What the PC Industry of Tomorrow Looks Like

The companies I am not worried about -- the ones who will be in the PC industry of the future -- are the ones that understand mobility and consumer markets. Right now this is a very short list

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Adam Hunger / Reuters

We are, without question, an industry in transition. The 500-lb. gorillas who once dominated the technology industry are undergoing major transitions and experiencing new types of growing pains. And for many, this is extremely painful. These titans will rise or fall based solely on their ability to manage this transition and these new types of growing pains. So what’s growing, exactly? Opportunity.

From Business to Consumer

For the past 30 years, the computing industry only appealed to a small group of people – namely the business community. Many companies such as Microsoft, IBM, Dell, HP, Intel, RIM and others got their start by creating products and solving problems for business users.

What many of these companies are learning is that business users are as different from ordinary consumers as night and day. I specifically peg Apple’s turnaround to this observation. Apple has and always will be a consumer company, one that struggled until there was a true consumer market. Now Apple finds success where others have not, simply because the company has always had a vision of creating products for ordinary people. Apple had to wait more than two decades for its true market to emerge. Now, emerge it has and it is billions strong.

A key point signaling this shift was the recent news about the PC’s decline in Q1 sales. Who usually bought PCs in bulk in the first half of the year? It wasn’t consumers. It was businesses. In years past, bulk purchases by enterprise and business buyers helped offset the lack of consumer spending for PCs in this buying cycle. With businesses shifting to BYOD, it’s doubtful the first half of the year will yield the volumes it once did. What we are witnessing in clamshell PC sales is not really massive declines. It is simply the new normal.

The consumer market will dwarf the business-pro market by magnitudes. The PC industry of the past is not the PC industry of the future. The opportunity has shifted from business to consumer, and it is growing faster than many anticipated. Many were not prepared, and the pain of this reality has been life changing for all PC vendors.

From Stationary to Mobile

We were not meant to sit at desks, yet that’s exactly the paradigm that desktops and notebooks brought. Innovations around mobile devices are among the most important innovations for the PC industry of the future. When we first learn to ride a bike, we don’t just sit on it and not move. We take it out and explore the world. While smartphones and tablets deliver on a truly mobile computing vision, we are barely scratching the surface of mobile computing. There is still massive software innovation ahead. We still don’t have devices that truly know anything about us. Anyone who believes innovation is dead is wrong and lacks vision. We still have billions of new customers to bring into the digital age and they want innovative products, many of which haven’t even been invented yet.

At the moment, we are in an adoption-cycle phase, not an innovation phase. Why should we expect revolutionary new smartphones, for example, when half the planet doesn’t even have their first smartphone? Do we expect revolutionary new cars every year or even every few? Until the advancements of hybrid technology, the auto industry had hardly changed in decades. People don’t freak out and scream about the collapse of Toyota because it doesn’t release a revolutionary new car every few years. It’s not a perfect analogy, I admit, but I do believe the consumer market for automobiles brings out applicable insights for the PC industry of the future.

The companies I am not worried about — the ones who will be in the PC industry of the future — are the ones that understand mobility and consumer markets. Right now this is a very short list.

This is the problem for many of the companies that are experiencing growing pains: they have the wrong definition of mobile computing. Couple that with a lack of understanding of consumer markets and it’s bad news for traditional PC vendors unless they really find mobile religion and deliver mobile products that meet the needs of all their current and future customers.

Bajarin is a principal at Creative Strategies Inc., a technology-industry analysis and market-intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week.

10 comments
IntangibleGuy
IntangibleGuy

The consumer market will dwarf the business/pro market by magnitudes.

Ouch that hurts. It's a matter of definition of what is consumer and what is business. Business market also includes the devices in the "backyard" like servers, routers, switches, etc. All in all that is far more than the consumer market.

I though agree on the editors assumption if only the "personal" devices are taken into account. Say phones, pad, laptops.

MikeBruno
MikeBruno

As long as Tablets smart phones etc can not play games such as crysis3 dead space, starcraft 2, etc They will always be inferior to the desktop. Who cares about mobile. Desktop will always be here. Unless tablets can shrink video cares and processors nec to play such games they are worthless.

