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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
The title of this article is "Why The U.S. PC Market is On The Decline", but right in the summary it says that IDC expects the PC market to grow 5.7%!! That's not decline.
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Gee Dell and Apple will be announcing their projected numbers in a few days. Well, I guess we'd all better listen to the "analysts" whose accuracy rate is about the same as flipping a coin. Speculation and stock fluctuations before these announcements is pretty much par for the course as people make guesses in the hopes of a stock market win. The rest of us, however, are a lot more concerned about Q1 and Q2 numbers that actaully, you know are how much they are selling.
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.
In the past, the PC market would advance at an alarming rate. If you bought a PC in 1995, lets say a 486, then three years later it would make total sense to upgrade to the newer P2 processors that were out at the time because the performance leap was huge and commercial software was taking advantage of the new speed.
These days, i find the average home PC for Average Joe Family need no more than a >2Ghz CPU, = 1GB RAM, ~80GB, GeForce 6200 or the likes. This computer would handle Word Processing, Internet Browsing, email and even simple multimedia (digital photos, whatnot). I think it's fair to estimate this PC was a decent 'new' computer back in 2003.
What has changed for the home user? Windows XP is still the operating system in use. IE hasn't changed much, nor has Office. With that in mind, is it entirely necessary for this family to purchase a new PC? Probably not.
It boils down to the only thing driving new PC sales is new games, honestly.. and since many home PC users aren't into the latest games at the HIGHEST FPS possible, then of course PC sales are going to sag.
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.
I think it's a combination of 'home entertainment' being done better on the games consoles (surely XBox360 must be a growth market), and 'corporate' users figuring that a long-life PC (with parts replacement) is more environmentally friendly, does not fill up and pollute landfill space so quickly. Should a corporate PC now have a lifespan of 10 years rather than 3 years ? If Microsoft won't supply a software maintenance service at competitive prices, that leaves doors open for the likes of RedHat and Novell who certainly will.
From what I can see of Microsoft Windows Vista, it's aimed at the games market.
Corporate/professional use just doesn't get anything more out of Vista than XP; it's not as if a new version of Microsoft Word will help you think and express yourself more clearly than the old one does.
My computer was built in 2002, and for my home still serves as a fileserver for 4 computers and a test web and database server. The "kiosk" laptop we use to surf the web and play streaming music is a Pentium III. No problemos here with linuxes (statiticians, please add 3 to linux column and subtract same from Operating Systems "in use").
Vista is a great name for MS's next OS: Chance I would use it is WAY off in the distance.
-KB
Apple has yet to release an actual "Desktop" x86 machine, so hold your conclusion until then. So far, the x86 line is filled with competitively-priced 'specialty' items, like the iMac, Mac Mini, and Macbook (+pro).
A sentence you'll never see on an Internet discussion board: "You know what? You're right."
I guess it depends on how you define "desktop". The iMac is more of a "desktop" machine, in the literal sense of the word, than is the Power Mac - the Power Mac in my office isn't on the top of my desk, it's underneath the desk. You could put a Power Mac tower on your desk, but if you put an iMac on the floor, you're not going to be able to use it conveniently from your desk (unless you ssh into it from a machine on your desk).
The iMac is the consumer "desktop" (as opposed to "laptop") model in the Apple line (although the Mac Mini could also be used with a monitor as a desktop); the Mac Pro or whatever it'll be called will be the "professional" desktop.
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! --
G4 Sawtooth 450mhz updated to: 2.0ghz Powerlogix with, 2.0gb PC 133 ram, Radeon 9800 Pro 256mb, 80+120gb WD HDs running on ATA 66, + SATA 3.0 4 channel card running a 400gb Samsung + 16x Pioneer DVD+-RW. Tiger 10.4.7 / 19in Envision LCD.
This machine is 6 years old, and runs Quake 4, Doom 3, and Halo like a dream. I don't see any reason to upgrade to a G5 when I am running 86+ scores on Xbench. I probably won't upgrade for another year at least.
Yea, it has a 100mhz bus, and fights between resources, but if im doing one or 2 things at a time, it flies.
http://www.kore-net.com/office/sawtooth.jpg
When government fears the people, there is liberty. When the people fear the government, there is tyranny. - Jefferson
Any current Intel machine will blow that so far out of the water it just isn't funny. I have a G4 933 (QS 2002) and just got a Macbook. The Macbook is portable, uses less power, and spanks my G4 around the block as far as performance goes. Even with Parallels running and 2 VM's going. Seriously a MB or Mini Mac Intel would more than be a super upgrade for you. Obviously you don't need wiz-bang if you have been living with the B&W that long. Especially since we have definitely entered the realm of most new computers being capable of way more then you will typically ever use. I even use Protools regularly, and on the Macbook it has plenty of power for most of the sessions I run. I'll never have a deskop again, except in very special circumstances (perhaps an installed machine in a studio, but that isn't necessarily considered a general purpose computer anymore).
