Is the PC Business Crumbling? Can Vendors, Partners Revive It?

Partners Revive

Kolkata, Sept 21: The PC business is going through a critical phase. A new report from Gartner predicts that if PC vendors and their partners are to stay in this business, they need to rapidly determine what changes to make or what alternatives to adapt in today’s over-penetrated PC market.

“The PC business model as we have traditionally known it is broken,” Gartner research vice president, Tracy Tsai, said, adding that the top five mobile PC vendors have gained 11 percent market share over the past five years – from 65 percent in 2011 to 76 percent in the first half of 2016; but this has come at the expense of profitable revenue.

“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.”
According to Tsai, the traditional way of gaining shipment market share by competing on price to stimulate demand “simply won’t work” for the PC market over the next five years.

Read more: PC Adoption: How Lenovo Is Driving Relevance

Facing the new reality

Hence, Gartner advised today’s PC vendors to adjust to the new realities that are shaping consumption. “The new trend would include that PC users are extending PC lifetimes until end of life, business PC applications and storage are moving into the cloud, and are less reliant on PC performance and, crucially, that price and specification are not enough for a user to upgrade a PC – a new and better customer experience is the only true differentiation,” the report said.

Gartner’s new report also indicates that channel partners should also embrace a number of business model transitions over time, including resell to services, managed services and MSP to cloud. In this respect, 2014 CompTIA report noted that nearly two out of three IT channel companies have made a significant structural change to their business model in the past 18 months.

“For those contemplating a change, the process needs to start with an awareness that it’s time to transition, then identifying a viable new platform and defining a step-by-step approach for learning how to do something new, according to a Managing a Successful Business Transformation,” the report author mentioned.

India’s PC business drive

The Indian scenario is particularly interesting. Partha Sarathi Sengupta, AVP at AMI-Partners mentioned that PC is no longer a dying business and is likely to grow due to the “Digital India” initiative by the India Government. “PC vendors and their channel partners should focus on the addressable SMB Universe which is estimated at 4.5 million and there is considerable untapped opportunity,” he said.

A study released in June this year by AMIPartners revealed that SMBs spend on PCs (desktop, laptop and tablet) stands at $3.2 billion which is poised to grow at a CAGR of 10 percent over the next three years. Over 35 percent of this market opportunity lies beyond metro cities. Small cities like Tripur, Rajkot, Raipur and Ranchi are anticipated to display good traction.

What has phenomenally increased is the mobile workforce in India with the increased adoption of high-end smartphones and tablets and going forward many more interesting mobile technologies from wearables to robots.

As Gartner researcher Tsai suggested it is important for PC vendors could establish a new business unit to run business in a different mode and explore new technology solutions to create a completely new product line.

“This would include working with new channel partners and independent software vendors (ISVs) and partnering with startups,” Tsai advised. “The resources and revenue model might be completely different from a vendor’s existing structure.”

In conclusion, vendors may need a whole new business and product strategy to turn their situation around. They may collaborate closely with their partners, identify their core competencies, evaluate their internal resources, and focus on product innovation models to stay in or leave the PC business.

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