The Future PC

on March 4, 2014
Reading Time: 4 minutes

Apu Kumar has held senior leadership roles at iconic technology brands as well as early stage start-ups, Phoenix Technologies, CNET.com, mySimon and is currently the SVP, Chief Deal Hacker at BlueStacks – GamePop. This is part 1 of a 2 part series from Apu on the PC industry.

Trepidation

“Trepidation is either the sign of great weakness or great wisdom.”

The consumer PC business appears to be in the doldrums due to the invasion of smartphones, tablets and mobile devices. The back to school, thanksgiving and holiday sales that have traditionally been the high points for the consumer PC business have shown a sharp decline year over year. Traditional PCs and laptops are rapidly losing mindshare and market share. The verdict all round is that the PC is in its death throes. The writing is on the wall. But have we not known that already?

Meanwhile, smartphones are recording explosive growth and the Android phones are lording over the mobile world. New iPhones have surged ahead with phenomenal success. iPads, Kindles and Android tablets are relentlessly marching from strength to strength. The year 2013 witnessed over 1 Billion smartphones powered by Android and iOS, per IDC. These numbers are staggering and dwarf everything we’ve seen in the device space in the past 3 decades. The meteoric rise of smartphones and tablets, so smart and so sudden, has caught the PC ecosystem in complete shock and awe.

How has the PC ecosystem responding to this onslaught from mobile? The initial instinct has been to mirror the attributes that are perceived to have contributed to the success of smartphones and tablets. PC brands and x86 chipset vendors are working feverishly to create ultra-thin and lightweight designs with touch screens and a plethora of sensors. There is a manic focus on performance and battery life to get a minimum of 24 hours of use on a single charge. While touch, battery life and performance are the absolute must parameters to be focused on, this feels like an uninspiring incremental approach and more of the same old wine.

Ironically, some of the largest PC brands are hedging their bets. While they are cranking out x86-based PCs, they are also unhesitatingly investing in ARM-based smartphones and tablets running Android. This is true of Lenovo, Asus, Samsung, Toshiba and others. Does this not speak volumes of their confidence in the longevity of the PC?

The reversal in fortunes for the PC is reflected in rapidly declining device sales, shrinking profit margins and anemic financials. PC OEMs are struggling. Some OEMs like Dell have opted to delist and go private. Some like Acer are struggling and bleeding money each quarter. Some like HP have tried to spin-off their PC business without success. Others like Sony have sold their PC business for various strategic reasons. Many have restructured, hired new CEOs, reshuffled their entire management chain and tried every jugglery hoping in vain for a much-needed turnaround.

The core problems for the PC stretch far beyond the myopic view of an industry in denial.

Revelation

“You don’t know what you don’t know.”

For the PC business, the trillion dollar question is – what do consumers really want? Consumers spend an inordinate amount of time online. Online behaviors have completely and dramatically shifted in favor of mobile devices. Smartphones and tablets account for 82% of all connected devices, per Jumptap. Consumers prefer the instant gratification that a mobile device provides to get online instantly and do what they want to do.

Movie and video consumption accounts for the largest chunk of all online traffic. Content streaming was once predominantly a PC-based activity. This has now shifted to tablets, smartphones and game consoles. The PC is no longer the entertainment hub it once used to be.

The world of gaming has gone through a disruptive change in the past four years. The PC was the bastion of hardcore gaming. Graphics-heavy games used to be written explicitly for powerful PC platforms. Stores like Steam thrived on sales of AAA game tiles for PC. Barring a few, developers do not write games for PCs anymore. Gaming has made a 180 degree shift to mobile. The most popular games are now on mobile first. Almost 80% of all age groups (18-24, 25-49, even 50+) are playing games on smartphones and tablets, per Comscore. The PC is down to 20% and dropping fast.

Why do consumers gravitate to mobile devices? They do so simply because they can easily access their favorite games and favorite apps on mobile first. Consumers spend time and money playing games on mobile. At the same time, consumers also prefer mobile apps over traditional web sites. So what do consumers really want? They want phenomenal content. They want useful apps. They want great games. And if consumers get access to great content, apps and games on their PC, they just mighty spend more time on their PC than they do today.

The mobile app ecosystem has boomed in the past 4 years. The dominant app stores of today have over a million apps each. Google’s Play Store and Apple’s App store have brought riches, fame and glory to many a game developer. The consequent monetization of games and apps is driven by the laws of large numbers. It is only natural that game developers gravitate towards large and rapidly growing installed bases – like the iron shavings around the magnet. Most developers are less inclined to write apps for a platform on the decline.

It is, therefore, imperative that the PC needs mobile apps like a donut needs a hole, like the heart needs a beat, the ocean needs the tide and the body needs the soul. For the present, developers will continue to write games and apps for mobile first. This will not change anytime soon. But the PC ecosystem certainly can shed its inhibition or hesitation and be smarter about embracing mobile, leveraging content, games and apps from mobile and extending over to the PC.

Look for Part 2 of this series on Thursday.