PC vendors must overhaul business or exit market
PC makers will need to make tough choices between radically overhauling their business models to stay competitive in a shrinking market or leaving the market altogether by 2020, according to Gartner Research VP Tracy Tsai.
“The PC business model as we have traditionally known it is broken. The top five mobile PC vendors have gained 11% market share over the past five years — from 65% in 2011 to 76% in the first half of 2016 — but this has come at the expense of profitable revenue,” Tsai said.
“While this does not mean that the PC market is finished, the installed base of PCs will continue to decline over the next five years, with a continuing erosion of PC vendors’ revenue and profit.”
Factors contributing to the contraction of the market include longer upgrade cycles, as well as the ongoing shift towards cloud computing — which is making PC performance less important.
Gartner said PC vendors seeking to stay afloat in the future should consider one of four alternative strategies. The first involves keeping the current product and business model, and selling high volumes to generate sufficient cashflow to cover the cost of business. In a declining market, this would make consolidation of vendors inevitable.
Alternatively, vendors could keep the current products but experiment with new business and revenue models — such as PC as a service — or keep the current business model but introduce new products, such as by adding sensing, speech, emotion or touch to PCs.
The most aggressive approach would be adopting both new products and a new business model, Gartner said. PC vendors could establish a new business unit to explore technology that would allow them to create completely new product lines.
Examples of new products could include personal assistant robots combining the functions of a chat bot and a voice-activated personal assistant. Revenue could be generated from developers and third-party content and service providers.
“Business leaders of PC vendors need to think about business outcomes based on the four alternatives discussed here,” Tsai said.
“Some vendors may need a whole new business and product strategy to turn their situation around. PC vendors need to identify their core competencies, evaluate their internal resources and adopt one or more alternative business and product innovation models to stay in or leave the PC business.”
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