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Can Dell and HP Keep Pace With An Asia-Centric PC World?
MojoKid writes "If you've paid any attention to the PC industry in the past few years, you're aware that things aren't as rosy as they used to be. After decades of annual growth, major manufacturers like HP and Dell have both either floated the idea of exiting the consumer space (HP) or gone private (Dell). Contrast that with steady growth at companies like Asus and Lenovo, and some analysts think the entire PC industry could move to Asia in the next few years. The ironic part of the observation is that in many ways, this has already happened. Asia-Pacific manufacturers are more focused on the consumer electronics market and better able to cope with low margins thanks to rapid adoption and huge potential customer bases. Apple has proven that high margin hardware can be extremely profitable, but none of the PC OEMs have been willing to risk the R&D costs or carry new products for a significant period of time while they adapt designs and improve market share."
Just offer options that customers want! For instance don't only offer Windows's based notebooks, offer Linux as an option, imporve tech support so people can actually get help. Offer GREAT hardware, not just the cheap crap.
"You can't get good chili in Taiwan."
No most people in the US who are not enthusiasts will buy a name brand OEM PC from a Best Buy or Staples or maybe even Walmart. People who build their own rigs or even are interested in custom ones are enthusiasts.
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The summary seems oblivious to the ODM/OEM relationships that have existed for decades. Dell and HP don't *make* anything, they just rebrand things made by Arima, Compal, Uniwill, Quanta, Clevo, etc. Taiwan designs and manufactures everything, Dell and HP simply slap some stickers on them and retail them with the addition of whatever service/support package.
The whole market has belonged to Asia for a generation, and it's not going to change.
I support the Slashcott and will not be reading or commenting from 2/10/14 to 2/17/14. Beta is steaming pile of dog shit
The components have been made in the East for a long time now, particularly Taiwan was famous long before China. For those that missed the memo, the recent HDD crisis was due to floodings in Thailand which is in SE Asia. All sorts of optics and related electronics is heavily centered around Japanese companies like Canon, Nikon and Sony. The OEMs have mostly just been assembling systems from standard parts which is a commodity service.
Live today, because you never know what tomorrow brings
So you're ditching the Windows frying pan and jumping into the tablet volcano? Just load a Linux distro. Tablets can't get real work done without add-on peripherals anyway.
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They certainly don't - for now.
But...
- the total cost of production for automated factories is decreasing rapidly (and will continue to decrease)
- the current cost of borrowing money to invest in capital is relatively low
- the current economic incentives to relocate manufacturing back to western nations is 'somewhat' significant
- the cost of Chinese labor is increasing (and will continue to increase)
The long-term outlook is good for robotic production. I don't know exactly how close we are to the break-even point, but I suspect it will be soon (for variable definitions of soon, of course).
Up until 2011 Microsoft's strategy was to drive up PC marketshare but controlling the low end. Microsoft was very worried about initiatives like Sun/Oracle's Java Desktop to use thiner client distributed software and lower end machines. Their strategy was to push the price of PCs down low enough so that there weren't meaningful cost saving is just using server based architectures and local program execution was the norm. This is the same reason they focused so heavily on getting control of web technologies and tying them to Internet Explorer / Windows.
With the success of open Web Standards the move towards server based services is happening. This has required a strategy change. Windows 8 systems to work well require more expensive hardware. Microsoft is reintroducing margin back into the business and driving the cost of hardware up. They are willing now to sacrifice the low end so that the total experience on rich clients is much much better than on thinner architectures. Dell and HP sell mainly to corporations. Corporations are still years away from migrating to real Windows 8 hardware as a norm. I think this is short sighted on Dell/HP's part because in 5 years there is likely to be margin in the business. They've now gone through most of the lean years and just as the market is going to go back to being high profit they are exiting.
Once other companies get the experience in making powerful multi paradigm machines it will be hard for these companies to reenter the market. That being said I think Dell isn't existing the PC market, rather I think they going private so they can undergo a restructuring without having to provide regular public scrutiny.
Asia-Pacific manufacturers are more focused on the consumer electronics market and better able to cope with low margins thanks to rapid adoption and huge potential customer bases.
How about:
(1) Less greed,
(2) Being nimble
(3) Proper labor relations and management?
(4) The sense that, "We can beat them at their game?"
(5) Proud citizenry - Those Asians usually patronize Asian
made goods. You ask a Japanese what the best car is.
They'll tell you it's a Toyota! They then buy that!
Youre going to get modded down, but this is far more common than most Americans realize. Many of my European friends think the same; they refuse to buy american products until such time as the USA starts acting as a responsible member of the world community and stops with the wars and forcing their IP laws onto other countries. At the moment though they cannot ethically buy USA made products (not that there are many of those left....)
I'll give you 2 (nimble), and 4+5 (local pride), but how does (e.g.) Foxconn exemplify less greed and proper labor relations and management? I guess for certain values of "proper labor relations" you could be right, but probably not what most people think of!
Use robot shells with Chinese laborers inside?
Profit!
Karnal
Jesus Christ you must have a mountain of debt to still be in business.
You seem to be under the assumption that hurting the US economy will be translated into less war-mongering. You don't understand the US.
What will probably happen is:
US economy falters. Gas prices soar. Product prices soar.
Right-wing conservative hawks are elected in response. Half the country gets hopped up on jingoism, (which wouldn't take much).
Far more US military action world-wide.
You are much better off keeping the US fat and happy and waiting for more and more social-leaning leaders to be elected.
Start building them here in the USA.
If labor costs are too high, use robots.
No, market them here in the USA. Actually, that's all US companies really seem to do with any product (cars, etc.)
