PCs Q2 15A – The cruel sea

Reply to this post

PC makers do nothing to fight the tide.

• Figures from both Gartner and IDC show that Q2 15A has been another awful quarter for the PC industry.
• IDC has the market declining 11.8% to 66.1m units while Gartner has seen a 9.5% decline to 68.4m units.
• Tough comparisons to 2014 where the ending of XP support drove a wave of PC upgrades and price increases driven by the strong dollar were to blame.
• There was also inventory clearance ahead of the launch of Windows 10.
• Lenovo continued to lead the market with around 20% share with HP is second place but the only vendor that is seeing any growth is Apple which has gained share to around 8% up from 6% Q2 14A.
• The short term outlook depends on how well Windows 10 is received and there is every indication that it will go well.
• This is because Microsoft has a monotonous rhythm of success and failure with its operating systems and following the disaster of Windows 8, it is time for a success.
• I suspect that this rhythm has everything to do with the way Microsoft develops its code.
• With a new OS, it is never finished on time and so as the deadline approaches, corners are cut and features are dropped.
• The result is a mess which Microsoft then spends the next two years fixing and finally launches what it originally intended.
• Consequently, the OS cycle is really 4 years rather than 2.
• However, I suspect that Windows 10 will provide only temporary relief and what the industry desperately needs is some innovation.
• The form factor of a PC and its use case have not changed for 30 years and all of the PC makers have such thin margins that they cannot really afford to do any R&D.
• The one exception is Apple which produces beautiful looking devices, albeit at high prices, that sell well at the very high end.
• I continue to believe that an answer to this problem is the obsolescence of the laptop form factor.
• A device that is as powerful as a laptop but can be crammed into a tablet form factor which offers a far superior user experience.
• This is because a desktop-like user experience that offers far better utility and ergonomics is now possible while the user is away from the office.
• This should not be seen as a hybrid device but simply a better and healthier way to compute on the go.
• With exception of Microsoft, the PC industry is addressing this with a series of 2-in-1 devices that are simply laptops where the screen can be removed.
• 2-in-1s are hybrid devices that don’t perform either function particularly well, look clunky and dull and not surprisingly have been shunned by users.
• This is why investment in R&D, imagination and creativity is needed which Apple has shown can have positive effects even in a declining market.
• Combine this with slick marketing around a new use case, and I can see a replacement cycle kicking in that could drive the PC market back to growth.
• In the absence of this, the PC market is likely to drift sideways with the occasional burst of excitement followed by a slough of despond.
• Against this backdrop Microsoft has done a good job of mitigating revenue declines and is likely to outperform most of the other players.
• Intel, with its position in servers should also be able to outperform the market, leaving the PC makers helplessly adrift upon the sea of a cruel market.
• If the PC makers want to change their outlook they will have to do it themselves but there has been very little sign of any get up and go.
• It seems to have got up and left.