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Decemeber 1999 Volume 6 no.12


by John Boyd

The PC's mid-life crisis

There are rumblings in the industry that the almighty PC, like the other Almighty, is dead. Or at least it is dying. Absurd! Right? PC shipments continue to grow. Consumer markets are still only fractionally tapped. And third world countries, including China, are only now beginning to acquire PCs.

Yet wait, when we dig a little deeper, some worrying facts come to light. PC shipments may continue to rise, but markets in the US and some Western European countries are maturing, and concern over growth moderation has set in. Market researcher IDC, for instance, is forecasting a growth dip of around 10% in US PC shipments in 2000, compared to 1999.

What's more, while global PC shipments continue heading north, PC prices are jetting south, even to the point that some companies are actually giving the dammed things away free! The result is that many vendors are watching revenues stagnate, while others like IBM see red.

Meanwhile, critics of PCs are questioning the high total cost of ownership involved in arming every employee with one, even two, PCs. Handheld devices can now read e-mail, even get you on the Net, so they could prove to be a more practical alternative for some business users. Similarly, home users, too, suddenly have more choice. Game machines, settop boxes, and TVs now provide Internet and e-mail connectivity, as can i-mode-type cellular phones.

"The interest level in information appliances will grow as the products become more viable," says Bruce Stephen, a PC analyst with IDC. "We'll see a crossover occur between shipments of consumer PCs and information appliances by 2001 in the US. It's an inevitability." No question, then, the PC's golden image is fading to bronze. Just a couple of years back, when the PC still ruled, it not only drove the IT industry, it also shaped it, with everything else, from mainframes to chips, adapting to its every whim.

That's hardly the case today. The PC has been bumped out of the limelight by the Internet. Where the magazine stands and bookshop shelves once groaned under publications devoted to the mighty PC, today they more often praise the joys of e-shopping around the globe and the like. Why even the paper edition of Computing Japan has given way to J@pan Inc., for Pete's sake.

IDC's Stephan puts it best when he says, "The PC industry is having a mid-life crisis."

And whether or not the PC will meet early superannuation or carry on computing for a couple more decades will depend on how well leading PC vendors deal with the crisis. Fortunately, heads of PC companies are generally a paranoid bunch--unlike their haughty predecessors in the mainframe and minicomputer era. After all, it was the PC people who tossed so many of the Big Iron vendors onto the silicon scrap heap, and they have been wary of following ever since.

Far from ignoring the threat, PC vendors have acknowledged the inevitable and are already busy adapting their products to the needs of the new whip cracker. Sure, it's a "If you can't beat 'em, join 'em" strategy," but it's the strategy that will see them flourish.

Setting the example here is Dell Computer, the current No. 1 PC vendor in the US, and No. 2 worldwide, behind Compaq. Dell was the first to integrate the Internet into its operations. Not only does it run day-to-day business processes on IP (Internet Protocol) technology, but it sells up to $30 million worth of PCs on a daily bases over the Internet. That's around 40% of all its sales, with 50% targeted for next year.

Interestingly, company founder Michael Dell recently had the following to say on the rise of the Internet and its threat to the PC.

"Far from signaling the end of the PC era, as some have suggested, PCs will become an essential hub of communication productivity and entertainment," said Dell. "The rise of single-function information appliances, like the Palm Pilot, creates the need for a central system to coordinate and synchronize them. Appliances become powerful peripheral extensions to the PC. Ten years from now there will be 1.4 billion PCs installed, functioning as servers to 14 billion Internet devices."

So if the PC of 1999 is dead, then long live the PC of 2009!

John wants to know where you stand in this life or death debate. So he asks you to sit down and drop him a note at boyd@gol.com. But no death threats please.

 

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