Asia /always/ had a rich and broad ecosystem of the latest / greatest new technology products when it came to computers, personal electronics, cars, etc. All US companies do is pick a few good ones and dumb them down into a handful of brands that can be effectively mass-marketed to the US. As an aside, it's remarkable how little branding means in Asia... products are mostly sold on specs alone. Even Nintendo game prices would fluctuate based on the MB of ROM in the cartridge and the market demand/popularity over time, and not based on how much Nintendo spent on the marketing campaign for the characters and agreed to fix prices with distributors over a long period of time.
So the shift really is that the asian companies are getting better at simplifying their product lines to market directly to the bulk of americans.
As for robotic assembly, maybe that would work for building widgets that never change, but technology products change too fast too afford to keep your robotic workforce up-to-date.
I'm afraid the only viable financial future in the US is in the collecting on and enforcing of intellectual property. Kinda like how Old Imperial Europe collected its money from colonial and trade royalties. But we kinda know how that played out eventually.
PC roles that other devices can't currently do:
Can other devices do these things - yes if COST or other limiting factors are not an issue for you (Angry Birds on tablets, or console versions of various FPS titles are not at all comparable to a complex 3D simulation on a dedicated general purpose PC in any way shape or form). For those of us without a silver spoon in his/her mouth - that is not an option.
For most of us - buying a server grade system at $5000+ to do hobby coding isn't worth it - nor is springing for an equivalent cloud based VM to do the same. If it is over $1000 USD over the course of several years, it is too much.
Lumping desktop/server PCs in with laptops is not useful - laptops are not meant to run 24/7 and have automation for doing infrastructure things - like nightly builds, automatic updates for repositories, or other automation (spidering etc). Laptops are made to be mobile, and don't make good servers due to constraints placed on energy consumption and processing power. As for other devices - due to DMCA regulations - there are no legal means of turning them into general purpose devices any longer. That only leaves the PC as the bastion of general purpose computing.
Too many people don't realize what they would be giving up if cheap PCs are not available - they will be limiting the options of small developers (who historically generate more creative output - and the next big thing [e.g. Linux wouldn't exist if Linus didn't have access to a general purpose PC]) while strengthening the strangle hold large companies have over software development (app stores barriers to entry).
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
I think you're lumping everyone into the same boat. I love Linux - but not really happy with the way most of the UIs on top of it are going. I also am not a fan of Windows. I also have Macs - and OSX's UI is close - but I'm not really happy about the iron-fist Apple has over it (e.g. I would prefer to hover my mouse pointer and have the window become active - but not bring to front - like I've done with every Unix/Linux system I've ever used).
I've finally come to the conclusion that the only solution for me is to build my own distribution that has all the best parts that I do like - and some things that I want that no distro has today.
I'm not broken - I'm just hard to satisfy. Of course, that is what leads to innovation. I guess the difference is, don't just sit there and complain about it - do something about it!
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
So when you buy a Thinkpad from Lenovo, 20% of which is owned by the People's Liberation Army, or a smartphone from Huawei, whose CEO used to run Chinese Intelligence, what do you think your money is supporting exactly?
Not really. The case/layout is some of the least of the technical parts of a computer. All the components inside are the higher tech bits and you find they come from all over. The big daddy, the CPU, is usually from the US. Most of Intel's fabs are in the US, and their design centres are in the US and Israel. Same deal with the motherboard chipset, though their Ireland fab does quite a few of those. Assembly largely depends on where you are, they have packaging facilities in the US, Costa Rica, Vietnam, Malaysia, and China.
The graphics card, if there's a separate one, was fabbed in Taiwan by TSMC, at least for now (both AMD and nVidia re displeased with them) but designed in either the US or Canada since that's where nVidia and AMD respectively have their design centers. All development is done there.
For memory it really runs the gamut. Depending on the company the chips can get fabbed in the US, EU, or Asia and final assembly of the sticks is often done elsewhere. Some places, like Micron, like their own modules, others buy from other companies (Kingston favours Hyynix these days).
Storage it varies. HDDs are all Asia all the time. Final assembly is pretty much Malaysia or China. Components come from various places, motors notably from just one firm in Thailand. For SSDs it again depends on the company. Samsung is all internal and does their own flash, CPU (though it is based on an ARM core) and construction. They do final assembly in Korea, the flash itself is sometimes fabbed in Korea though a lot of it is fabbed in Texas (Samsung has a big plant there). Intel buys their controllers from Sandforce, a US company, but they are fabless so Intel fabs the ones they use. Their flash they make themselves mostly in their Utah but also Singapore (the facilities are co-owned Intel and Micron).
For discrete components, like caps and so on, then Japan is usually the big supplier. It varies some, China is used as well, but Japan is still real, real big in the discrete components game.
Power supplies? That's all China all the time. There are only a couple companies that make them, and they do the design work too. They put out a PSU design, companies then alter the specs to their liking (upgrading components for better reliability or whatnot) and then they are built to order.
LCDs are mostly Korea in terms of panels, though China is in that market too, and nearly all China for final assembly.
Computers are really quite an international production. They use parts form all over, and designs from all over. Remember that the place that produces a part isn't necessarily the place that designed it. This is not only true for fabless companies like nVidia, but even for companies like Intel. They don't do design, fab, packaging, and all that in one facility, they are all over the place.
To say the market belongs to Asia is rather silly. It belongs to the world.
Oh and with regards to Dell? Have a look at the systems you get in the US. Mexico and Brazil are the usual sources for final assembly, not Asia.
"..things aren't as rosy as they used to be. ... the entire PC industry could move to Asia in the next few years."
So a shitload of people who live in places called "third world" only a generation ago are now making their living doing something better than stoop labor in a paddy field, and this is "not as rosy as [it] used to be"?
Come up with a new and better technology if you don't like being undercut by the up-and-comers.