Is the desktop market growing?

Those who have their eye on the channel may have noticed a shift in the way AMD deals with its partners. The components vendor has amalgamated its various divisions into one unit and has initiated its Vision strategy, which aims to simplify sales for retailers.

The recently revamped Fusion partner programme has seen the disparate partner programmes for different products – CPUs, GPUs and chipsets – brought together to form a single entity, one that aims to bring a stable platform to AMD’s partners.

AMD’s Vision scheme is divided into Vision, Premium Vision and Ultimate Vision categories – catering for the lower, middle and higher ends of the market respectively. They aim to create clearer guides for customers who want to know what kind of performance to expect from a machine without having to familiarize themselves with the nomenclature of components.

AMD’s EMEA channel director, Andrew Buxton, feels that such measures are necessary, especially for the desktop segment, as the channel has a much greater participation in sales of desktops and components, than in single unit notebook sales.

“I guess if you step back and look at the bigger picture, notebooks are largely the territory of the multinationals,” he tells PCR. “Netbooks, nettops – a lot of the emerging Chinese and Taiwanese manufacturers are building these devices really cheap and they fulfil their slice of the market.

“What does seem to be happening – to me, and this is a personal comment – is that the multi-nationals seem to be losing interest in the desktop segment. All the new factories they’re building are notebook factories and that makes sense from their point of view. Increasingly I see the desktop, and the SMB and consumer markets – so anything apart from true commercial and corporate segments – as really being owned by the channel.”

The phrase ‘owned by the channel’ appears to be an observation on the way computers are used and re-used by the consumer, who will often simply upgrade their current system or buy a new one to spec, and pass the old system on to friends or family members. Most often it is an independent retailer who provides the advice, expertise and products required for such an arrangement.

“Some people would buy all the components and build it themselves, but not everyone’s that confident, so it is at that point that the resellers are re-emerging,” continues Buxton.

“Suddenly, the retailer’s turned into a system builder again. People might say ‘I want that PC, but I can’t afford it, can you build it for me?’ and the retailer builds it to spec. So increasingly what we see happening is that people want a nice solid home family PC, and they’ll build a new one and pass on the old – this is a market we see as really strong at the moment.

“I think this is rightly perceived as the best value way of getting what you want. I think people across Europe are going for value, instead of just buying a brand and then finding out it’s not quite what they want and having to add components later.”

Buxton also contests figures that indicate that the desktop segment is in decline. While shipments of preassembled desktop PCs have fallen, this is not to say that the overall use and demand for desktops has declined at the same rate; in fact, Buxton claims that the demand for desktop components has not been significantly affected.

“During the recession, this time last year, we were all quite concerned – we didn’t know how bad it could get,” explains Buxton. “Q1 actually didn’t turn out so bad, Q2 turned out stronger than expected and Q3 was very strong.

“Our Q3 results are there for anyone to look at, so I’m not going to go into that here, but just as a general, non-specific comment, unit-wise things have been quite a bit stronger than we previously thought, so the challenge is more in terms of availability – making sure that we have enough stock to meet demand – than trying to make sales, especially at the entry level. That has actually gone better than expected.”

In addition to this, Buxton claims that the increasing demand for netbooks and other mobile internet capable devices is actually driving more requests for desktops.

“The higher end market at the moment is really fragmented. People want portability, so they need some kind of internet access device – whether it’s a smartphone, netbook or high end notebook,” he observes.

“Everyone needs some degree of connectivity and portability, but people have more than one PC in the house. They might have a notebook, but many people have a family desktop as well, as a central depository for important family documents that relate to everyone in the household.

“So, I don’t see netbooks or net-tops as a threat to the desktop. It almost drives the desktop business, because the cheaper, more throw-away or more vulnerable your portable device becomes, the more important it is to have a solid base for all your data.

“And there are so many applications now aside from gaming that people are interested in having a PC for communications, media storage and sorting, for example – and an iPod isn’t much use without a PC, so there are many different applications that still drive the need for desktops.”

It’s clear that AMD sees the channel, and the desktop segment in particular, as being much stronger than analysts’ figures would lead us to think. The channel, as ever, is key to the continued health of this traditionally core market.

“The channel tends to be more resilient, and tends to be able to react and adapt quicker than some of the larger companies, so wherever the opportunities are, people seem to be able to move really quickly with it,” concludes Buxton.

“People have been forecasting the demise of the channel for 15 years, but it’s as strong as ever. This can be seen from the fact that even our competitors are keen to keep working with the channel as well.

“However, AMD is probably seen as more friendly to the channel and that’s a reputation that we’d like to keep.”