Back in mid-2010, Apple co-founder, chief executive and tech deity Steve Jobs declared that the “post-PC” era had arrived. A look at the most recent data from Gartner and IDC shows he was right. Sales are falling for all of the top six PC makers, except Apple (which some would argue isn’t a “PC” maker, but let’s not argue semantics). Garden-variety PC resellers are on the endangered list. They can either evolve fast, or face extinction.
Both Gartner and IDC reported huge falls in PC sales last year, with IDC recording a global contraction of 10.6 percent, the biggest yearly decrease in history. Gartner’s numbers showed an 8 percent contraction. The future doesn’t look much brighter, with IDC’s latest report forecasting a PC market decline of 5.4 percent in 2016.
But is the sky really falling? The reality looks a little different. A walk through any office, school or airport lounge reveals that we are using more devices than ever. It’s just that our notion of what constitutes a personal computing device has changed. Smartphones, tablets and hybrid devices continue to increase in popularity. In fact, IDC is also predicting major growth for newer form factors. Ultra-slim notebooks are expected to grow more than 70 percent by 2020, while convertibles are expected to double by that year.
Alongside upheaval within the device category, the operating system market has been changing at the same time. It creates a different marketplace for resellers. With falling sales and shrinking margins, PC resellers are being forced to change their service models. Simply supplying hardware is no longer a viable model for resellers – it hasn’t been for some time.
The same applies to the vendors, who are fighting to slow the decline in sales and find points of differentiation. Long-time Microsoft OEM Acer is now a major supplier of Chromebook, running Google’s operating system. By delivering both Windows and ChromeOS, Acer’s general manager of product management, Gaba Cheng, gives the vendor an opportunity to distinguish itself from other manufacturers. “Otherwise, the only differences are the colours of the devices,” he says.
Services, not just hardware
Times have changed. The old practice of using operating system release cycles to drive hardware sales is no longer valid. Apple releases an annual update for free, while Microsoft and Google committed to releasing new features and fixes as they are ready.
For Microsoft, this marks a massive shift. For most of the company’s life, sales of Windows licences were its major cash cow. But with Windows 10 being offered as a free upgrade until 29 July this year, the strategy is to use Windows as a gateway to other, high-margin parts of the Microsoft portfolio, especially cloud services.
“Our rationale is very much designed to kick-start that huge ecosystem around Windows – I mean device resellers, companies involved in implementation and also consumer customers,” says Jaron Cohen, Windows product marketing manager at Microsoft. “It’s part of that goal for us to have a billion active users in the next two to three years.”
Theo Kristoris, managing director of Australian distributor and system builder Leader Systems, reckons new form factors promise future sales growth. “Even though there’s a lot of negative talk on the PC market, we still see great opportunities. We see many resellers that are focusing on PC solutions that value add are growing in the PC market.
“What are the drivers for change? New technologies like powerful and slim PCs, two-in-ones, and small form factors such as the Intel NUC are creating many opportunities for new business solutions. Also, new technologies coming soon such as Intel Realsense will allow resellers to custom design solutions for business applications,” Kristoris adds.
The customer is (usually) right
Microsoft recently conducted a survey of 300 business customers. Two-thirds of respondents said they would refresh their PC fleets in the 12 months after upgrading to Windows 10 – installing new, interesting devices with capabilities that Windows 7 couldn’t provide. Half said they’d look towards new cloud services from Microsoft and other vendors following the Windows 10 deployment.
Keeping abreast of customer upgrade plans is a key strategy for resellers. Even if customers are focusing on taking advantage of the free upgrade to Windows 10, 2017 will likely see a shift as businesses look for ways to take advantage of new features constantly being added. That will mean opportunities for selling convertibles, tablets, two-in-one systems and other new form factors.
What’s clear on the hardware side of the equation is the traditional model of 'desktops for the office, laptops for the execs' has been shaken up. The iPad heralded this change back in 2010 but it’s only recently that businesses have started to really look for opportunities to bring in different form factors and operating systems.
User-led revolution
Traditionally, corporate PC rollouts were driven by the IT department, which took a Henry Ford approach – you could have any computer you liked as long as it was a specific model. Today, change is being user-led.
“In most businesses these days, the desires of the users – even in the largest companies – are starting to influence business decisions. The old school IT guys would find the idea abhorrent but that’s the reality,” according to Crunch IT’s boss, Mark Williams. He has seen this first hand as a leading Apple reseller.
