Only thirty years ago it would have been hard to conceive of an office without typewriters, and just as hard to imagine the famous Wintel entreaty of a computer on every desktop.
From ancient grudge break to new mutiny; these days the desks might not even have people assigned to them, let alone desktop computers.
Its all part of the huge innovation in how we work which has been wrought by smart mobile utility. And for companies who cut their cloth selling desktop computers and traditional notebooks, this is an age of uncomfortable disruption as consumers – business and individual – pivot on personal computing preferences.
The decline in the PC market is as vicious as any market disruption of the modern era and would give music and newspapers a run their money.
Beneath it all, the inevitable flourishing of innovation. Money hasn’t left the market, it’s just chasing new opportunities.
But first to the numbers.
The headlines couldn’t be worse. The core PC market in Australia is in sharp reverse. According to IDC analyst Amy Cheah, “In the second quarter this year the market declined by 21 per cent year on year.”
Worse still, Q2 is historically a very strong quarter for PC sales suggesting the overall result for the year is unlikely to be clawed back. “And there was also a sequential drop from Q1,” notes Cheah
She says several factors are at play and not simply cannibalisation of the PC market by tablets. “Consumer confidence is very soft and with the election coming up people are not buying due to the uncertainty that creates.”
The consumer market has been hit hardest, according to IDC’s figures and the SMB market is down 19 per cent year on year as the lower end of the market extends the time in between system replacements.
But even within a declining market there are nuggets of value. In the corporate market for instance, IDC says sales are flat – which is a creditable result. “It is a consistent run rate and it shows that they are still buying and there is a constant need to replace systems,” says Cheah.
For its part Gartner’s research confirms IDC’s view.
“It will take a few more years for the installed base to get to a point we will eventually reach a core number. But once we reach that point numbers will stabilize. For now though we are still at that point in the cycle where many PCs in the installed base are being replaced by tablets or even smart phones.” according to Gartner analyst Lillian Tay. “ That is the whole structural change of the PC market.”
Adios, standard operating environment
“Five years ago there were not many choices out there for buyers. PCs were basically the general purpose machine” says Tay, but all that has changed in recent years.
These days organisations are much more selective about the types of machines they give to their employees, based on their work needs.
A spokeswoman for Ingram Micro, Australia’s biggest distributor told CRN, “Mostly that choice is still being driven by the applications that end-users need and want to run.” Even though more and more applications are being “web-enabled” and adoption of cloud applications is increasing, for many that still means a desktop or laptop running Windows, she says.
Ingram’s view is that with the growth in Ultra books, power consumption, weight and “connectibility” are all important considerations influencing the choice of what to buy. And says the spokeswoman, for large corporates, total cost is obviously still important although, interestingly, less so that before. “With the drop in prices it’s perhaps less critical than it used to be.”
According to IDC’s Cheah, “It depends on the role of the user. If they are content creators then a desktop may be a better option. If they are always on the go and they need to be always connected then tablets would be more suitable.”
Gartner’s Tay says the PC has moved away from being a general purpose machine to having a specific usage. Gartner’s recommendation to vendors is that vendors have to take the time to understand the use cases across the client site. “Is it graphics for heavy editing, or storage,?”
“If the employees are desk bound and the productivity apps are based on sitting at a desk all the time the you want to be able to get the cheapest PC. If they are a heavy-duty user involved in serious content creation they may need workstation capabilities to do their job.”
But once productivity is based on their mobility that opens up a whole world of new choices for the buyers, says Tay.
“Will it be a traditional notebook or an Ultra mobile with high mobility but still with full windows based functionality. Or will a smartphone or tablet suffice.“
This is the kind of evaluation happening in companies all the time as they segment their users to figure out which device is best.
VR Rajkumar, national reseller channel manager, Intel Australia and New Zealand tells CRN , that when purchasing a new device, the biggest consideration for customers is how they’ll use it. “Do they need the full performance of a PC with multitasking capabilities? Is compatibility with existing PC applications a key factor? Will they be doing significant amounts of video or graphics processing? If so, a desktop or notebook will be most suitable.
Often, he says, the decision comes down to whether they want to be mobile, or simply what their preference is. “Do they hot desk? Telecommute? Do they visit client or customer offices on a regular basis? In that case it will be important for them to use a mobile device. If not, they may prefer a desktop PC.”
“There is definitely still a market for desktop PCs among users who prefer the experience of a large screen and detached keyboard although both of these things can be achieved by docking a notebook into a workstation. “
On the other hand tablets are more suitable for someone who wants a thin and lightweight touch device and for people who are more interested in consuming content than creating it.
Alternatively they may also choose a tablet simply because they want access to a particular application ecosystem or just want a simple user interface.
Dell’s Jeff Morris, director - end user computing APJ says that in many of the interactions Dell has with its clients they discovered that customers are not always 100 per cent sure what choices they should be making in terms of what devices their user should deploy.
The company recently put out a white paper addressing this very question. “Our recommendation is to understand your workforce and classify them into user categories. For example a worker who process orders would be a task worker versus a sales person visiting customer who would be a mobile warrior.”
