Every year Dataquest, now owned by the GartnerGroup, hosts their 'Dataquest Predicts' Conference to share statistics and to give an outlook for numerous segments of the electronics industry. The 2000 Conference was held at the Santa Clara Convention Center in Santa Clara, California. Among other things the industry analysts discussed whether the PC will survive or be replaced by an Internet appliance, or what is happening in the consumer electronics space.
For about two years now we have been hearing rumors about the nearing death of the PC industry. It will be replaced by Internet appliances or by a little box that plugs into our TV and then Internet-enables the whole entertainment center. Well, the good news is the number of shipped PCs is still growing, from about 114 million in 2000 to 201 million in 2003, and that the PC remains the No. 1 device for accessing the Internet. However, the bad news for the industry is that PC prices continue to drop and with them revenues and profits for the computer manufacturers. The winner is of course the consumer, for a change. Finally, we might enter a period when computer manufacturers must distinguish themselves from the competition not only with good products but also by offering better customer service. This almost sounds too good to be true, doesn't it?
Show Me The Money
Fact is that the PC industry faces the challenge of selling more PCs to counter the dwindling profit margins. According to Dataquest six out of every 10 desktop PCs - including monitor - will cost less than $1200 by Q4 of 2001. One solution is to speed up the replacement cycle. Today, most consumers replace their old PC about every 3 years, mainly because the technology is out of date and a new processor generation has come along. But this trend should actually slow down even more, since the average user owning a computer based on a Pentium-II, -III, K6 or K7 chip hardly needs more computing power to run common word-processing or financial software, spreadsheets and to access the Internet. Only the relatively small group of game fanatics is willing to upgrade their PC for the best performance money can buy.
So what could entice consumer to replace their old PC? Dataquest thinks that more stylish models could be the answer: smaller form factors, more appealing designs in different colors. Especially if the prices continue to drop, consumers might consider buying a new computer sooner if it looks 'cool'. Apple's iMac already proved that color does matter. According to Dataquest, style is the second criterion after the price/performance ratio when buying a PC. This is actually a no-brainer - we have always cared about the looks of the products we buy, whether it is a car, a bicycle, a stereo system or a telephone. If two things cost the same, but one comes in a more stylish package, most people would go for style. It is a way to express our individuality.
Another approach for selling more PCs is to leverage other markets. In the US this mainly means low-income households and small businesses. Both have been neglected by the big PC manufacturers so far, because they have different needs than the large corporate environments - and of course will not spend as much. Only now are retailers like Gateway and Dell beginning to figure this one out and started to offer tailored solutions for these markets.
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