HazeAndDrizzle
HazeAndDrizzle

Perhaps it would be better to drop the consumer/business distinction in long term thinking. Communicating computing, or call it computing communications if you like, embeds itself further and further into all corners of life. Phones and tablets are merely a hint of what is come as much as PCs are only hint: wrist band systems (aka "watches"), personal body sensors, wearable computer, electronic paint, the "internet of everything" are already making their first appearances.

his process will penetrate everything: daily activities, entertainment, nearly all devices around us, our real time and long term health  (one of the obvious next big killler apps), education (generically the largest single activity on the planet), and all of our interconnections at the social, business, and technical level. We are racing head long into living between the machines all around us that chatter incessantly at high speed and in high volume (lagging American communications infrastructure notwithstanding) while we occasionally blather away at more stately human speeds. I believe it is obvious that Apple is just one more company that had its day but the market is rapidly moving beyond it. Apple is ultimately as stand alone industrial era producer of generic products. Much bigger things are coming than a few clever relatively unspecialized end nodes here and there (PCs, ipod, phones), but rather much more personal and yet more social.

MarkHolland
MarkHolland

There is tragedy in all this. The internet is a library that no human being could have dreamed of 100 years ago but its full breadth and depth can barely be touched by mobile devices. They are too small and the settings they are used in are all wrong. There is something to be said for the quiet formality of sitting at a desk and using a huge screen and a keyboard. There is something to be said for spending time on a subject. There is something to be said for a desktop computer, even for a "consumer".

DeweySayenoff
DeweySayenoff

Oh, PLEASE, blaming a 20% drop in PC sales all on BYOD???  Windows 8 did it a hell of a lot more damage because you HAVE TO REPLACE WHAT YOU HAVE TO REPLACE and people weren't buying new systems, they were hanging on to old ones until Blue comes out (Windows 8.1, which is reportedly going to fix many enterprise complaints about Window 8).

BYOD will last about as long as the first time productivity drops because it's less efficient both from a productivity point of view and a IT management point of view.  It's also a hell of a lot less secure and security breeches always hit the bottom line hard.

And let's not laud Apple too much there.  Yes, it's a consumer market - for people with way too much money and way too few brains.  Apple made a name through marketing, and their stocks have been tanking over the last several months.  They tapped into that nicely, charging about 70% more for the same thing someone could get that wasn't as "hip and cool".   They made a lot of money, but their market penetration in PC's is still single-digit and consumer markets are a hell of a lot bigger than that.  Tablets are toys that no sane business is going to use except in front of customers to sell the damn things.

And their sales have proven it with iPad sales declining in the face of rising non-iPad devices.

I've heard a lot about BYOD - mostly from pundits who are heavily into technology for the sake of technology.  But productivity and profit drive the bottom line.  Any short-term gains in profit from not replacing a desktop and letting some slacker bring in a tablet will be far more offset by the loss of productivity using a tablet in a business setting will create.  Only complete idiots would implement a BYOD policy and most businesses aren't run by COMPLETE idiots.  They'll hold off upgrades and replacements of current systems until a more suitable OS comes along than Win 8.

Exactly as what's happening now.  If there isn't a moderately significant bump in PC sales after the release of Blue (Win 8.1), only then will I eat my words.  But I expect the author of THIS article to be picking out the condiment of his choice when it comes time to eat words.


PaulDirks
PaulDirks

We still don’t have devices that truly know anything about us. 

Every time my computer displays a pop-up, offers to format an SD card, or otherwise does anything that I didn't specifically instruct it to, it is violating my rights to control my own machinery. The only thing a device should 'know' about it's owner is what instructions it's being given. Mine may be a minority opinion, but my whole attitude towards innovation is 'just because something can be done, doesn't make it a good idea."

kralso
kralso

HTML5 and CSS3 will dramatically change the way people interact with web pages. There will be no need for Flash because of these technologies.  It will difficult to distinguish a smartphone from a tablet in the future because they will be unified. Asian manufacturers are offering their own brand name smartphones and tablets and there will be an increased number of them in the US market in the future. http://t.co/ZTYzNWMTAq

MrBenGhazi
MrBenGhazi

Smartphones are not in the early adopter phase anymore. A huge segment of the cell phone market - predominantly comprised of the young demographic - have switched over and will never go back.

The author is correct in asserting that the future of mobile computing technology is in software innovation. The companies that succeed will be the ones that offer products that further integrate our digital lives with our physical lives. We have seen this pattern since the adoption of the cassette player. The iPod, smartphone, and tablet adoptions have all been indicative of this trend. Companies like Apple with their Siri product and Google with Google Glasses are in prime position to drive the market. Companies like Microsoft and Dell are struggling to catch up.

IntangibleGuy
IntangibleGuy

@MikeBruno You are belonging to a shrinking minority. Die-hard gamers and Photoshop addicts are a tiny group of PC users in no way relevant for the business at large.

Even laptops will slowly diminish because apps written for tablets can do most of the work. Who really "needs" a fully featured MS Office when all you do is filling a tax form and doing some minor spreadsheet work.