We need to talk about the PC

With “the longest-lasting decline in the industry’s history”, PC shipments and sales are at an unprecedented low. Jonathan Easton asks the channel what can be done to save the seemingly doomed PC.

We need to talk about the PC.

It’s been the cornerstone of the IT industry for over 20 years but now it finds itself in a time of crisis. 

Gartner reported that shipments of desktops, laptops, and ultra-mobile ‘premiums’ like the Surface devices declined 5.7 per cent in the third quarter of 2016, marking eight consecutive quarters of decline. It is, according to the research firm’s findings, “the longest-lasting decline in the industry’s history”.

IDC might have slightly different numbers, but the outcome is still the same with sales around the point they were at in 2007 – 10 years ago. 

The very definition of a recession is a decline in growth for two consecutive quarters and after two years of constant decline, it is fair to say that PC shipments are exhibiting signs of not only a recession, but a fully-fledged economic depression. 

Summing it up neatly, Forbes succinctly surmised: “PC sales stink”.

But what does the channel make of the recent misfortunes of the PC? Is the PC in its classic form, by and large, irrelevant? 

“PCs will generally always be relevant,” says Platinum Components Partner Jon Harrison. “However, the form that we currently see them in will change. 

“I think the big box under the desk is starting to become more than staid. Over the next few years I believe we will see a solution that lends itself to mobility with NAS as standard, super-fast uplink on Wi-Fi/4G for home access.”

76BITS CEO Mikael Berglund similarly believes that while the form factor may change, people will still want a PC for functionality: “A notebook is still a PC. I very rarely see travellers being “productive” on a tablet or smartphone. They use a device that has a full keyboard.

“People will still have PC’s but I think they will buy PC’s suited to a certain functionality. At the heart it is a PC but one might be optimised for travel, another for gaming and virtual reality (VR), another for content creation etc.”

“PCs will always be relevant. However, the form that we currently see them in will change.” 
Jon Harrison, Platinum Components

In spite of shipments being consistently down, Utopia Computers’ Craig Hume argues that these sort of figures can be deceptive. 

“Gartner blames it on the fact that most consumers now own as many as three computing devices and among these devices their desktop PC or laptop is no longer their key priority, it’s easy to understand why they might feel this way. But, as with many things in the world, I think it’s all about the way you read the figures and if you are manufacturing PCs, in turn how you position yourself in the marketplace.”

He goes on to say that even though shipments might be down, major vendors such as HP, Lenovo and Google are seeing nothing but success.

“Each one of these businesses has seen their PC hardware profit increase. HP’s operating profit was 4.3 per cent or better in the last two quarters. In fact, HP’s PC business is at its highest operating profit since 2012.”

Harrison however believes that more has to be done in order for PCs to keep up with their booming mobile counterparts. “PC has slowly been in decline for years, however the change in its function and place in a family home would boost sales again in my option. 

“Workstations will always be required, I believe, in terms of whether a thin client is used or PC. Eventually more mobile integration will be required, it’s just the way the market is moving.”

The Windows 10 effect

PC shipments had been in decline for a long time before the launch of Microsoft’s latest operating system but it is no secret that the company has a massive effect on what goes on in the PC market. 

“Windows 10 has improved the PC space,” says Berglund. 

“A better OS all round is good for the consumer but has allowed people to extend the useful life of the hardware they currently have. For one client we upgraded their 40 Windows 7 PCs to Windows 10 thereby putting off the need for them to purchase new hardware.”

And this is a big reason why consumers are less likely to buy a new computer. With the company’s persistent pushing of Windows 10, many users who would previously have bought a new computer for the new operating system instead kept their older machine with a new, free OS update that is better designed for less powerful machines. 

As Network Group managing director Phylip Morgan points out, Microsoft made Windows 10 “available on mobile, tablet and PC for more efficient working between devices,” giving users little reason to boot up a new computer, rather leading them to rely on their pre-existing and established ecosystem of devices. 

“We’re selling more PCs than ever and we have already stopped the declines.” Andrew Gibson, Overclockers UK

Loren Loverde, vice president of Worldwide Tracker Forecasting and PC research at IDC, said the option to upgrade to the new OS meant that some users were postponing an upgrade “a little, but not indefinitely”.

“Some consumers will use a free OS upgrade to delay a new PC purchase and test the transition to Windows 10. However, the experience of those customers may serve to highlight what they are missing by stretching the life of an older PC, and we expect they will ultimately purchase a new device,” she says. If they actually will purchase a new machine however remains to be seen.

