Sunday, February 10, 2013

Dell's Going Private: PC Era's Come to An End?!

Michael dell pic


A big surprise to many people, Dell has decided to go for privatisation after being listed as a publicly traded company for more than 25 years. The reason could be many, but the most dominant one is still the declining sales of personal computers (PC). The company wants to make a turnaround and transform itself to a corporate solution provider, following the example of IBM in the early 90s. And don't forget not so long ago, HP reported the same decline in its PC sales and expressed pessimism about the future prospect of its PC division. So question is posted to everyone, is PC industry really dying? 

Well, it depends, but not so negative. 

PC industry has somewhat stagnated due to the growing trend of smartphone and tablet markets in the recent 5 years. Many major PC manufacturers, such as HP, ASUS, Acer and Toshiba, are facing some serious contraction in PC shipments. To some extent, smartphones and tablets take up some of PC's features and make them easier to access, for example, web browsing and social networking. However, they are still far from a good substitution of PC. text processing and other productivity applications still largely rely on the use of PC. Business and corporate also prefer PC as the main solution because of its versatility. From another perspective, I would say, tablets and smartphones are more for consumption of information rather than creation of it. Things may change in the future, tablet could be getting even more powerful, but that's how I see them now. In this sense, PC industry will still be hanging around for some time and a relatively steady growth can still be expected.

In addition, I agree that PC industry has been overcrowded by too many manufacturers with very little differentiation among themselves. It has driven the industry to be competing with each other solely based on cost rather than any other innovative initiative. The profit margin is so low that any downward movement in sales and shipment will make the business suffer. Since some competitors are already considering withdrawing from the PC market (like Dell, HP, etc.), it actually helps the other PC manufacturers gain a larger market share and profit, and hopefully better positioned and designed products. 

Lastly, software, mainly the operating system of PC, or Windows, is one of the key factors consumers consider when they are replacing their old PC. Microsoft has not brought us many (good) surprises in the recent years The response Windows 8 has received so far is also underwhelming. Consumers find themselves reluctant to upgrade their consoles as there is not much progress made anyway. However, I believe that Microsoft will eventually catch up with this. In April 2014, Microsoft will stop supporting Windows XP. This will probably lead to a massive upgrade in its user end, especially corporate customers. 

I agree that the best time of PC may be gone for good but I believe it is still a valuable industry with steady demand. Again, to make it more sustainable, innovation must be the key for any manufacturer to create more value, instead of being disrupted by other products or industry. 

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