Time to upgrade Your PC

by Jon Peddie   |   May 6th, 2013

While preparing for a presentation I was going to give, I looked at some historical data. I like to do that to set the stage for my talks and give the audience a chance to get in synch with my comments.

When you’re running in the trenches 24-7 you tend to forget some of the outside world events, and that happened to me I’m embarrassed to say. A historical review reset my perspective.

A 2009 Intel has just released the Core i7 Nehalem Processor and AMD brought out its 6-core CPU Istanbul processors. We thought those new processors were amazing, and for the time they were, but that was four years ago, and things move fast in this industry.

If you bought an IBM PC in the US for $3,000 in 1981, you were actually spending the equivalent of $7,461 in 2012 dollars. A notebook PC bought in 2009 for $630 would cost the equivalent today of $672, but the ASP of a notebook today is only $546.07.

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Meanwhile, while the cost of living index has been steadily going up, the average selling price of PCs has been coming down.

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Not only have PC prices been going down, but also due to Moore’s law, the performance has been going up.

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More computing power is great, but its costs money to run a PC. And electricity, like every thing else is getting more expensive every year.

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Yet, even with more powerful processors, bigger disks, and more memory, the average power consumption, thanks again to Moore’s law, has been going down.

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Today’s PCs use less power, which save costs, while delivering more performance.

So today, you can get a more powerful computer for fewer dollars than the old 2008 or 2009 unit you have. In addition, the new PCs can do so much more.

The newest applications and programs need more CPU horsepower, and memory. Consider the latest games, Windows 8, Office 2010, video transcoding, photo editing, and peripherals that require the latest I/O such as HDMI 1.4, USB 3.0, and DisplayPort 2.2, and soon 4k displays.

Also, with the new memory technologies like LP-DIMM, you can now have 48GB to 144GB of Ram in your system, which makes everything run faster.

Consumers and business that have old machines, which are ever more expensive to maintain and keep running (and run slowly when they do), have been stalled in their normal update or refresh process by the fanfare over how wonderful tablets are. Tablets are indeed wonderful, and are a nice contribution and companion to the computing environment. But as has been said by so many and now so often, tablets are certainly not a replacement for most of what a PC is used for. They are at best a compromise for trying to emulate what one does with a PC.

Now’s the time to get a new PC, the cost-benefits couldn’t be better.

Jon Peddie

Dr. Jon Peddie is one of the pioneers of the graphics industry, and formed Jon Peddie Research (JPR) to provide customer intimate consulting and market forecasting services. Peddie lectures at numerous conferences on topics pertaining to graphics technology and the emerging trends in digital media technology. Recently named one of the most influential analysts, he is frequently quoted in trade and business publications, and contributes articles to numerous publications including as well as appearing on CNN and TechTV. Learn more about Jon and his services at www.jonpeddie.com
  • capnbob67

    Is it PC shill week? Did Intel pay for some of these recent articles? Smart attempts to boost the flagging Post-PC PC market. ;-)

    The fundamental equation is “does a new PC offer practical user benefits that are worth the spending of the cash to buy one”. The vast majority of users are over-served by a Core 2 Duo so convincing most to spend money on a new ultrabook or laptop with an 3rd gen i5 or i7 is a pointless exercise. Pretending that the savings in electricity are worth more than pennies per month is disingenuous (it costs about $2-3 per month for average users).

    Yes PCs are much cheaper than they used to be in real terms, but then >50% of us now spend ~$1200 per year on a smartphone/plan so tech spend probably hasn’t really gone down even so. The PC has been squeezed because it is no longer the center of people’s tech lives and a 2009 PC can do most jobs as well as a 2013 one.

    • benbajarin

      I’ve been thinking about something in relation to this from a PC market standpoint. I’m not sure if you read the Wall St. Journal article the other day on truck sales in the US, but it outlined that truck sales have seen a 20% increase in the first quarter of 2013. They attribute it to the steady growth in construction, namely housing and larger build outs. This is tied to the US economy doing well and larger construction housing or build outs being funded.

      The point was when that happens many contractors both big and small upgrade their equipment (their truck) in order to help them be more efficient, get their job done better, easier, etc.

      I thought that was an interesting talking point in relation to the traditional PC. We all agree there is still a role for the traditional PC and it is for primary knowledge workers, and other employees who rely on this form factor and larger screen to get work done in a non-mobile job setting. This market is still large and still relevant.

      So the analogy could go, as the job market stays strong and companies grow, etc., the steady trickle or even perhaps quarterly uptick we may see in PCs can be attributed to strong job growth or steady business growth as people upgrade their PCs to be using the latest tech, the same way those who need trucks do when times are good.

      Of course we don’t expect the PC sector to be a growth sector again the way tablets or smartphones are for now. But I do think we can look at elements of the PC market and their quarterly or yearly sales, and discern some bigger things than just sales, but things like the global workforce and economies as well.

