PCs are on almost every desk in the world and the installed base is measured in the hundreds of millions. Brian Krzanich, Intel’s latest CEO, recently announced a massive layoff tied to the company missing its quarterly numbers. The trend is clear. For the last two years, PC sales have been on a downward slide like never before. Unless the manufacturers of those PCs begin stepping up their innovation, the problem is going to get a lot worse. Here is a summary of the issues facing the PC industry:
• Microsoft’s efforts at new versions of Windows haven’t affected demand in any meaningful way.
• Tablets and smartphones are getting faster with more memory with every passing iteration.
• Tablets, two-in-ones, and smartphones have usurped many of the tasks traditionally assigned to the PC.
• Today’s PCs are lasting longer, and as solid state drives replace hard drives, that lifespan will get even longer.
• People are finding they can live without a PC (some 20% of millennials don’t have a PC at all).
The industry seems to vacillate between getting it (when some of the players liquidate their PC manufacturing facilities) and believing that it’s just a little blip in demand.
Everyone has their cause for why the problem is getting worse. Remember those who pointed to Windows Vista and then Windows 8 as the cause? Then it was the iPad, but now tablet sales in every segment but the enterprise are on the decline. Windows 8 got replaced by Windows 10. While it was well received, it didn’t fix the problem.
While PC original equipment manufacturers (OEMs) seem to be very bad at it, PC makers also need to become better at selling PCs. Look at other products. Cars today sell largely on status. Most of the models sold have a 10-year lifespan but we buy the new ones because a new car is a signal to everyone that the buyer is successful. The auto industry almost died in the 70s when each major player seemed to forget that.
Today, one of the product lines that is selling very well is the Microsoft Surface. The fact that Apple had to respond with a gigantic iPad Pro showcases how successful the Surface has been. The Surface products look good, are very well marketed and do convey status.
TV companies advertise TVs and move them. Car companies advertise cars and move them. Phone companies advertise smartphones and move them. For the most part, PC manufacturers don’t advertise their PCs aggressively– and certainly don’t connect them to status.
But, you ask, how about two-in-ones? The issue here is they seem to provide a feature that most people don’t want to use. The vast majority of buyers use them solely as notebooks, not tablets; much like the vast majority of iPad users use iPads as tablets and not notebooks. For two-in-ones to work, the industry needs to address the fact that folks don’t use them as tablets.
The tech industry can see what causes products to move all around them. They can see, even in their own companies, why people are not getting new PCs. They have seen other industries fix problems like this. They just ignore it and come to a conclusion folks don’t want PCs anymore, even as they look around and see PCs on every desk around them.
What should PC makers do to survive? They’re going to have to innovate and evolve. For far too long the hardware side of the industry has been relying on Microsoft to create demand by releasing newer versions of Windows. Microsoft, to its credit, is working hard to add new features to Windows that bring new things to the table for both home and enterprise PC users. Features such as Cortana and Windows Hello give PC OEMs an opening to craft systems that are designed to take advantage of what Windows 10 has to offer, but so far we’re not seeing many take advantage of that opportunity.
The PC, as it currently stands, has come to the end of the road. If it is to survive then OEMs need to make a realistic assessment of how the computing landscape has changed over the past couple decades and develop new PCs that will deliver what consumers – both home and business – want.
Rick Richardson, CPA, CITP, CGMA received two AICPA lifetime achievement awards for his contributions to the profession in the field of technology. Providing his annual forecast of future technology trends, Richardson is the keynote speaker at the New Jersey, California and Illinois conferences each year presented by Flagg Management. www.flaggmgmt. com. If you have 20 minutes each week and want to keep current with today’s technology, subscribe to Rick’s newsletter, TechnologyThisWeek.net.
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