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PC Makers In Desperate Need of a Reboot
nmpost writes in with a story about how hard it is to be a successful PC company in today's world. "Hewlett-Packard Co. used to be known as a place where innovative thinkers flocked to work on great ideas that opened new frontiers in technology. These days, HP is looking behind the times. Coming off a five-year stretch of miscalculations, HP is in such desperate need of a reboot that many investors have written off its chances of a comeback. Consider this: Since Apple Inc. shifted the direction of computing with the release of the iPhone in June 2007, HP's market value has plunged by 60 percent to $35 billion. During that time, HP has spent more than $40 billion on dozens of acquisitions that have largely turned out to be duds so far. HP might have been unchallenged for the ignominious title as technology's most troubled company if not for one its biggest rivals, Dell Inc. Like HP, Dell missed the trends that have turned selling PCs into one of technology's least profitable and slowest growing niches. As a result, Dell's market value has also plummeted by 60 percent, to about $20 billion, since the iPhone's release."
The PC is dying. The most recent quarterly results confirm it, as Apple alone announced 12 M iPad tablet sales, overwhelming Dell's mere 9 M PC sales. The consumer market is especially bad as laptop prices continue to fall to record lows without stimulating sales. Intel's Ultrabook initiative has already been declared a failure. If not for third-world markets, the PC would be in complete freefall.
Meanwhile, the retail segment continues to collapse. Best Buy reports record losses while laying off hundreds of Geek Squad technicians, the lifeline of consumer PC support. Soon it may be impossible to purchase a PC from a major name brand retailer. Consumers wanting a PC will need to enter shady inner-city shops selling off-brand merchandise.
Worse, the outlook for the PC looks especially foreboding with Microsoft's poorly-received Windows 8 OS on the horizon. Leading PC game developer Gabe Newell is convinced that Windows 8 will devastate what remains of the PC industry and force major OEMs to close shop. Massive discontent about Windows 8 fomenting on the Internet will only further push consumers into the tablet market.
The situation in Enterprise is even more grim. Most large businesses have standardized on Windows XP, Internet Explorer, and applications built on obsolete frameworks such as VisualBASIC. As far as business is concerned, the PC is as mortified as a Selectric Typewriter. No major PC upgrades will likely occur ever again. Meanwhile, nearly all major corporations are experimenting with tablets and developing modern mobile applications.
Hewlett-Packard has already publicly expressed serious doubts about the future of the PC market. IBM wisely abandoned it years ago. Margins are already below zero as PCs are loss-leaders for IT outsourcing and other services. Second-tier CPU builder AMD is reportedly close to bankruptcy. In a few years, Chinese conglomerates will control all manufacture and distribution.
While the Amazing Kreskin may predict the future, most computer nerds are too myopic to grok the obvious conclusion. They blindly cling to beige turbo-buttoned clones while debating the latest window manager advancements. Soon, they too will be seen as relics, just like the seldom-used PCs pushed into dusty cubical corners, much like the dumbterms which preceded them. Ding dong, indeed the PC is already dead. The new era has begun.