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Vendor consolidation 'inevitable': WHO will dash for the exit first?

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If PC makers were despondent that slablets of every type continue to hog consumer spending this year, then 2014 will bring little relief - and may finally shove those teetering on the brink of the abyss over the edge.

Providing the box counters at Canalys have done their forward calculations correctly, tabs will "almost outship" all other PCs form factors "combined", to account for roughly half of all total market sales.

Even Intel had to finally admit this week that the Wintel grip which has served it and Microsoft so well over the past decades is waning, with Android and iOS coming to the fore through smartphones and tabs.

The market conversion to tabs - it is not cannibalisation as such, more that consumers are buying tabs and businesses are sweating existing PC assets longer - is even speedier than Canalys predicted back in January.

As of calendar Q3 slabs comprised 40 per cent of global PC shipments, less than half a million units behind the declining notebook sector and catching up fast. Canalys reckons 285m slabs will ship next year and 396m in 2017.

This is not to say that all slab-makers have had it their own way: Blackberry is ending its PlayBook experiment; Barnes and Nobile is moving away from its own hardware; and PC vendors struggled in the slabby space, aside from Samsung and Lenovo.

"Expect 2014 to bring a flurry of acquisitions, mergers and failures as PC hardware vendors of all sizes struggle to maintain their desktop and notebook business while attempting to capitalise on a tablet market that will see great volumes driving limited value," said Canalys.

Apple volumes may be sliding and average sales prices took a knock from the iPad Mini, but it is better at protecting margins than PC rivals - creating a fruitful ecosystem in which loyal fanbois gladly pay their fanboi tax, rather than chasing hardware market share.

PC sales - minus tabs - are forecast to shrink again on a world-wide stage this year, falling between eight to nine per cent according to Gartner.

Talking to El Chan, principal analyst Ranjit Atwal said most PC vendors were looking "vulnerable" in a market where consolidation looks "inevitable".

He said Asus and Acer were "too dependent on PCs", Dell has taken "drastic steps" by going private to alleviate the need to get out of the sector straight away and HP is still "unsure what it wants to do long term".

If the Windows 8 upgrade and ultrabook form factors do not give sales a lift this Christmas then causalities are expected, the Gartner man reiterated.

"The margins are lower, there is more competition for sales and most vendors are still in survival mode. We could see any of the [PC] companies deciding that the value in the business over the long term doesn't exist," said Atwal.

Jos Brenkel, HP senior veep for worldwide sales of printers and PCs, said he was surprised "there hasn't been more consolidation".

"I think people are scared to invest in PCs, they say is there a margin left? None of the players are strong or making money in tablets. I think we'll maybe see consolidation with people giving up the business," he told us.

The "sustainable players" in his opinion were HP, Dell, Lenovo and Apple, which he said have a broader product portfolio and a spread of different customer types.

Brenkel added that HP is still eyeing up the number one PC spot and will become more "aggressive" after his new boss Dion Weisler started to make the cost structure more "rigid and disciplined".

That PC crown seems to have lost some of its shine, though, and no longer carries the kudos it once did. ®

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