Tag Archives: PCs

Summer Doldrums

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Is it cyclicality, or … ?

Many reports, anecdotal and evidentiary, point to a general slowing in PCB production and sales over the past quarter.

Yet there are some reasons for optimism:

I am of the mindset that what we are seeing is a return to cyclicality after roughly two years of recession followed by a year-plus of bottled-up demand. Clearly there’s some market turbulence ahead, especially when we take the macro vectors into account. Some of the end-markets need a boost: Now that Windows 7 has taken over, PCs are stagnant, with new tablet demand offset by rather humdrum desktop/laptop interest coupled with some migration to smartphones. Nokia and RIM are skidding, and Apple can’t make up for everyone’s lack of flair. Autos are a big-ticket item and many consumers today need stronger feelings of job security before taking on new debt.

A forecast slowdown in US defense spending (the nation’s fiscal year starts in October) could be partially offset by new deliveries of jumbo passenger jets (Boeing last month announced a record single order and will ship its first Dreamliner next month).

The tea leaves are murky. We hope for the best.

Focus? Who Needs It?

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From Jim Collins to Michael Porter, the latest generation of management gurus argued companies must focus on core competencies and shed all other activities.

Just what makes a “core competency,” however, is always in flux. And as electronics companies see sales plunging like cliff divers, they are quickly redefining the terms.

With today’s launch of Nokia Booklet 3G,Nokia, long synonymous with mobile phones, has now officially entered the netbook market.

But Nokia is just the latest in a string of high-profile OEMs that are seemingly trying to jump-start their revenues by going after what are increasingly commodity markets.

Dell, in conjunction with China Mobile, is said to be looking at jumping in the mobile phone wars. In doing so, the world’s No. 2 computer maker would join Hewlett-Packard, Acer and Asustek as PC OEMs that either have launched or are planning to debut smartphones.

Meanwhile, China Mobile, AT&T and Far EasTone Telecommunications are among the mobile providers now pitching netbooks.

In today’s Wall Street Journal, Roger Yuen, Acer’s vice president of Asia-Pacific smart handheld business group, is quoted as saying “it is relatively easy for PC makers to make smartphones because the two devices share similar components and software.”

Which makes sense to analysts, I suppose, but is something of an insider’s joke in electronics manufacturing. After all, what doesn’t have Intel Inside?

The moves are highly questionable. As this article today in the Wall Street Journal notes, “Analysts say PC makers are unlikely to reap significant benefits in the near term as they need to develop better relationships with mobile operators to sell their products. It will also take time to develop differentiated products and market their own brands in a segment where consumers already have many choices.”

The WSJ hedges, adding, “[M]any agree that longer-term, PC makers have a chance to gain share which would generate a new source of revenue growth and improve overall profitability.”

I don’t see it. These are extraordinarily competitive markets, flush with big-name brands with deep pockets. IBM. Nokia. Samsung. Dell. H-P. The list goes on. None is going to give in without a (very expensive) fight.

Meanwhile, the broader markets are showing some signs of leveling: Worldwide mobile phone sales fell 6.1% year-over-year to 286.1 million units during the second quarter. And the battle for the niche markets – like smartphones – may already be over. Nokia holds a 47% share of that market, and RIM has been entrenched in second place.

New players have found the going bumpy. Take for example, Apple’s much-ballyhooed entry, the iPhone. Measured in terms of style and pizzazz, it has performed exceedingly well. In terms of units sold, it’s another story. Apple shipped 5.4 million units in the second quarter, Gartner says, good for 2.4% market share. Very likely, Apple makes the equipment as a medium to sell its highly profitable catalog of digital music.

Given that, and given that few companies boast Apple’s marketing and design savvy, it’s hard to fathom why a company would risk dominance in one market to attempt to conquer such foreboding – and possibly worthless – terrain.

It brings to mind one more business truism: That the grass – and the profits – is always greener on the other side of the fence.

Netbooks: Unhappy Returns?

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As anyone who peruses computer stores knows, netbooks are proliferating at unprecedented rates. Consumers are taken the portability of the half-pint PCs (the typical reaction is “they’re so cute,” one salesman derisively shared with me), not to mention the price tags – often under $300. In my own completely unscientific survey, 30% or more of the PCs on display in traditional PC retail outlets are now flavors of netbooks.

The data support the anecdotal evidence. Worldwide netbooks shipments are expected snare a 17.2% share of the overall notebook PC market in 2009, according to a new research report.

But not so fast. The salespersons I spoke with noted lots of problems with notebooks. The return rates run as high as 40%, one said, citing consumer complaints about the lack of functionality. Computer Weekly editors recently took on the negative side to the phenomenon as well.

Netbooks serve a function – namely surfing and simple word processing. But they are not computers in the full-fledged sense. The idea, as noted by Computer Weekly, that business are starting to implement netbooks is a scary proposition for those who value quality and performance over price.

Apple’s Next Bite?

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Great piece in Slate on the rise of the netbook craze and its pros and cons for the PC industry.

The reward, especially as companies like Apple reportedly consider a move into the loss-cost, stripped-down PC market, is greater market share and a renewed interest in buying computers at a time when the market could absolutely use some good news.

The risk, however, is the Forrest Gump-like devices (in that their presence outstrips their capability), will suck all the innovation out of the market, leaving little in the way of profits for future R&D.