Lenovo layoffs prove the PC market is in freefall; expect "radical changes" ahead

PCR's anonymous Counter Insurgent retailer says more job cuts and price cuts are likely
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PCR's anonymous Counter Insurgent PC retailer reflects on the news that Lenovo is slashing ten per cent of its workforce - and looks at what it means for resellers.

What can I say, other than the recent moves that Lenovo, Google and HP have made are indicative of the entire mobile and PC hardware technology business.

I can only imagine more [extreme changes] are bound to pop up. From what I am reading, watching and hearing, the big hardware sectors (phones, tablets, desktops and laptops) are all in freefall.

Hardware itself is plateauing as the users’ needs are no longer feature-led but are experience-led, therefore demand is collapsing everywhere.

The PC market has been in decline since 2012. However, in 2014 things picked up a bit, due to Microsoft calling it a day on Windows XP. That upgrade cycle is now over and PCs are back in freefall (sales dropped nine per cent last quarter). In my opinion Windows 10 has not helped - not only can you upgrade without making a purchase, but you can upgrade on kit that was made in 2009.

But even when we do make sales, there is no margin to be made throughout the channel, not just at the retail level, but even at the mega global industrial volumes level.

Servers are still a huge market, but even if you need quantities of units big enough to affect world market figures, you are still using manufacturers whose numbers are still not earth shattering. Furthermore, this market is completely out of our reach, so companies like us are going to struggle even more.

I personally feel that it is going to affect every company big or small in the channel, even Apple (or maybe not)? 

What can we expect? Well, expect massive price falls from everyone very soon, as the big manufacturers are starting to get desperate for sales, for example Lenovo writing off $300 million in unsold smartphones, laying off 3,200 workers and spending $600 million in restructuring it smartphone business is not something you do lightly.

"I believe the future of any sustainable consumer level hardware market will be in personal storage/cloud, gaming and other high-end hardware like Apple products, as margin and quality of product is always going to demand a price. This is great news for indies and system builders to make a living."

This is pure desperation and people need to know it’s not all rosy in the market. Expect radical changes! And expect bigger ones than from 2008, when mobile started to go crazy, but sadly these new changes will be heading in the opposite direction. Mobile’s ambition as the “rescue-replacement of the PC business” is about to be over very soon, too.

Even the supper cheap Moto G has not made a serious impact on revenue, sadly the rest of the hardware industry is about to feel the same pain very soon.

I expect the next round of revenue figures to be halfway acceptable in the channel, apart from Apple, which is a hardware machine in its own right.

Well, on the upside (and there is one)... It's happy days for ALL consumers worldwide, rich and poor alike - this is absolutely brilliant news.

Also, for so-called 'lifestyle businesses' it’s a win win situation too. They are flexible, can evolve and have the saving grace NOT to carry any significant 'nightmare causing' stock either. Growth may be non-existent but with streamlined and managed costs, you don’t have the burden or the stress that comes with running a retail business in a market sector which is so volatile and has next to no margins.

I believe the future of any sustainable consumer level hardware market will be in personal storage/cloud, gaming and other high-end hardware like Apple products, as margin and quality of product is always going to demand a price. This is great news for indies and system builders to make a living.

Other than that, everything is going to be streamedlined and a service, service, service market in a world of possible FREE and open hardware. Yes you won’t become rich overnight, but at least you will be alive and kicking in the morning, ready for customers.

So let me ask you all: is this the start of a global tech recession - or a revolution?

Credits

http://techcrunch.com/2015/08/12/lenovo-is-laying-off-3200-staff-after-a-poor-quarter-of- business/

http://www.economictimes.indiatimes.com/photo/48079765.cms

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