Once users are classified you next have to determine the types of applications they use and the kinds of devices they interact with such as printers, web cameras and card readers. “Then you can look at how you deliver the content to the user and to what device.”
“By taking this approach instead of everyone getting the same device you can optimise how to deliver applications and provide the right device for the user to access that information from.”
Rajkumar says, “Go back five years and most large enterprises were predominantly filled with desktops, but now hot desking, telecommuting and the BYOD trend have changed that considerably.”
He argues that instead of trying to segment the market by size and prescribe suitable PCs based on that, resellers should look at the job function of the majority of people within the organisation. “With recent innovation in form factors – devices are now considerably lighter and thinner than a few years ago – as well as a huge increase in battery life, and this presents a strong argument for these businesses to upgrade. “
He also recommends that resellers aim to gain an insight into the organisational policies of their customers, and look at how these could impact purchasing decisions. “Do they hot desk? Do they have a great number of staff who work from home or a regional office? If not, they may be more inclined to purchase desktop PCs, with a focus on supporting legacy systems.”
It’s only once you’ve worked out how they are using their technology that you can offer a suitable solution Rajkumar says. “Resellers need to be prepared to be agile and offer a range of solutions to meet their needs – particularly since they may not initially know exactly what it is that they want. They should go in with strong knowledge of who they are dealing with, what interests them and what is (and is not) important to their business. “
There is a strong argument to make that many smaller organisations may not realise that old technology is in fact costing them money. “Old technology can make businesses less productive and the associated maintenance costs are often very high. You need to show them the ROI they will get from refreshing their PCs.”
Ingram’s spokeswoman adds, “The ability to manage and secure those devices is also critical for the enterprise of course.
Enterprise vs SMB
The industry leaders CRN spoke to are also seeing clear distinctions between the thinking at the high and low end of the market.
Enterprises tend to have fixed refresh cycles, says Rajkumar “Resellers need to make the most of that time and don’t have a lot of opportunity to sell outside those cycles.“
He contrasts that approach with small businesses where decisions are often more spontaneous. “There is a big opportunity for the channel with 1.6 million SMBs in Australia; with new technology constantly coming into market and with a great variety of devices available, the choice is huge.”
“The needs of small and large businesses vary considerably. Large enterprises generally have a clear brief of what they are looking to purchase – so it’s a matter of meeting that brief with a compelling, cost effective solution.”
“Resellers should be in touch with customers regularly, not just when the refresh cycle comes around. It’s important to make sure customers are aware of the technology available to them, as well as what’s coming, so they come to you when it is time to upgrade. Meanwhile, small businesses may not always know exactly what they’re looking for so be prepared to work with them to understand their needs.”
Large or small, Rajkumar says it is also important to keep on top of the refresh cycle. Older PCs are often less secure, reduce the productivity of a business and cost more to maintain.
Intel’s research indicates for instance that older laptops can cost businesses over $US1,700 more per PC in maintenance and lost productivity than new ones.
“BYOD is certainly a bigger factor in the SMB market,” according to the Ingram spokeswoman. “Large corporates seem more cautious about the variety of devices that they allow inside the corporate firewall – whereas SMB is more open.“
Of course this may also explain why security is increasingly a growth segment for SMBs. Research companies like IDC for instance predict that in the SMB space security software is likely to grow at double the rate of growth across the category as a whole.
“So we’re seeing a broader selection of devices in the SMB market that we see in the enterprise market,” the spokeswoman says.
Ingram also believes desktop virtualisation in the enterprise will provide opportunities. “Having seen ROI from server virtualisation, enterprises are looking to extend virtualisation onto the desktop too. This will be slower in the SMB segment we think. It’s a little early to say how that might affect enterprises with respect to their choice of end-user devices.”
Thank god for schoolies
One market everyone agrees is holding up strongly – and is indeed proving robust – is education.
Ahmmad Issa, national commercial manager for Synnex told CRN, “We are seeing a spike in education and government. ”Desktops are doing extremely well for us. We are doing a lot of projects in the education and government side.”
According to Kevin Yap, 4P product marketing manager at Lenovo, “We are rolling into an education buying cycle. This is when both public and private education are buying. A swag of those machines are mobile or notebook devices and there is a lot of consideration for tablet type products on that space as well.”
Indeed Yap says demand for tablets in the education market is running at two to three times that of the SME space.
“We are heavily betting that in the education space there is a greater uptake of Windows eight tablet devices relative to android and iOS. We have bolstered the range with the inclusion of out Helix product It’s a convertible where you can detach the screen as a tablet.”
Even though these are twice the price of the conventional slate tablet devices they are outselling them in education, he says.
According to Yap, only three years ago product preference in the education market was driven by the simple issue of what the IT manager or the department wanted to support – it was heavily geared towards Windows and standard devices and standard operating systems.
“The growth of BYOD has started to change that and we see that as a growing trend.”
Read on to learn about the opportunities with hybrid and ultra models
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