Win 8 fillip not enough for PC industry

The sluggish global PC industry will receive a boost from the launch of Windows 8 devices and clearance of Windows 7 devices, but it will still face long-term challenges from other form factors and lack of innovation.
Written by Ryan Huang, Contributor

The PC industry has been sluggish with the upcoming launch of Windows 8 impeding PC sales as consumers, especially in mature markets, hold out on spending. However, the introduction of Windows 8 PCs, and the clearance of Windows 7 devices, later this year might not propel the overall industry forward as much as players hope for.

According to Beau Skonieczny, analyst for computing practice at Technology Business Research (TBR), PC shipments were flat and global revenue down 0.7 percent year-on-year in the second quarter of 2012. World No. 2 PC maker Lenovo was one of those affected, with its PC revenue growth slowing to 23.8 percent during the three months to June in response to weak demand from mature markets, he said.

The sentiment was further highlighted in September when chip giant Intel cut its revenue outlook for the third quarter due to "weaker than expected demand in a challenging macroeconomic environment", noting that PC manufacturers were cutting inventory.

Craig Stice, senior principal analyst for compute platforms at IHS, said a positive rebound could happen in the fourth quarter of 2012 though, due to the holiday sales and introduction of Windows 8 devices.

The PC market could be further boosted as PC vendors clear their Windows 7-based devices at a lower price, particularly in emerging markets, Skonieczny added.

Not enough to boost market
Both analysts, however, noted these factors will not compensate for the overall slow year. The TBR analyst said the touchscreen Windows 8 PCs would likely be US$100 more expensive on average than normal computers, and this might be a barrier to certain consumers.

"Emerging markets would also represent a limited opportunity for Windows 8 products in the near term, particularly as vendors saturate these markets with Windows 7 PCs," he added.

Stice pointed out the PC industry is coming under increasing pressure from other device segments such as tablets, including the next-generation Amazon Kindle Fire, the new Nook from Barnes & Noble, Microsoft's Surface, and Apple's much-rumored iPad Mini

"All these new computing gadgets do end up competing for consumers' dollar, and with many of them priced  lower than ultrabooks or ultrathins currently, it creates a challenge for the PC Industry," the HIS analyst said.

As for 2013's outlook, he said it would be brighter with Windows 8 in full launch, as well as the next generation of ultrathin and ultrabook devices hitting the market.

However, Tang Pin-chen, research analyst at Canalys, was more pessimistic over the long-term outlook of the PC industry. "It's tough times for the sector; it needs new innovation as it hasn't changed that much," he said, adding that more people were buying tablets than PCs.

Tang pointed out vendors can no longer compete on hardware specifications, but may have to focus on other aspects such as design elements and product quality to win over customers. Asus is one brand which has been able to differentiate itself by working on aesthetics, he noted.

Vendor still upbeat
Despite the emergence of new form factors, PC vendors such as Lenovo remain optimistic over the long term.

"In the short term, we observe new form factors taking hold and further blurring the lines between PC and tablet. However, we are confident the traditional PC will continue to play an important role for both personal and professional computing," said Koh Kong Meng, general manager for Asean at Lenovo.

Koh added the company believed in a "PC Plus" environment, which he described as the PC remaining central to people and businesses in an ecosystem of various devices.

He said a significant source of competitive advantage for Lenovo comes from its vertical integration, with which it could leverage manufacturing capabilities over both product development and supply chain operations. For instance, the Chinese PC maker opened its first plant in the United States this month, which it believed will speed production innovation and support rapid business growth.

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