As we start to see desktop sales tumble with sales declining by ten per cent in volume according to GfK, will the traditional tower continue to slow as alternative PCs storm onto the market, or will Windows 10 help to drive more sales? Jade Burke investigates…
There are now a wide range of computing devices users can fill their homes and office with, from the portable laptop and tablet to the compact all-in-one (AIO). One that has stayed throughout the years is the humble desktop, but now with threats coming from all angles the tower is in decline.
Analyst GfK states that desktop sales fell ten per cent in volume and 21 per cent in value in Q1 2015, while average selling prices (ASPs) have fallen ten per cent to £347.
GfK’s business group director Megan Moore says: “The two areas declining are desktops and tablets, but all-in-ones are up 50 per cent and laptops are on the increase.”
According to IDC, the PC market will also continue to struggle as newer and smaller alternatives launch into the market, as Loren Loverde, VP for worldwide PC trackers, says: “In addition to educating clients, they’ll face tough competition from other devices, and weak spending in many regions. As a result, we see PC shipments stabilising in 2016, followed by limited growth for the next few years.”
Analyst Gartner also predicts that PC prices are going to rise by up to 10 per cent this year, but consumer spend is due to drop by 7.2 per cent, which will cause a knock-on effect for the already declining PC market.
Currencies are also impacting on sales, as vendors have begun raising prices to help offset Euro exchange rate pressures. Other initiatives within the industry could also impact unfavourably on PC sales, causing a further decline, as Lachlan Welsh, senior analyst at Context, adds: “Other factors such as the Windows Bing initiative has now been restricted which will lead to a rise in prices. The focus has been on the low-end recently to spur growth but we predict that the product mix will change to the mid to high-end which will increase the average selling price of PCs.”
In comparison, some retailers believe that the desktop is in decline because of low consumer demand. Steve Ling, executive director for Overclockers UK, says: “The reason that the desktop market is in decline is the lack of stimulus for mainstream users to upgrade.
“Typically it is only when a user experiences hardware failure that they will look to replace their trusty old desktop and even then it could be replaced by a laptop or tablet.”
As PC prices continue to rise, customers have a limited amount of income to splash out on more expensive new devices on a regular basis. Meanwhile, cheaper tablets and laptops are being snapped up. Alternative form factors are also starting to make their mark in the industry, from Hannspree’s PCs on a stick, Intel’s Compute stick and NUCs (Next Unit of Computing), to a Compute Plug, which features a mini PC inside. The diversity of form factors is constantly evolving, and as more customers begin to look for smaller PCs, towers are becoming less popular.
Stuart Carlisle, MD of Ebuyer.com, explains: “Very few people will use a desktop as their everyday go-to machine, laptops have taken over this market due to their portability and ease of use.
“Laptops, mini-PCs, all-in-ones and netbooks are a great way to utilise space. Desktops are inherently large in terms of size so the introduction of these small form factors allows for near-desktop performance in small spaces or on the go.
“For us the markets are separate, a businessman on the move isn’t likely to invest in a desktop PC, in the same way a gamer wouldn’t want to use a slim-line laptop for his overclocking.”
Chip maker Intel has recently released details of its new processor Skylake, which has been named by the company as one of the most significant chip releases in a decade. Intel has since started to push these new sixth generation chips into mini-desktops such as NUCs, dramatically improving the power of these devices when it comes to the traditional tower. As these processors start to get more powerful within alternative PCs, towers may take a further back seat in the market.
Daley Robinson, director at Stone Group, continues: “What I think is worth considering is that customers looking to re-invigorate their desktop estates very rarely just go for ‘more of the same’.Our customers are open and curious about alternative solutions and it’s our job to provide them with as much comparative information as possible to be able to give careful consideration to each choice.”
Desktops can be decked out with all sorts of components, from graphics cards, motherboards, HDDs and SSDs, improving their capabilities when it comes to tasks carried out either at home or in the office, something a small seven-inch tablet cannot provide.
It is due to these functionalities that the desktop is still able to compete alongside tablets and hybrids, such as the iPad and Surface Pro.
Andrew Line, business manager for consumer PC desktops at Acer UK, explains: “We often talk about the ‘hub of the home’ and consumers are enjoying the relatively large hard drives in desktops and using them to supply content to their other devices. A 16GB tablet cannot store a lot of movies.”
There are also ways in which users can access their desktop from the cloud, meaning they do not require computing power or a desktop. Jonathan Birch, product manager at UK managed service provider Redcentric, continues: “According to market analyst company, The 451 Group, the market for virtualised desktop environments (VDI) is estimated to reach $5.6 billion (£3.5 billion) by next year.
“The statistics show that the traditional PC desktop is on the decline and is now being replaced by cloud-based desktops.”
Contrary to what some statistics have revealed from analysts, many retailers have in fact noticed that customers are showing more interest in desktops, and that sales have not dipped as much as reports suggest. Carlisle concurs: “Although there has been a decline in the global desktop market, we simply haven’t seen the huge drop-offs reportedly affecting the desktop sales. In fact some of our desktop sectors have improved in terms of sales volume.”
In addition, reseller Stone Group doesn’t believe the desktop is on its way out. “We don’t think the desktop market is necessarily dying, we prefer to think of it as being in a period of transition. It didn’t change for 20 years, and then the last 12 months has seen some incredible innovation,” Robinson adds.
