a present, but once they’ve tried it out, they’ve loved it.

Business Users

Business users are bemused by all the latest developments. The average business manager or owner now has more devices than he/she can shake a stick at, with a Desktop PC in the office, maybe a Laptop too, a Tablet for presentation and Sales tasks, and a Smartphone as their main communicator (but now with some added features). The release of Windows 8 caused uproar among the small business users, as they wondered just how this was going to make their daily grind any easier – or even how their older, maybe even bespoke, software application was going to run on there. A large proportion of them saw Windows 8 as a gadget OS, and certainly not designed with their needs in mind.

So what is going to happen, and what needs to happen?

Computers in decline...

What is going to happen is simple – the PC is going to continue to decline. It will never be lost completely, there will always be a market, at least until something is developed which makes it completely redundant…and nobody will bet against that.

The Manufacturers role

The main manufacturers were caught flat footed lately, with the rapid growth in the demand for newer and better Smartphones and Tablets, the release of a none-too-popular Windows 8 with a much-too-new UI, the price to develop touch-screen devices, the lack of direction in the development of All-in-one PC’s, the massive change in global economic markets, and the spiralling costs associated with getting their product to market.

Personally, I now see the computer market as having more levels than previously, and the overlapping of device capability nowadays has made this very difficult for the manufacturers to get a firm hold of, and establish where in the market they want to be pitched.

I see the following breakdown of the computing market (I would personally class this as the total PC market, but it’s still being sub-classified by the industry as PC vs Mobile):

  • Smartphones
  • Tablets
  • Netbook/Laptops (the netbook is becoming redundant in our eyes)
  • Desktop PC’s
  • High-end PC’s and Servers

Previously, this would have been a purely Portable vs Static decision, now there has been a new layer added, with Mobile tagging onto the end.

There have been many forays into producing Laptops which have some of the Tablet-type of technology included, but there seems to be quite differing opinions among the main manufacturers where to pitch this, and the pricing has made these devices more of a specialised-user’s (a Laptop Connoisseur?) choice. A nice idea, but they have yet to convince me they have carved a section of the market for themselves just yet.

The All-in-one Desktop PC

The interesting All-in-one Desktop PC is something a lot of consumers look at as a great, even aesthetically-pleasing, product but they tend to be that little too expensive, particularly when you add touch-screen capability. These will become the device of choice for business users I think, particularly those desk-bound, as the full size keyboard and larger screens make them much better for office applications. Personally, I use a Desktop PC for the vast majority of my business-related tasks, and am merrily tapping away at this moment on a full-sized desktop keyboard, with dual 27” monitors facing me.

The effect on Small Computer Businesses

Small businesses, like ourselves, have had to roll with the developments. We have had to endure:

  • A much lower demand for Desktop PC’s, particularly the branded systems. There has always been a market for good quality custom builds, but we have noticed the demand for basic builds has all but disappeared.
  • A steep decline in demand for Netbooks, which most will say makes no difference, but we would disagree. There has always been a very small percentage margin on Laptops and Netbooks for the smaller reseller, so a low-priced, quick shift of a Netbook was always welcome.
  • Now we have noticed that the average user wants a cheap Laptop, meaning the bottom spec machine is most-desired, and the margins are shockingly bad. Laptop Connoisseur’s (as we like to refer to the consumer who wants a decent laptop) are few and far between, but they are always a welcome sight.
  • The flapping about of the manufacturers with regards to All-in-one PC’s and the Laptop/Tablet derivatives. The range never seems to settle, every time you get a popular model it quickly becomes discontinued, and the price of the Touch-screen models makes them less-than flying off the shelves.
  • Smartphones are pretty-much outside the reach of small businesses like us – the major telecoms companies are giving them away with small contracts, meaning there is no distribution channel or even market for us to resell.

So, where are we all headed?

So, with all this in mind, where do we see the computer market going in the next few years? That is easy, we think a lot of the manufacturers will have to implement rapid changes – in terms of their R&D, production and distribution channels. This will mean that the manufacturers who adapt best (and quickest) will survive, whilst others will fail and disappear.

This will have a knock-on effect right down through the distribution channel. Bear in mind that computer hardware works on the tightest margins imaginable, and with change there is always associated cost. There are a load of distributors who now resell direct, and there is an increasing number of resellers who are pushing themselves as distributors – whether or not this can survive all the change remains to be seen.

The average reseller, such as ourselves, will have to tie themselves in much more with specific manufacturers (NIPC have partnered ourselves with Lenovo and Toshiba lately, in addition to trebling the number of distributors we now deal with, in order to keep the small margins bearable). We have had to structure our services offered, and begin to market some services which we previously didn’t – we now push our Data Recovery, Web Design, Hosting, Remote Support and Network Infrastructure services much more than we used to previously – just for a few examples.

The small fry like us need to seriously take notice of all this change – if not there will be no business model for us to follow. Simple box-shifting is no longer an option, though it was never a focus for us (at NIPC) anyway, and a wider skill base is needed to cover the repair of Mobile devices as well as the normal PC device. Small computer firms need to look at their existing skill base, and promote the additional services that can be found there. Where a skill is lacking, it needs to be researched and trained up on as a matter of urgency. Any diversification that can be done, needs to be done – in order to remove the reliance on shifting machines.

NIPC have always enjoyed participation in the Custom Built PC market. Our focus has always been to provide a quality PC, using quality branded components, fully tested and personally guaranteed – one we could happily stand over. This has always been our marketing focus, above the branded systems, though we had to look around a little more when the portable devices (Laptops and Netbooks) began to become much more mainstream, since building these was not an economic reality.

What we have had to do though, is to look at the niche markets we serviced, and design our range a little more with them in mind – mainly Home Media Centre, Gaming, or even Video/Sound Editing machines. This has meant we still retain demand for our custom builds, even with the overall Desktop PC market taking a nose-dive. It also means, as geeks, we are happier – because what geek isn’t going to enjoy building a high-end Gaming PC instead of a run-of-the-mill office PC?