How tough is the PC business today?
So tough, leading PC suppliers must either overhaul their business models or leave the market by 2020, according to research and advisory firm Gartner.
“The PC business model as we have traditionally known it is broken,” says Tracy Tsai, a Gartner research VP.
The top five PC vendors — Apple, Asus, Dell, HP Inc. and Lenovo — have increased their collective market share by 11 points in the last five years, Tsai explains. But those gains have come at the expense of profits.
"While this does not mean that the PC market is finished, the installed base of PCs will continue to decline over the next five years,” Tsai says.
Specifically, according to predictions from Tsai (pictured left), the worldwide installed base of PCs (which Gartner defines as desktops, notebooks and “ultramobile premium” devices) will drop from a total of 1.48 million units last year to 1.33 million in 2019.
Assuming that happens, this would represent a 10 percent decline in the number of installed PCs over just five years. And along with that decline, the revenue and profits of leading PC vendors — and possibly their solution-provider partners — will likely also fall.
4 Ways Forward
What’s the alternative? Actually, Gartner has identified 4:
> Stick with the current model: Just keep on keepin’ on, hoping for volumes that are high enough to generate the needed cash.
> Adopt a new business model: Offer the same hardware, but devise new ways of making money. For example, PC as a service, or partnering with a digital content publisher.
> Create new products: Keep the business model, but create new hardware. For example, PCs that offer superior speech-recognition, touch controls or connected-home features.
> Create new products and adopt a new business model: For example, a vendor might offer both personal assistant robots, a combination chat-bot and personal assistant, and subscription-based services from third parties.
“PC vendors,” says Gartner’s Tsai, “need to identify their core competencies, evaluate their internal resources, and adopt one or more alternative business and product innovation models to stay in — or leave — the PC business.”
And what’s good for PC suppliers is also good for their solution providers and partners.