Hardware

PC market 'broken,' vendors must innovate or die by 2020

New information from research firm Gartner claims that businesses in the PC market must change their practices or leave by 2020, and gives four strategies for moving forward.

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Image: iStockphotos/hroe

The PC market is failing, and vendors have until 2020 to either change their approach or get out, according to research firm Gartner. The market is oversaturated and, as we know it now, is "broken," said Gartner research vice president Tracy Tsai in a report.

"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," Tsai said in the report. "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."

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The issue is that competing on price to bolster supply and demand isn't working any more, and PC vendors are going to have to adjust their strategies to deal with shipping declines. An additional problem, Tsai said in the report, is that users are dragging out the lifetimes of their PCs even longer, because new cloud products and services are less reliant on performance.

So, what differentiation will get people to buy a new PC? According to Tsai, it's "a new and better customer experience."

To further outline how PC vendors can retool their businesses to compete in the future, Gartner listed four strategies that can be used. The first strategy is to move forward in a "business as usual" approach. This approach is conservative, as it requires no big changes, but it is also high risk, as the practicing vendor could get left behind by competitors. Sales need to be better incentivized, and focused more on profitability over market share, Tsai noted in the report.

The second model is one in which the company would innovate around the business model, while offering the same product. In one example offered from Tsai, bundled PCs could be offered as-a-service, with subsidization from a content publisher.

The third and fourth models both center around new products, meaning PCs that have been changed to include new technologies such as "sensing, speech, emotion, and touch," or specified for a certain vertical, the report said. However, in the third model, vendors would move forward with a more traditional business model, while the fourth option would have them work closely with independent software vendors (ISVs) and startups, the report said.

"Some vendors may need a whole new business and product strategy to turn their situation around," Tsai wrote. "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."

The 3 big takeaways for TechRepublic readers

  1. New research from Gartner said that the PC market is broken, and that vendors need to change their course or leave by 2020.
  2. Vendors can no longer compete on price and performance alone, as the user experience has moved to the forefront of differentiation.
  3. PC vendors must evaluate both the products they are offering and their business models to determine what they should do.

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About Conner Forrest

Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.

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