Capitalising on the profit potential of the PC market will require an approach that links services and hardware, as the industry prepares to flatline through to 2020.
Currently, PC OEMs aim to protect operating profitability and stabilise gross margins while earning greater profit per sale, but as the dynamics of the PC market change, so too will how OEMs seek to generate greater profit.
“The volume‐centric strategies that propelled PC OEMs’ growth and vendor focus on boosting sales volume of premium PCs are out of sync with the dynamics of the PC market in 2Q16,” Technology Business Research senior analyst, Jack Narcotta, said.
“The price wars among the OEMs are over.
“During this transition from volume sales to a profit‐first approach, OEMs, and their partners, will not always pursue greater profits through traditional means such as greater sales of premium PCs or other devices, although those are important segments.”
Narcotta said PC vendors able to move services into a leading role will not only create supplemental revenue and profit streams but also boost customer loyalty, protect their install bases and foster greater predictability.
Services, and to lesser degree peripherals, particularly 4K‐ready video displays, are primed to occupy a leadership role alongside PC hardware.
“Larger OEMs are better positioned to shift their go‐to‐market strategies, as they possess the necessary hardware portfolio, service staff and support capabilities,” Narcotta added.
Looking ahead, Narcotta believes that smaller OEMs leveraging sales of premium 2‐ in‐1 and gaming PCs to protect PC business, or overall financial health, but lacking a comprehensive roster of services to accompany device sales will find it increasingly difficult to adapt, leading some to exit the PC market.