As another note, I have no idea what you are talking about with the $30 discount for Parallels with Windows, and I have checked their site. Their typical $30 discount, however, expires Tomorrow. So if you think you might go Intel in the near future you probably should act on it.
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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.
In the Smithsonian's technology exhibit, I saw a graph that marked the rise of television in the 1950s. It was a saturation curve, rising very quickly at the 40 to 50 percent level, and then flattening and gradually moving up at, IIRC, 70 to 80 percent. I'm sure the transition to color and solid state provided some turnover, as will the hi-def transition we are in now.
The lesson though, is that PCs will saturate too. They can surf the web and play DVDs. They can do word processing, spreadsheets, and most of the other "killer apps" people need. There's no more reason for turnover, and those that want 'em got 'em. I was looking out for this, and figured the real saturation started in the late 90s. For years, the state of the art PC was "about $2000", and then suddenly, very capable machines dropped through the $1000 floor. The vendors must have seen the curve flattening, so they had to reach into that lower price market to drive sales. That was the beginning of the end.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
It's not a PC. PCs care about that stuff. Macs just work.
A firewire connection to the cable modem won't make a difference so I don't know why you keep mentioning it, any PC that has a network card for the last 10 years had at least a 10 Mbps card if not a 10/100 Mbps card which both will max out the cable modems downstream just as much as a firewire connection would. Cable ISPs just don't provide the bandwidth for a firewire connection to have ANY advantage. Firewire was great for bandwidth intensive devices before USB 2.0, but now that USB 2.0 is the norm firewire is just about pointless and I hope it disappears fast and we just have one standard port.
Switching to the Mac mini - same basic firewire, same cable modem.
No perceptible difference.
Comparing an 8 year old PC to a PC now on non CPU intensive sites will give you "No perceptible difference." as well as long as both machines aren't bogged down by spyware/adware. Trying both PC/Mac setups on CPU intensive sites will most definitely have the newer machines performing much better.
Anyway, you can keep paying extra money for your Macs and thinking they are the greatest things on Earth, I will keep spending my money on much cheaper hardware which has always been easier/cheaper to upgrade/custum build my own computer myself (I have heard Macs are getting better in this area, but I do not know for sure) and also "just work". I also don't have the pompousness that a lot of Mac owners (such as you) have which I think is much preferable.
Hey, there is only one Return and it's not of the King, it's of the Jedi.
The difference between men and women.
A man will spend $2 on a $1 item which he needs, a woman will spend $1 on a $2 item which she doesn't need.
"You can't fight in here, this is the war room!"
Everybody knows the obvious reasons (e.g., gas prices, interest rates, outsourcing), but the lurking fat girl ready to jump out of the cake and start farting up a storm is home equity borrowing.
Under Bush, you borrowed against your fast-appreciating home as fast as you could. Then you went out and bought crap.
That money's spent (though usually still owed). Unhappily for those counting on the "home ATM" to work forever, there's a glut of homes and condos nobody wants and that owners can't sell. Speculation is rife, values have ballooned beyond the reach of most buyers and new building is continuing like a bad thyroid problem: this will lead to declining values. The WSJ observed a plateauing in new equity borrowing back in March; just wait. There's more signs of the hard landing ahead today at WSJ.com, where it's argued that "the current slowdown in homes sales is more profound that many had first thought," along with mounting fears of recession.
Under mountains of debt and delusion many Americans are going to learn to live within their means, which will be reduced by the reckless choices--financial and political--made in this decade. Obviously, that means fewer new Dells and Apples among other things. Anyone looking for good prices on systems might want to wait for the foreclosure sales in McMansion land--lightly used, you know, just a little porn and Rush Limbaugh. ;-)
There are currently seven functioning computers around my house. Three Ubuntu desktops, one freessco box, one headless XP machine, a wireless XP laptop and a wireless Ubuntu laptop that absolutely rocks.
My personal desktop is a 766Mhz celeron running Ubuntu. It does everything I feel I currently need. My son is happy playing his online games on a three year old Ubuntu machine. My wife is perfectly capable of doing anything she needs towards finishing her college degree with the remaining systems.
The XP desktop would not even be here if it were not for my wife foolishly buying a Canon "3 in 1" printer that only works on windows.
Think about it. My family can do anything they decide to do with what amounts to other peoples throw away machines. Most of our closer friends have come to us when they felt that they needed new computers. If they were ready for linux, we put them on the favorite linux distro at that time (currently Ubuntu). If they were not ready for linux, we set them up with a 98lite gutted version of ME (don't laugh, its a pretty slick little system if you go the "micro" route). They are all still running along happily with no major complaints.
I've been doing my part to stop this mentality that says "we have to upgrade because Microsoft has a new system." The old argument about how hard it is to use anything other than Mac or Windows doesn't fly in my house. We swapped to Linux in 1995. I'm not an IT pro. I'm a steamfitter. Guys, its just not that hard.
Even my Macintosh nazi father-in-law is beginning to question this continual upgrade cycle.
Perhaps the rest of the community is starting to figure out that they are getting ripped off by computer and software manufacturers.
If it isn't broke, don't fix it.