Industry in 'denial' as demand for pricey PCs plunges
Today's low-cost computers are yesterday's high-enders, so why pay more?
The question most taxing the minds behind the personal computer industry right now is how to persuade punters to spend their money not merely on new notebooks and desktops, but specifically on more powerful - and thus more expensive - machines.
All the evidence suggests they are currently not doing so. More problematically, they don’t need to.
IHS iSuppli, a market watcher, this week said it had found that only six per cent of the desktop PCs that have been and are yet to be sold this year are what techies might call a “performance” machine - a computer based on the latest processor, graphics and storage technologies. For notebooks, the figure is slightly higher: 9.2 per cent.
Instead, punters are focusing their interest on what iSuppli calls the “value” and “mainstream” segments - defined, respectively, as machines cost $500 (£314) or less, and those in the $500-1000 (£314-629) band - of the desktop and laptop markets. Each accounts for more than 45 per cent of the whole.
Of course, today’s low-cost computers were yesterday’s high-end machines, and it’s in the very nature of the computer business that a given amount of computing power becomes less expensive every two years of so, such is the rigour with which chip maker Intel - by far the biggest player in personal computer component supply chain - is working to ensure its co-founder Gordon Moore’s famous ‘law’ remains true.
That Moore’s Law might one day come unstuck has always been seen as a result of the limitations of the silicon chip production technique, called lithography, Intel and other chip makers have been relying on for the past 40 years or so. While there are real physical limits to how small transistors can be etched into a silicon wafer - you can’t yet make these tiny components out of anything less than a single atom, after all - other factors may play a part first.
Pushing technology down-market means that a cheap PC today can deliver the same performance that a top-of-the-line machine provided two years ago. Some software - games and professional graphics programs, for instance - still involve crunching plenty of numbers, but by far the majority of applications ordinary folk run no longer need the lastest, fastest processors or graphics chips.
Proof of that is the fact that so many of those applications - or versions of them - are being run on tablets and even smartphones.
Chip makers can no longer look to Microsoft to solve the problem by regularly updating its operating system with technology that demands the performance only the latest processors can deliver. Window 8 steers users toward a new user interface, formerly called Metro, designed to run small, phone-style apps that can present information, or allow users to generate their own, without the need for a state-of-the-art chip under the hood.
At the same time, Apple, which pioneered the lightweight tablet market, sells more iPads and iPhones than it does its Mac computers. In its most recent quarter, it shipped 4.9 million Macs but 40.9 million iDevices, almost ten times as many.
It’s telling that when Google’s latest own-brand phone, the LG-made Nexus 4, went on sale to today, the £239 handset rapidly sold out. Not so the cheaper, £200 laptop Google also started to offer today, this one made by Acer.
Quite apart from punters buying tablets instead of laptops and desktops, they are finding their existing PCs sufficiently powerful for the tasks to which they’re being put.
For their part, computer makers are finding they need to punch out fewer machines. According to Joanne Feeney, a semiconductor analyst with Longbow Research, Q4 2012, previously hoped to be a stronger quarter than the third, will actually be much the same, her notebook maker sources say. In place of growth in the region of 5-10 per cent, the market will be flat. That doesn’t bode well for the three months combining Christmas and the US’ Thanksgiving shop-a-thon.
Q4 will set the template. Barclays Capital‘s hardware analyst, Ben Reitzes, meanwhile, believes the PC market could decline for “many years to come”. He reckons consumers are making PCs last longer, adding an extra year or two onto the machines’ working lives - enough, he calculates, to knock 50-100 million units off annual shipment totals that have reached 350 million in past few years.
“After years of denial, most PC industry players still don’t seem to realise what is happening – and don’t have contingency plans,” says Reitzes.
Worse, they may be simply sticking their collective fingers in their ears and trying to carry on as before. According to Feeney, chip makers are busily cutting the price of their products to encourage sales. That, in turn, is pushing up inventories of unsold machines, from four or five weeks’ worth of machine to six weeks’. Supply is outstripping demand.
Intel, for one, is looking to Windows 8 to revive the replacement cycle and raise demand for pricier PCs containing its more expensive chips. It’s too early to say whether this will happen, but if even the new operating system’s own developer is promoting a tablet this Christmas - its own Surface product - this may not be a season of celebration for the PC industry. ®
Any old iron?
I use three desktop computers. All of them are old IBM ones, bought from eBay for somewhere around £70 each. I've stuck thirty quids' worth of Crucial memory in them and the most important got a new HDD for £50. They are between 7 and 10 years old, I think, and they work just fine. Why would I want to upgrade?
I think PCs reached a performance plateau of "perfectly good for most people" some years back; there really is no incentive for most users to update. Different for hardcore gamers, maybe, but what proportion of the PC market are hardcore gamers? Anyone, the ones I know own FrankenPCs which have been steadily upgraded, but they haven't bought a whole new one in years.
Re: "Crash in much less time"
Perhaps you meant "Crash much less often"?
I says what I means, and I means what I says.
Older and wiser
The truth is that many of us are grizzled old timers. Building your own PC is fun the first time. That 386 with the 20Mb disk......... but after the fifth version (and the old ones all in a cupboard), the fun's gone out of it.
I'd rather play with my RasPi, hacked HP touchpad , android phone..........
The new challenge for me is how much of my technolife can I run in < 8Watts of power, rather than the surge across the grid my aging i7 PC costs me.
The huge elephant in the room as to why even gamers aren't updating their PCs regularly.
Along with Windows demanding ever more from a PC, there were the games, demanding ever more performance - whether that be screen resolutions, physics or the plethora of other details.
Unfortunately, 5 years ago, the consoles' latest incarnation came to town. At the time at least on a par with high-end PCs, however that has ceased to be true for several years now. Unfortunately, they are a huge cash generator for games makers.
Add in to that that monitors have stalled at a resolution of 1080p for the same 5 years or so and you get to the bottom of why nothing has moved on.
Games are designed and built for 5 year old hardware, to be displayed at 1080p resolutions.
Nobody is pushing for a performance increase - even the CPUs Intel is producing aren't pushing the envelope. 5 years ago the Q6600 was released, quad core @ 2.4GHz; today's equivalent the 3570K is a quad core running @ 3.4GHz. I know there are other differences, but the big one is that clock cycles in 5 years haven't advanced particularly far and raw computing power today isn't a large enough leap to warrant the expense, so why bother?
Add in to that mix that a lot of gamers have looked over the fence and gone "hang on, why am I paying out £x when I can just get a console for £x/2?" and a lot have jumped ship. Look at the games - 5 years ago games were released to support 64 players online (with Battlefield 2 unofficially supporting 128 with some, at the time, ridiculous hardware requirements), today we're lucky if they support 32 (there are exceptions).
If the big requirements for faster processors have diappeared (e.g. Windows, Games), then why is anyone surprised that there is no market for new, faster processors?
I dont know about you but....
Thats a failrly depressing set of comments!, here we a re at the worlds premiere tech website (plus lewis page's personal soapbox) and all commentards so far are so proud of using archaic kit!
I like my 8(ish) cores, and you know sometimes 16gig is just not enough - and just how the hell do you expect me to get anything done with just the two monitors. of course if it's a big model i can always use the 16 core 40gig behemoth in the corner of the office
That said i do remember many many years ago as machine specs shot up year on year wondering if the limiting factor would turn out to be technological or if at some point the majority of users would say,'you know, this one does all i really want, so why get a new one'
so i guess now i know