Business Hardware Part 1: Desktop PCs

6 Jul 2004

They mightn’t be shouting it from the rooftops but PC manufacturers have a dark secret – the desktop PC has become a commodity, a mass-produced unspecialised product that is primarily bought on the basis of price.

What’s worse is this state of affairs is largely one of their own making. Since the mid nineties, the basic architecture of the Windows/Intel PC has changed little, and bar the addition of multimedia extras it could be said to broadly be the same as the IBM-PC introduced in 1981 which established the industry standard.

The double digit sales of the nineties were supported by Moore’s Law – formulated by Intel co-founder George Moore – which predicted that chip processing power would double every 18 months. This basically means that you get double the power of your existing PC every 18 months as newer chips appear. That was good news when new power hungry PCs were appearing every few months and the jump from a 200MHz processor to a 400MHz one delivered significant productivity gains. Yet off the record the manufacturers say it’s a segment that’s badly in need of a new killer application that will encourage users to upgrade their systems.

But even software developers are finding it hard to use up all that processing power now that microprocessors are measured in Gigahertz. A gigabyte of RAM is not unusual these days and hard drives are large enough for even the most prodigious hoarders of data. Is it any wonder Intel is changing its chip naming convention and is removing all reference to speed in the processor names?

As sales director of indigenous hardware manufacturer Iqon Technologies Ciaran O’Donoghue frankly admits: “in most cases the hardware is over specified for the job it is trying to do.”

The upshot is that sales of desktops have been in the doldrums for the last few years. According to figures from market watcher IDC, sales of desktops in the Irish market grew by just seven per cent last year; a tiny amount for an industry built on double digit growth while sales of notebooks grew a whopping 34.pc.

Manufacturers had hoped desktop sales would start to pick up over the last year as large businesses that had replaced their PCs in advance of the year 2000 would start to replace these machines. According to Kevin Nolan, Category Manager for Hewlett-Packard’s (HP) Personal Systems Group, this hasn’t transpired. “People are replacing their desktops with notebooks instead, especially in the large corporates. The business is there but it is directed much more towards mobility products which are being used as primary desktop PCs.”

Nolan’s comments are backed up by the latest data for Irish PC sales. In the first quarter of 2004, notebook sales were up a massive 30pc over the corresponding period in 2003, while desktop sales shrank by 2.3pc, based on revenues generated by manufacturers.

From a pure technology perspective it’s easy to see why consumers and businesses are favouring portable PCs over their deskbound siblings. Innovations such as Intel’s Centrino mobile technology, which offers increased battery life and wireless networking, are not being matched in the desktop space where the last innovation of note was the introduction of Windows XP. The manufacturers may be trumpeting advances in bus speeds and system memory; cheaper high capacity hard drives and management and support tools but buyers don’t seem to be biting.

Yet anyone who starts predicting the death of the desktop PC would be jumping the gun. O’Donoghue points out that when you examine the figures closely the unit sales of PCs in the local market are growing healthily, even if revenues are declining. “The problem is that the average selling prices of PCs are falling so rapidly you have to push a lot more units into the market just to stand still.”

Despite recent aggressive price cuts from market leaders HP and Dell, Adrian Horne, ThinkVantage Technologies Consultant with IBM, says that businesses are still holding onto their PCs for longer. “The life-cycle of a typical business PC is still beyond the three year life cycle that analysts recommend. We’re not back to the bulk buying we saw before 2000.” Horne referred to analyst indications that there are encouraging signs of recovery and the market should be back to double digit growth this year.

In the meantime there are new technologies emerging which, although they mightn’t have IT managers rushing to get budget approval, nevertheless add incremental new functionality to the overall package. Greg Tierney, product marketing manager with Dell, cites the introduction of PCI Express (a new form of high bandwidth interconnect for a PC’s innards) and high capacity serial ATA hard drives as two important new technologies that are being introduced for business PCs.

But Tierney points out that for a company like Dell it adopts a very different strategy for the introduction of new technologies to its consumer and business lines. New technologies are quickly introduced to the Dimension line of consumer PCs, while corporate buyers of the Optiplex line of PCs are more concerned with stability and consistency. “They want to know they can deploy a standard image to their PCs, so we don’t make technology changes until they are relevant,” says Tierney.

Other new technologies that are proving popular are PC flat screens which not only look good and take up less desk space but are also less tiring on the eyes as the screen is not constantly being refreshed. But other than that, despite talk of new technology driving sales, solid examples are hard to come by. And until that changes desktop sales look likely to be continually trumped by those of notebooks.

By John Collins

Next time: printing and imaging issues