Mad Dog 21/21: Has The PC Lost Its Mojo?
Published: September 4, 2012
by Hesh Wiener
When the top two suppliers of PCs to American business customers, Hewlett-Packard and Dell, posted financial results for the second calendar quarter, shareholders wept. Their results were bad, their outlook worse. Meanwhile, iPad sales soared.
The non-iPad tablet segment, led by Amazon along with Barnes & Noble, recently joined by Microsoft and Google, just kept getting hotter. Moreover, PC makers Lenovo, Asus, and Acer seem to be on the rise, suggesting that the PC business isn't doomed after all. Maybe it's only that America's two biggest vendors are executing poorly in a tough environment.
Gartner's more recent research findings for the worldwide market and in the United States specifically provide a snapshot of current market conditions.
What seems to be wrong with the entire PC business is that client computers cost so much to support. User companies try to control support costs by various means, but only two methods seem to have promise:
- Choosing as few different configurations as possible.
- Selecting systems that provide high reliability, availability, and serviceability in the chosen configurations.
All the vendors are happy to work with customers to meet these goals. But a look at the installed base shows that the customers are not very good at controlling the total cost of owning and using client systems. However, the vendors are not without blame. On the contrary, even though they are willing to work with customers so buyer and seller can settle on only one or just a few PC models and configurations for each generation, the vendors' marketing and pricing policies suggest that vendors really favor an entirely different agenda. Business PCs (whether desktop or laptop) sold by all the major players are offered with an excessive array of options and priced in ways that seem to make the options more profitable than base machines.
Sunset in the West: The future hope of the PC business may be in the developing world, according to IDC.
In that regard, the client computer industry has grown to resemble another mature industry: automobiles. HP and Dell in some ways resemble Ford, General Motors, and Chrysler. Lenovo used to be that way, too, but for the past few years it has learned to build inexpensive but trustworthy systems for emerging economies . . . and to use its experience to improve the value it offers customers in the advanced economies. But even so, all three of the largest PC vendors as well as up-and-coming Acer and Asus (and struggling Toshiba) can't seem to overcome their addition to excessive complexity.
The strongest case for a simpler PC business is the one made by Apple and followed by all its competitors in the two other segments of the smart client market: smartphones and tablets.
But the big PC vendors haven't learned much from the neighboring markets that are causing them so much difficulty. HP has learned to build attractive all-in-one computers (with very few configuration options) for the home market, but has failed to make a near-universal PC for the business market. Such a machine might not be an all-in-one; it might be a dockable laptop. But, like a smartphone or tablet, it ought to have only one of nearly everything: one LAN card (or function), one WiFi circuit (or function), one type of peripheral interface (with only a few connectors but capable of a lot of fanout), one standard power connection, one rich type of Bluetooth, one high quality audio circuit (with a connection for an external amplifier), one microphone (or pair of mics), one video camera with respectable resolution, one built-in GPS, one type of touchscreen (and possibly in only one size for the portable piece that gets docked plus only a couple sizes for the stationary portion), one biometric security device, and so on.
If the PC vendors moved in that direction, they would stand a much better chance of addressing a serious problem that costs them and their customers a lot of grief: the deadliness of system software, particularly device drivers.
During the commercial life of a PC not only is it likely that there will be many system software updates from Microsoft (or, for Linux shops, a distro vendor, and for Apple users, Apple). In addition, with changes in operating systems, discovery of security or functional flaws, and, from time to time, changing customer requirements, PC vendors have to supply updated versions of the systems software components that optimize chipsets, manage devices, and generally keep that PC running well. All the major vendors have automated this, or tried to. HP offers its Support Assistant. Lenovo provides Thinkvantage System Update, which is the descendant of technologies first deployed by IBM. Dell offers Client System Update.
All of these programs promise a lot and often deliver it. But they also fail quite often, sometimes with very severe results. Business customers with their own support teams and well as corporate users who buy enriched client support from their PC vendors have more horror stories about poisonous downloads than one might suspect. Research companies like Vocalabs say all the big name PC vendors are awful and point out that similar complaints are legion in other fields, such as banking and mobile telephony. Vocalabs says that currently HP is the PC vendor that is making the most users swear they will go to a different vendor for their next purchase. But complaints site Consumer Affairs says Dell gets ten times as many complaints as HP or Lenovo, while pointing out that no PC supplier in its listing is widely admired. Automated support plus live support are both causes of customer dismay.
In general, the PC vendors act like all is well and that disgruntled users are the exception rather than the rule. But that's just posturing. Not that long ago, when Dell was the pre-eminent supplier of PCs to business, it suffered a lot of field failures due to defective capacitors in its motherboards. Dell's response was seriously flawed, ultimately attracting big league legal attacks, including, famously, one from the Attorney General of New York State. There's still a website commemorating Dell's unsatisfactory handling of the matter. More recently, in the wake of a spate of deadly downloads (some causing catastrophic hard drive corruption), Dell quietly deleted the links to its Client System Update from the support pages offered to registered business customers. These customers can still get driver downloads, including flawed ones, from Dell, but not as readily and not automatically. Similarly, the same users can get the Dell update utility that is no longer proudly offered by their vendor, but they have to search for it. Nevertheless, it's not that unusual for Dell's update management software to incorrectly identify client hardware features (despite accurate data available in Windows Device Manager and elsewhere) and attempt to install drivers that can foul up a PC.
Take two--tablets: The rising start of high tech market analysis, Avensys, thinks tablets and PCs are fighting for territory in the same space.
HP and Lenovo have similar problems, and it's anyone's guess which of the big name vendors trying to provide automated support has the largest friendly fire death toll. Anecdotal evidence suggests that Dell, once considered the best or least bad of the lot, may now be in the same fourth place its worldwide market share occupies (or second place if your focus is strictly on the market in the United States).
These days, when PC vendors alienate customers they aren't the only suppliers to suffer. It's one thing if an unhappy user company switches from HP to Dell or vice versa. It's quite another if that customer finds a way to move to thin clients such as iPads or Android tablets, because when that happens Microsoft loses footprint and will be unlikely to make up the loss by selling server-based apps or cloud services. And if Google or anyone else can give a tablet the hardware pep and software functionality to handle docs and spreadsheet, Microsoft could find itself in a serious crunch. That's what some of the experts are saying. For example, Finnish market analysis hotshots Asymco think a structural change in client computing is a real possibility.
These days, PC user companies are not inclined to just suck it up when their support costs balloon, their employees are hobbled by malfunctioning client machines, or vendors disappoint. If some vendor offers a better solution, not just a non-PC solution but also possibly a line of PCs that is comparable to smartphones or tablets when it comes to containing support costs, that vendor could leap ahead.
And with the way market data says things are turning, the PC business could echo the history of the auto business, with Lenovo and Acer and Asus toppling American leaders the way Toyota, Honda, and other East Asian industrial powers overcame Detroit.
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