      The bottom line is, there still hundreds and hundreds of millions of people who still need a traditional PC form factor for some mission critical tasks and they absolutely know they need it. These people will benefit greatly from new tech and hardware, as Jon points out. More importantly, unlike trucks, this new tech will be more affordable than ever by years end.

      • capnbob67

        There is a smidge of truth there but trucks do not have the massive problem of substitute products that PC have. PCs will sell a couple of hundred million units this year, which is still a lot. Those are probably mostly upgrades. Just less than it takes to maintain a steady state or growing market. Specific year fluctuations and their short-term mechanics are not very meaningful in defining trends.
        You need to investigate the trucks analogy. Even cursory research shows that peak light-duty trucks peaked at 9.3M in 2004, bottomed out at 4.9M in 2009 and are now at around 7M in 2012. So, growth since 2009 but still way below 2004. Total car/truck sales peaked in 2001 (17.1M). Now they are at ~13.5M (10.4M in 2009). The whole industry has depressed in the US since before the crash or ’08/09. Detroit’s share has gone from 64% in 2001 to 47% in 2011. Pretty dismal for the market leaders (and their trucks). Even in a market where no real substitute products exist.

        • benbajarin

          This is true, and similar in vein to how the PC peaked and is now off and we are re-balancing yearly shipment expectations. But I do think the idea of both corporate and consumer upgrades for work purchases can send signals of the greater economy. Again, like cars they are held on to longer than before, but also like cars, PCs don’t last forever.

          • capnbob67

            I think we can agree that PC sales are in structural decline and short term demand fluctuations will occur based on localized factors. Current rates of decline may not be tenable into the long-term and sales may plateau at some lower level but decline is a given for the foreseeable future unless some unknown killer use cases suddenly make PCs more applicable to everyday use again.

            US market factors may create a short term rebound based on pent up demand but they do not necessarily apply to EU or BRICs. This pent up demand will not change the fundamental trend away from PCs no matter how well or not the economy does.

      • http://twitter.com/qka qka

        Sorry, but I’m not buying your contractors and their trucks logic.

        A 2013 truck is virtually identical in capabilities to a truck from recent years gone by.

        The contractors and tradesmen I know are just like consumers – when times are tough, they do what they can to keep that old vehicle running a little longer. When times are good, then they consider purchasing a new one. (Of course the market for work vehicles is somewhat distorted by the tax law related to purchasing capital equipment.)

        PCs are just as capable several years old as they are the day they were purchased (the crufting up of Windows excluded). They are still able to perform the task for which they were purchased. Until new software in needed to perform new tasks, there is little reason to upgrade, more so in business where that purchase is a hit against profits. Do you really need a new computer that can get around to waiting for your next keystroke 50% faster than the one it replaced? (to steal a line I was back in the earliest days of PCs.)

        • benbajarin

          I don’t disagree but I have witnessed first hand time and again a severe and distinct performance and usability drop off on PCs in the 3-4 year range and they just get abismal in the 5 year range. I don’t care if its a notebook or a desktop. My brother in law just replaced both his 5 yr old iMac and 5yr old Macbook pro because the simply became unusable. When I went over to his house I simply wouldn’t use them they were so slow in all regards.

          I guess the question at hand, and its probably different for consumers and working professionals, is what is the cut off before the experience is so bad, you are just dealing with it, when a fresh and superior experience is around the corner.

          Perhaps 3 yrs or so for those who use a PC for work 8+ hours a day and somewhere in the 4-5 yr range for consumers, depending on the quality of the machine they buy.

          I know many of our readers are bearish on the PC but the bottom line is new tech offers a drastically better experience. In fact I had one consumer in our interview sessions, a stay at home mom, come out and say that after upgrading her PC she never knew she was living with such a terrible experience. The new one so much better, faster, etc., it brought out how bad of an experience she was dealing with but she just didn’t realize it.

  • http://maxzografos.com/ Max Zografos

    Not convinced. Average users are discovering they don’t really need trucks. Why spend on the latest piece of plastic when my old one still works and I do 80% of every day tasks on my iPad?

  • def4

    I was going to say “nice try”, but it’s not even that.
    I’ll upgrade my PC exactly when I can get a totally fanless silent box capable of powering a 20″ display with over 200 ppi.
    It’s pointless to try to sell on faster and cheaper when my old PC costs me zero and is fast enough.

  • Hosni

    Consider the electrical usage chart. New notebooks consume 30 watts per hour compared to 50 watts six years previously. Saving 20 watts per hour is 160 watts per 8-hour workday, so in (1000/160=) 6.25 days the owner of the notebook saves 1-kwh, or 13.25¢ worth of electricity (your chart).

    That savings is (13.25¢/6.25=) 2.12¢ per day. In one year (no vacations), the total value of saved electricity is (2.12¢x5x52=) $5.512. Over a 4-year ownership period, you’ve saved $22.05.

