yARN: Why PC sales are falling away

Is there a silver lining?

IDC recently tipped a global drop in PC shipments of almost 8 per cent this year. That’s got to be bad news for most people in the hardware business.

The analyst firm has incorporated several factors into this prediction, and some aren’t going away any time soon. Perhaps the most fundamental change is the shift from computers to tablets and smartphones. The majority of people seem to buy handsets in conjunction with phone service, so there’s little reason to purchase them from traditional IT resellers.

Similarly, tablets seem to be mostly bought personally (as in BYOD), and since buying a tablet is so much simpler than buying a PC. For example, once you’ve decided you want a 10-inch Samsung Galaxy tablet, it’s basically down to how much internal memory you need and perhaps whether you want it in black or white.

When you’re buying a PC, there are far more questions to be answered even if you’ve settled on a model. What case style? What processor speed? How much memory? How big a disk drive? Do I want a flash drive as well? Will the on-board graphics suffice, or should I buy a discrete card? If so, which one? Do I want a better keyboard? Is the standard mouse adequate? What size screen? Is it worth buying a better quality screen?

While it made sense to visit a specialist when buying a PC (you need expert advice, you want access to a wide range of components, or both), I see a lot of people buying smartphones and tablets from mass-market stores and other outlets in local shopping centres. You can even buy them with your groceries at the supermarket.

Other reasons given by IDC for revising its forecast from a drop of 1.3 per cent to 7.8 per cent include the transition to PC designs that are optimised for Windows 8, but the firm also reports a change in commercial buyers’ behaviour.

Part of this is a shift from large-scale replacements (the old three- or four-year technical refresh cycle) to replacing individual systems as needed. This does provide support for those who feel a reasonably modern PC is capable of performing the tasks normally required in a business setting, and that it now usually makes sense to replace a machine only when it fails and cannot be economically repaired.

What wasn’t mentioned in this context was the adoption of desktop or application virtualisation reducing demand for new PCs by shifting the bulk of the investment to the server and allowing either the substitution of thin or zero clients for PCs, or the ongoing use of old PCs as clients.

Presumably that’s still too much of a minority interest to have a significant effect on global PC sales, though it may be boosted by the still-growing use of tablets.

IDC does point to the spread of BYOD as a factor in declining PC sales, “with nearly 25 per cent of employees in organisations larger than 10 people claiming to have purchased the primary PC they use for work," according to Bob O'Donnell, program vice-president, clients and displays at IDC.

Not only does this mean that fewer PCs are being sold (many of these people will be using one computer everywhere instead of one at home and another at work), it also implies that different strategies will be needed to reach individual BYOD purchasers rather than the technical advisors and purchasing managers. Perhaps that’s why Apple’s computer sales have been running ahead of the overall market in the last few years.

Those different strategies are almost certainly going to be more expensive. Have you visited an Apple Store and counted the number of staff? Or estimated the rents for these relatively prime locations?

One silver lining is that individuals may be less inclined - or less able - to negotiate as aggressively over price as a purchasing professional, and those professionals won’t be able to put the time and effort that went into negotiating a contract for hundreds or thousands of PCs every time that John in Accounts needs a replacement computer or Jane is hired to fill a new position in Human Resources and therefore needs a new computer. Even so, it seems unlikely that any improvement in gross margins will offset the decline in volume.

Do you think IBM was smart to exit the PC business when it did?

More about: Apple, Galaxy, IBM, IDC, Samsung
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