A less glamorous feature of Windows 10 is Office 365, but that has shown legs and will be at the centre of consumers’ devices, believes Harrison: “I think Microsoft Office 365 is going to be something that develops with more cloud or a small office or home app for your own NAS cloud and office solutions.”

Effectively, for average users Windows 10 has pointed towards a future that is increasingly mobile, and is not tied down to devices with powerful processors or huge hard drives. 

There is one market that flies in the face of that belief though: gaming.

Game theory

While owners who just use their PC for web browsing and maybe a bit of word processing might see little reason to upgrade their machine in 2017, PC gaming is one area that has seen huge amounts of progress thanks, in no small part, to the demands of VR, and is leading the way for PC sales. 

According to its September 2016 Forecast Snapshot on gaming PCs, Gartner makes the prediction that: “device upgrades and propensity to spend more on gaming PCs will drive end-user spending from $6.7 billion in 2015 to more than $9 billion in 2020. Strategic planners at PC manufacturers must market purpose-built PCs such as gaming PCs as part of their profitability strategy.”

In other words: if you want to build and sell powerful PCs for the foreseeable future, you’ve got to get in with the gaming crowd.

That market is seeing a big upswing and retailers who deal in gaming PCs are surprised to hear of decline.

Andrew Gibson at Overclockers UK says that the “PC market is nothing but booming and showing growth as more customers move from gaming consoles. We’re selling more PCs than ever and we have already stopped the declines. 

“Sales trends at Overclockers UK are up.”

Likewise, Paul Middleton of PC-PartX says that “gaming PCs are on the incline, so we don’t really see a decline”.

It’s easy to see why gaming PCs are a fruitful market when considering the hype and furore surrounding VR and how the majority of gamers who want to pick up a headset are required to upgrade their gaming rig. 

At the beginning of 2016, Puget Systems founder Jon Back spoke to Maximum PC about how gaming PCs are flourishing and his statements ring as true today as they did a year ago: “At Puget Systems, our high end gaming PC sales have never been better. 

“Windows 10, Skylake, 4K, VR, and a strong year of title launches, has made 2015 a strong year for enthusiast gaming PCs, and we expect 2016 to be even stronger. 

“Keep in mind, when Gartner and IDC talk about PC shipments, they’re talking about the volume market, and most of the volume is entry level. We enthusiast PC builders live is a completely different world!”

And maybe that’s the thing. Maybe the PC world is divided up into two factions. Those that want that classic mouse and keyboard setup for performance – whether that be gaming or content creation – and those who simply just have a computer for basic web browsing and maybe watching a few videos. 

A 2-in-1 solution

While performance users are as dedicated to PCs as ever, that latter market is slipping away to tablets and smartphones. But are convertibles the answer for more casual users?

“I think convertibles are a good solution to the on-screen keyboard issues (they are not great, taking up a lot of screen and being harder to type on),” says Harrison. “I personally would buy one over a laptop or PC now as long as the CPU, memory and so forth backed up the performance I need along with the flexibility a two-in-one gives.”

Morgan holds a similar belief: “It will be the answer for some people. For middle managers/staff in jobs that require mobile working, there will be huge take up.”

However, some believe that the two-in-one devices present something of a halfway house: “Convertibles are still a compromise in my opinion,” says Berglund. “When they get thinner and lighter they will be more appealing. Perhaps the Lenovo Yoga Book is heading in the right direction.”

“I don’t think the PC is dead, but it is just in the downward stage of the technology cycle.” 
Tracy Pound, Maximity

It is impossible and largely impractical to say in which direction the PC market is going to go. On one side you have analysts who have spent the past few years spelling out disaster; but on the other you have the actual retailers in the trenches saying that they’re selling more PCs than ever before.

As the wants and needs of users change, it is an almost certainty that the form of the PC will shift away from what Harrison calls “the box under the desk”. Gaming PCs are probably going to get even bigger and more ostentatious, while – as we have seen with the Microsoft Surface Studio – vendors will adapt and experiment with form factors to make their systems suit the wants of more mobile users. 

Maximity director, CompTIA executive council member, and PCR Woman of the Year Tracy Pound believes that the PC hasn’t gone away for good: “I’ve been in the IT industry for 32 years and what I have noticed in that time is that technology goes in cycles. When I first started, PCs were just coming into businesses and they boomed, then once they got power behind them the industry went back to centralised processing and control, then the PC rose again and once again its use is being questioned. I don’t think the PC is dead, but it is just in the downward stage of the technology cycle.”

I think Pound may be right. We might be calling it a crisis right now, but in a few years time we may well look back on this period as a time where the PC was revolutionised forever for the better.