PC manufacturers seem to be dropping like flies at present. Shortly after Sony confirmed it was selling its PC business and Vaio brand, LG is rumored to be planning its own exit from traditional PCs, to focus on smartphones, tablets and ‘convertible’ PCs (touchscreen Windows tablets that flip round into a laptop).
Other manufacturers are witnessing falling sales, prices and profits – with The Guardian calculating that the average profit per PC in the third quarter of 2013 fell to just £14.87 ($24.09). One manufacturer of conventional-format PCs, however, has remained almost immune to the trend: Apple …
While the prices of Macs have fallen, the decline is far less severe than that experienced by Windows PCs, with average selling prices having fallen from $1277 in Q1 2010 to $1229 in Q3 3013 – leaving Apple with ten times more profit.
And how profitable are Macs? Apple doesn’t break out the figure for Mac profitability. But Horace Dediu of the Asymco consultancy reckons there’s a good-enough rule of thumb: assume that Macs have an 18.9% profit margin, which fits well enough with its historical operating margins.
That metric gives a hardware per-PC profit which has dropped from $241 to $232 – an erosion, certainly, but a margin that Windows PC makers would kill for: it’s more than 10 times greater than their per-PC profit.
Gartner is also forecasting that Apple will continue to make market share gains against Windows PCs, reaching an 11 percent share by 2017.
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Not really surprising considering the most focus from the PC based OEMs is Touch and convertibles. which i still do not understand why people want one.
It’s actually quite simple to understand. Why have two separate devices, when one device can fufill the job of two devices.
You get to enjoy the fun of a tablet when you want to use it as one, and when you need to get serious work done, you can use it as a laptop.
It transforms itself to suite your needs, wherever you are.
The consumer Windows PC market has come to and end. Smartphones, which most people already own, can do the most often used activities consumers previously used PC’s for; email, search and social communication.
Windows will continue to have a strong foothold on enterprise, but the Windows consumer market is lost forever.
Not true. Convertible PCs are still PCs at the end of the day. Software still requires Windows and as long as people can work on software on their Windows PC, the need for PCs will live on.. Even if it’s not as popular as it once was, that doesn’t mean that it’s done.
I disagree. Android and iOS seems to get the job done for the most common user needs. I do not see anyone other than institutional or businesses users need anything beyond smartphones as their main computing device.
@RP – Yes, but only common needs. That’s there the buck ends.
This is actually pretty exciting. This means less flack for when proprietary windows laptops will start coming to market and we will see mac quality hardware from Microsoft.
The exact same problem is happening to smartphone manufacturers.
The old-fashioned way to make money is to sell your products for more than they cost to assemble. It’s about adding value.
It’s difficult to add value to a Windows PC or an Android handset, because the manufacturer down the road, can make an identical device with identical features. Because they share the same software stack.
When modern consumer electronics manufacturers outsource their software to someone else, and that someone else is sharing the software with other parties, that business is built on very fragile foundations.
>>It’s difficult to add value to a Windows PC or an Android handset<>the manufacturer down the road, can make an identical device with identical features. Because they share the same software stack.<<
That doesn't make much sense, really. Why would an OEM make an identical version of the same product. Is there any proof to support this?
It’s called the value trap.
With a software based device, the value-add is really the software.
If you outsource the software to Microsoft, that means you get Windows, and Windows is the same on all devices. To consumers, HP, Dell, Sony Vaio are identical.
So manufactures end-up competing on price rather than feature set. As a result, the average profit per device is now less than $20.
That sort of return is really not worth the bother. So we are seeing PC OEMs just packing up and going home. Sony is selling off the Vaio business for this reason.
Expect the same thing in Android handsets.
@Glyn Williams (@Carniphage)
>>So manufactures end-up competing on price rather than feature set. As a result, the average profit per device is now less than $20.<>That sort of return is really not worth the bother. So we are seeing PC OEMs just packing up and going home. Sony is selling off the Vaio business for this reason.<>Expect the same thing in Android handsets.<<
I will remember that exact comment and when I see that this is not happening like you say it will, I will remember what you said.
@Glyn Williams (@Carniphage)
>>So manufactures end-up competing on price rather than feature set. As a result, the average profit per device is now less than $20.<<
Okay.. Is there any evidence to back up your claims..
There’s only one to blame here, and it ain’t the smartphone or tablet revolution. You can place blame squarely on Microsoft with that hideous Windows 8 release. I tried repairing a Windows 8 laptop for a friend the other day and I swear as God as my witness I had to use the internet to freaking figure out how to boot to safe mode. It ain’t easy. Just trying to reboot or shutdown is freaking confusing and time consuming.
>>I tried repairing a Windows 8 laptop for a friend the other day and I swear as God as my witness I had to use the internet to freaking figure out how to boot to safe mode.<>You can place blame squarely on Microsoft with that hideous Windows 8 release<<
That is absolute bullshit, and let me explain why.
The tablet and smartphone revolution kicked off with the iPhone and iPad. I will grant Apple that much. But, soon after the iPad's release, people started coming to realization that they didn't need a full-powered desktop or laptop just to do the same things that a tablet could do in a much more portable fashion.
This trend started after the iPad's release, which I believe was sometime in 2009. Windows 8 was first released in 2012. That is about 3 years after the iPad was released. To say that Windows 8 is the culprit in this is simply wrong on many levels.