“Smaller footprints and sleeker designs are attracting people back to buying a desktop and being proud to display it. So, although sales are smaller, we think interest is piquing.”
PC gaming gears up
Gaming within the PC sector has really started to ramp up, with hardcore gamers looking to desktops for better visuals and graphics, something a tablet or laptop cannot provide to the same extent. This industry alone has helped to keep the desktop market afloat, with many system builders making unique PCs for gamers, but could this endanger the traditional desktop and put it into specialised territory?
Carlisle disagrees, and believes the market should recognise this growing industry and start to embrace it. “The market simply needs to shift. Listen to the consumer, the industry needs to take gaming, custom PC building and modifications seriously and gear products towards that.
“Gaming and home-building PCs is as strong as ever, these consumers will continue to grow the desktop market,” suggests Carlisle.
With Steam Machines and the like, there may even be scope for the desktop to challenge consoles, as gamers look for more powerful capabilities from their devices. With this in mind, the desktop still has time to bounce back in the computing category.
Ling continues: “Contrary to past beliefs, PC gaming is on the rise and consoles could ultimately be the platform to disappear. As games become more realistic, consumers desire the best in-game experience and will upgrade their hardware.
“The console refresh cycle cannot keep up with changes in technology and deliver what consumers are looking for, for example 4K gaming.”
Furthermore, the PC gaming industry is one that benefits independent retailers and allows them to showcase their expertise and PC building capabilities Clifford Johnson, founder of retailer PCs Made Simple, continues: “The gaming market is growing fast and we don’t believe this can ever get too specialised.
“The sector is very important to us smaller companies, as this is where we shine and get a chance to show off our knowledge and skills.”
Microsoft recently announced that Windows 10 will be released on July 29th, which has got many retailers excited as they believe the free upgrade will be a good incentive for customers to upgrade their devices.
Carlisle adds: “We think the introduction of Windows 10 will have a very positive effect on sales, especially as upgrading will be so easy.
“Windows 10 is also geared towards cross platform use and gaming so it covers a lot of the bases modern consumers look for.”
However, other retailers and distributors have revealed to PCR that the free upgrade could be quite challenging to make a profit from, as some customers may put off upgrading their devices straight away and wait to check out the OS first.
“Windows 10 may slow the decline in the commercial space but this isn’t expected to have an impact til late 2016, when businesses are sure that all the stability and security issues are ironed out in the planned updates and sufficient testing has taken place,” explains Welsh.
On the other hand, various vendors have already revealed their own Windows 10-ready devices, including the likes of HP, Asus and Acer, which may help to drum up sales for retailers.
Robinson adds: “The advent of Windows 10 will bring a renewed enthusiasm for the desktop – people will come out of upgrade and refresh retirement because there’s a hopeful atmosphere around the changes to the operating system.
“After Windows 8’s lack of desktop friendly features and the omission of the Start button, Windows 10 will seemingly be much more desktop friendly for consumers.”
It is hard to say definitively what the future holds for the desktop, but currently retailers and vendors seem optimistic about its outlook. Thanks to the gaming industry, and the launch of Windows 10, many believe that the desktop will claw back market share.
Paul Betteridge, owner of The Laptop Fixers, says: “I think the desktop will never die. Many of our customers see a PC on a stick and compare the cost of this against the cost of a full size desktop. Perceived value is higher in a desktop, probably because you physically get a lot more for your money.
“It’s very difficult to convince a customer to spend £500 on one of these devices because of their size.”
Even though there are smaller alternatives to the desktop, it has made its mark within the industry as a familiar figure within homes and businesses, and it is that familiarity that may help to maintain its position in the market. “
“We know there will always be a place for the traditional tower PC, in universities, scientific and academic research, for example,” explains Robinson.
“The initial rise of the desktop was quite simply fuelled by the internet, the market was flooded with an abundance of cheap PCs to serve mostly that purpose. The adaptation of other devices such as laptops, tablets and smart TVs have broadened the offering of getting online, thus lessening the burden of a bulky PC on a desk. The desktop will always exist but in what form will ultimately be shaped by the consumers that still demand them going forward.”
PCR’s Retail advisory board looks ahead
Gavin Holder, director, GHI Computers: “The initial rise of the desktop was quite simply fuelled by the internet, the market was flooded with an abundance of cheap PCs to serve mostly that purpose. The adaptation of other devices such as laptops, tablets and smart TVs have broadened the offering of getting online, thus lessening the burden of a bulky PC on a desk. The desktop will always exist but in what form will ultimately be shaped by the consumers that still demand them going forward.”
Chris Innes, owner, Micro Plus Computers: “We are finding that our consumer customers are spending more on higher spec systems and are also more willing to spend more on devices that look good or run quietly – a definite sign that the PC is moving to the living room space and becoming a home/family entertainment hub.”
Estelle Johannes, director of member committees, CompTIA UK: “I believe they are declining because more and more people are not working the way they traditionally used to – working flexible hours and not working in the office all the time or even at all, makes the desktop the least practical choice to meet the requirements of today’s workforce.“
Craig Hume, director, Utopia Computers: “I think more and more indie retailers are looking to attract talent that has serious knowledge about games as they can see the trends. As a PC gamer myself, I love that the desktop PC is riding a wave of success at moment with gamers, and I hope that this can continue for the foreseeable future.”