“The majority of users have adopted iOS in addition to their Macs to provide enhanced and mobile capabilities. We’re yet to see a major shift in users’ adoption of iOS instead of OS X but I forecast that will change, especially with the iPad Pro with its keyboard, screen size and power.”
Leader’s Kristoris notes the move to low-cost or free operating systems has actually helped to boost revenues. “It has helped revenue for resellers as it has opened up opportunities to sell PCs that wouldn’t have been there with higher costing. There is still strong demand for more performance PC computing and these require a full-cost licence where Microsoft and the reseller revenues benefit.”
To remain relevant here, resellers must be more open to a wider range of gear. Rather than limiting themselves to a small number of device classes, such as a standard desktop and a standard notebook, there are opportunities to build tailored solutions around specific hardware and applications. In the past, a business could count on buying a single computing device for each staff member; they now might need to provision two, three or even four devices for some users.
That might mean a desktop or two-in-one for the office, an ultralight or tablet for travelling or using in meetings and a smartphone. While the margins are tight on the hardware, smart resellers can increase their success by identifying opportunities to build bespoke solutions to meet each business unit’s specific needs, rather than a generic company-wide computer specification.
This diversification of hardware platforms and operating systems puts enormous pressure on the central IT department to keep control of what seems like a unmanageable ecosystem. This presents the channel with a services opportunity.
Glenn Irvine is the national practice manager for Google solutions at Dialog Information Technology. He sees opportunities in creating a “whole of customer experience” in the Google ecosystem. With margins on Google software licences extremely thin, Dialog believes the most viable business model is customer-, rather than product-, centric. This offers Dialog a level of platform independence – Google’s apps can be run from any device with a browser, which provides Irvine’s team with options that go beyond traditional box-moving and licence-shifting.
Managing infrastructure and the licences, rather than simply selling products, shows there are still opportunities for resellers and integrators in the PC world.
As the devices continue to move towards being a commodity, resellers that find ways to add value will float to the top. They will be able to exploit their know-how for delivering kiosk systems, digital signage and other possibilities from a single management console.
Diversification: Untapped markets for PC sellers
While much has been made of the decline in PC sales, suppliers in the Australian channel are very capable of spotting fresh opportunities, whether selling new device form factors or adding additional services.
Intel NUC
Famous as a chipmaker, in recent years Intel has expanded into PC making. The company’s NUC is a mini-PC that come in varieties from Celeron and Pentium processors up to the new Core i7. In 2015, Intel partner Coates Signco scored a landmark customer project with McDonalds, rolling out 3,500 kiosks to fast food restaurants across Australia. Coates integrated Intel NUCs with NEC commercial panels, all running the reseller’s Switchboard web-based CMS.
Pioneer Computers
This Sydney-headquartered manufacturer touts itself as Australia’s only PC maker. Now, the company wants to capitalise on the internet of things. Pioneer’s most recent expansion is the Dreamcare Dr Glucose, a non-invasive glucose measurement system that connects to the internet. China is the target market, with Pioneer general manager Jeff Li telling CRN there are 100 million people with glucose-related problems in China alone – a big opportunity for the IoT business.
Panasonic Toughbook
Multimedia Technology and Sektor will distribute the latest rugged detachable notebook, which has six usage modes and a built-in handle for carrying or hanging on a wall. The device comes with Windows 10 Pro and an option to downgrade to Windows 7. It is powered by Intel CoreTM vProTM sixth generation of processors, Intel HD Graphics 515, 8GB RAM and a 256GB SSD.
Windows Cloudbooks
Acer has already cemented its position as a leader with Google Chromebooks. But it has a bet both ways, continuing its long history as a Microsoft OEM by launching the Cloudbook, a Windows 10 thin client, into Australia. The 11-inch Acer Aspire One costs $299 and is currently exclusive to JB Hi-Fi, while the 14-inch model costs $399 and is currently exclusive to The Good Guys. Both models are powered by an Intel Celeron N3050 Dual-core processor, 2GB of DDR3L RAM and either 16GB or 32GB of storage. The Acer Cloudbook comes with a one-year subscription to Office 365.
Device charging
The plethora of devices creates a battery drain problem for organisations. Synnex is targeting school resellers with a fast-charging cabinet from Taiwanese vendor Aver. It’s a securely locked cabinet where users can plug in popular classroom devices, such as iPads, Chromebooks and Microsoft Surface hybrids. The product ranges from the smallest model, which accommodates 12 devices, up to the S40i, takes up to 40.
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