Looks like LG is following the trend that Microsoft has had the foresight to invest in. A convergence of the PC and mobile devices. With Window’s 8 Microsoft has invested in the future where mobile devices have increased in relevance but the desktop experience is still very important. By encouraging PC manufactures to create one device, like covertables and hybrids, that take the place of two, Microsoft is ahead of the trend, and is simply adapting the new singular OS, and experience expected growing pains, that will drive these adaptable devices that are becoming increasing part of our lives. The Mac is remaining stagnant as a form factor of a passing era, whereas Windows devices, are becoming the future. I don’t subscribe to evolutionary theory but as point of analogy, cromagnon, homoerectus and other early forms of man disappeared ad they were ultimately replaced by Homosapieans. The disappearance of the PC, and the establishment and rise of convertables and hybrids, is evolution,Microsoft Windows in a more advanced form not absent, but present in a more fluid and adaptable form.
so I wouldn’t count the dieing of the PC as a bad thing especially in the wake of the rise of convertables and hybrids. If the death of the form factor is inevitable, Microsoft will be prepared as Windows 8 transcends form factor(PC, Tablet, Hybrid, Convertable), OS X is a PC form factor OS and is not prepared for the next stage of computing.
jlword says: “I don’t subscribe to evolutionary theory but…”
Wow! A creationist who uses the human evolution as an example to criticize the company that theorized the post-PC era for being stagnant and defends Microsoft.
You made my day!
May the Flying Spaghetti Monster touch you with His Holy Noodly Appendage.
Just creativity at work my man. Don’t believe in evolution but I understand the theory, and its hypothetical premise as advancing biology to a higher form presented an opportunity for a seamless analogy for the PC to post PC era. Again don’t believe but, I know its a well known,as an thought process, not point of fact, it was an easy method to communicate my point.
yes apple may have theorized post PC era, but I believe as stated if Macs retain thier form factor and OS, they will be products of thief own self fulfilling prophecy – left behind.
Given Microsoft’s record so far with hybrid devices, I can only admire your optimism!
Very well said. Apple does include it’s own tablet, but it is nothing more than just a tablet.
Windows tablets however, are great because they combine the best parts of a tablet experience and mixes it together with the power of a laptop and lets the user get things down in a more efficient manner.
Apple (as it sits) is not prepared for this transition into the hybrid movement. They better do something, or it’ll hurt themselves more.
Well placed optimism, I might add, though the Surface, a new type of device, and Windows 8, a new type of OS, both designed for a new type of post-PC world(and expectantly both saw growing pains, and required tweaks), after tweaks to both and consistent response to users voices, after each of thier introductions, in the market 15 months ago, have seen increased growth and adoption rates. The Surface(which is only Microsoft’s breed of hybrid; Dell, Asus, HP, Lenovo, Samsung, Toshiba, and others are on board)had, per last quarters reports, doubled in sales also Windows 8/8.1 have more than 10% of the market and increasing as sales of Windows 8/8.1 devices continue and the market dominated Windows users upgrade older version of Windows. Sales of Windows based tablets (according to NPD) tripled between Jan 2013-Nov 2013. This growth reflects a natural expectation that OEMs, in 2013, adopted the new Windows 8 OS (released Oct 2012) and began releasing these new “evolutionary” (back to my original analogy) devices into a world dominated by, PC’s and straight tablets. They, like homosapiens, were new to the world, but based on a tripling of growth in 11months(1/13-11/13), 2 months after a new, and evolutionary OS was introduced and after many concerns of the Windows 8 OS have been, and are being addressed(another update due in April 2014), and many OEMs as those mentioned above, have released, are releasing and will be releasing new WIndows 8 hybrids/tablets/ convertibles in a market that was reshaped with Surface & Windows 8 in Oct 2012, which they saw triple in 11 months in 2013, which has matured with OS revisions and form factor revisions, trial and errors devices, 2014 onward based on the stats of past and recent growth, the change in computing paradigm, MS with the Windows 8, the Surface and MS OEM partners with thier tablets/hybrids are evolving for the post-PC era. The statistical growth, tripling sale, within the context of just over one year since the introduction of the new, transcendent (tablet/desktop/hybrid agnostic) OS, Windows 8, and the doubling of the Surface’s last quarter sales points toward an adoption and growth of Windows 8 devices. Optimism, I believe, under these circumstances is well placed
Today the theory of evolution is about as much open to doubt as the theory that the earth goes round the sun.
I would imagine Redmond is trying to talk them out of it. For both companies to drop pc sales puts a hurt on the amount of licenses Microsoft can sell.
Again, more OEMs are focusing on merging the tablet and PC UX into one singular device, and so far it is working.
Is it?
Perhaps if we combine a kitchen and a toilet into one unified merged room that would be a great time saver?
Hybrid devices require big compromises. The biggest in this case is screen size.
The optimal size for a keyboard/notebook screen is 13-15 inches.
The optimal size for a tablet is 7-10 inches.
>>Is it?<>Hybrid devices require big compromises.<>The biggest in this case is screen size. The optimal size for a keyboard/notebook screen is 13-15 inches. The optimal size for a tablet is 7-10 inches.<<
As time changes, you'll see a change in tablet sizes, I'm sure. I'm not saying that we'll have huge-ass tablets, but nothing stays the same in the tech. industry – you should know that.
What LG is in pc business? Now I know why they are dropping that market…