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Why The U.S. PC Market is On The Decline
conq writes "BusinessWeek reports on the recent woes of Apple and Dell. One possible reason according to the article: 'imminent price wars'." From the article: "'There's a softness in the market that's building,' says Richard Shim, a senior research analyst at IDC. In the past two weeks, IDC cut its 2006 forecast for U.S. PC growth to 5.7%, from 6.8%. 'In '04 and '05 there was tremendous growth. In a market that's as mature as this industry is, there's no way you can maintain those levels.'"
My fastest desktop at home, a P4 2.6 GHz w/ 1GB RAM, was built 3 years ago and still works just fine. Why upgrade?
Nostalgia isn't what it used to be.
"I hate to advocate drugs, alcohol, violence or insanity but they've always worked for me" - HST
So Dell and Apple grow 1% slower than previously expected and suddenly the entire market is on the 'decline'? Let's put it back in perspective.
When they first started selling TVs, nobody had one, obviously. But very few could afford them, so they didn't sell many. Then they got cheaper, and more sold. And cheaper, and more, etc etc etc. Until everyone owned a TV. Oh no, people aren't buying as many TVs now. It's not because they are any less popular, or something replaced them. They are simply so common that there isn't a market for people that don't have one. There is only a market for replacements.
This is the market PCs are enterring. My mother and father each have a PC. They can barely use them, but find them essential. My younger sister has a laptop and a PC. I have a PC, a server-pc, a pc that doesn't even get turned on, an old 733mhz pc that's in the closet, a 500mhz laptop and a 133mhz laptop. Everyone I know has a PC. Or 6.
PCs are still in a growing market, as the 5.7% figure in the summary states. It simply isn't growing as fast. The real slump will hit when everyone has all the PCs they 'need' and are only buying replacements.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
3+ gal gasoline and higher cost of borrowing are beginning to weigh the US consumer. Things are going to get much worse.
It's a miracle the market is growing as it is.. For a while now, your 2 or 3 year old computer has been "good enough" for most people. Why would you upgrade if you don't really do new stuff with it? As I see it, reasons for buying a new computer are;
- you don't have one yet (which is getting more and more unlikely)
- you're doing new stuff with it, such as getting broadband or editing homevideos
- you're a nerd/geek/gamer
- it's broken in some fashion.
In other words; a replacement market.
Now, the OEMs know this. This is why Dell is getting into sidelines like PDAs, digital cameras, TV screens etc.
And, in a certain way, they've always known this. OEMs have always sold PCs that were essentially underspecced when it came to the cheapest upgrade; RAM. A 1GB P3 will simply do for most people. I bet they're glad they shipped them with 256MB (or "double your ram limited time only offer" 512MB).
A cynical mind might think that this is part of the reason why OEMs include so much "handy" bundled software.. Fill up that memory good, let the apps update (get bigger) once in a while, so the system gets cruftier and cruftier. Have the anti-virus software disable after a month or two to lower defenses..
There actually are (I'm afraid to say: a lot) of people who buy a new computer simply because the old one got so bogged down with spyware. Dell should have a checkbox on their order pages "[x] my old computer is teh broken with virusses" so they can pick up the old computer as they bring the new one, and ship the old one to Africa, where a simple linux install makes it usable for at least another 3 years..
SCO employee? Check out the bounty
Joe Sixpack isn't holding off buying a new box because of Vista. Only nerds do that. Joe is content with what he's got.
If all you need your PC for is Microsoft word and powerpoint from time to time, and you already have something 900mhz or above, why on earth do you need another PC? It's hard to think in terms of an ordinary user, but there are typicaly only a few reasons to upgrade.
1. What you need to do takes too long
2. It broke and repair is to damn costly
3. You need more "memory" (where memory = either ram or HD), need a burner, or need that spiffy software application which comes with the new PC.
4. There is a super duper deal with losts of extras you don't need.
From a goodwill standpoint, while there are still a number of PCs in the pentium I class, I'm starting to see quite a few AMD durons with gigs of HD space, a modest compliment of memory, and still operational save the spyware infections. I have to say the market is pretty saturated with PCs, more PCs than you can shake a stick at, so many that dell is apparently offering their Dimension 1100 for $50 plus tax and a modest fee for shipping, or free "designated carrier".
There is no sanctuary. There is no sanctuary. SHUT UP! There is no shut up. There is no shut up.
Exactly! The only real reason to upgrade these days is if you are a gamer...and unless you are into the high paced first person shooter games (not MMORPG) you will not upgrade at every new game release.
... we still were using the same Comcast high speed cable modem - it's not like it would suddenly "speed up".
That reminds me of my son's reaction when we brought home his new Mac mini with LCD flatscreen - the last computer I got him was an iMac, 8 years ago. We plug it in, connect it, and go on the Net.
His first reaction to the better graphics, faster CPU is "the Internet's not faster".
Duh
Hence, why bother upgrading? The Net won't go any faster. Sure, maybe you'll get cooler graphics, or better resolution, but in the end if you spend 90 percent of your time online, you won't see much difference.
So a "slump" in growth (aka growth that in the 70s would have been "fantastic") is just the fact that we as a nation haven't moved to Gigapop Internet like most of the real industrialized nations have.
-- Tigger warning: This post may contain tiggers! --
I couldn't figure out how a 5.7% growth is a "decline" until my wife walked in and told me how much money she saved me at the store because she bought all this stuff 50% off that we didn't need.