    With the new desktop computer, the chart shows that a new computer would save 60 watts per hour compared to a 6-year old computer. All of the calculations above are the same, except the savings is now three times as great … $66.15 over a 4-year ownership period.

    Though the energy savings is a great bonus, it is trivial compared to the price of a new computer.

    The analysis above is absolutely essential for arriving at a logical conclusion — either for or against purchasing a new computer.  Since all of the relevant facts were provided but no analysis was performed, it appears that the author began with a fixed conclusion and only threw in the facts/charts to wrap his conclusion in a scientific veneer.   (No offense intended.) 
    . . .

    The first chart (“US inflation rate”) presents its own puzzles.  The first observation in the chart (0.1%) is for a year that includes the deepest recession since the Great Depression … not likely to be repeated, and therefore not appropriate for describing trends.  Inflation figures for the final two years in the chart (2013, 2014) are both in the future — and therefore, unknown.  That leaves three non-depression inflation rates (2010-2012).

    Now, the chart says the inflation rate for 2010, 2011 and 2012 was about 2.75%, 1.50% and 3.00%. Depending on how one computes inflation, I believe the true inflation rates for those years was closer to 1.5%, 3% and 2% (respectively).  I assume there is a logical explanation for this error, but it suggests that not a lot of effort went into the article.

    Here are CPI inflation rates (Table B-63): http://www.whitehouse.gov/sites/default/files/docs/erp2013/ERP2013_Appendix_B.pdf

    • capnbob67

      Like I said… pennies… :-)
      Thanks for the analysis.

  • Ambidextrous Greats

    Still no answer as to why shill PC’s. The only question to answer is – is it Intel or Microsoft that is paying you?? No harm in admitting that, we all have to survive….

    There was a time when MS was (probably deliberately) making it’s OS need more resources by introducing cruft, so that people can move on to newer and better computers. That old Wintel monopoly we all heard about, well, it worked – mostly for Intel and MS, though. Not for consumers.

    In the present world, each newer version of Android needs less resources while serving more – bigger screens, higher pixel density, more software… wonder why we didn’t see it from MS at least once in its 30 year lifetime… and now MS is in a deep hole (of cruft) that it dug itself, unable to compete on thinner/lighter processors because its OS needs an elephant’s muscle (where Android needs, at most a donkey’s) and hogs nearly 30gb of space (vs only 6 or less for Android).

    So, no – I dont think people will buy newer PC’s in these straightened time just so they can save a few pennies. Someone should teach the author about IRR. Even at the current interest rates, I doubt anyone can even begin to make the argument of buying computers based on power savings.

    I think ultimately, the current problem stems from the fact that in the race to beat AMD, Intel advanced processing power faster than Microsoft’s ability to introduce cruft into the OS. Hence, computers from 3-4 years ago are still good enough, and this wasn’t true in the early 2000′s. Who knows what would have happened if MS had better engineers ;-)

    • benbajarin

      of course not, that’s not our business model. As industry analysts, I think many of us just feel the PC gets a bad wrap in the media. Understanding its role and benefits and making sure people (the media) speak in an educated way about it is more our goal.

      That being said if you read much of what else we have written the past year, we have predicted its demise for some time due to tablets. However, there is still much to be said about the current and future roll of the PC.

  • Ingolenuru

    Do any of you supposedly knowledgeable person know anything at all about the PC gaming industry? PC gaming was at $20 billion last year which was 8% growth. Gears of War recommended processor was Core 2 Duo T5550 1.83GHz back in 2007 and in 2007 the fastest processor released late in the year was the Core 2 Duo E4600 2.40 GHz so you barely squeak by on that but when it comes to RAM and graphics cards capability a 2007 top end machine does not even begin to touch what is need for today’s top games. Please stop feeding people this kind of old computers can do what you need crap. All you really have to do is try to push the bandwidth necessary for a top MMO without lag through any network card made in 2007 and then watch the fireworks. High end PCs of 2013 are so far beyond anything 2007 that the operating systems for 2013 won’t even load on a 2007 machine. Will you for the love of God, please stop making this ridiculous comparison. Put Windows 7 or Windows 8 on a 2007, if you can, and then play a top of the line 2012 game. Until you do this and show the actually playable results please shut up about how old PCs can do what new ones can. Thank you.

  • benbajarin

    I do think he is focusing more on business / professional consumers. But PCs don’t last forever and upgrades are imminent. Also look at my comments below with capbob on the truck analogy as a indicator of economic / job health.

  • steve_wildstrom

    The economics of power saving in the enterprise have gotten interesting. For years, companies cared very little about desktop power consumption. The incentives were all screwed up. IT made the purchasing decisions, but the utility bill was paid by facilities and charged back to the line of business. So IT had no interest in power saving and line managers didn’t really care about it much either since the impact on their P&L was minimal.

    Now many organizations have made reducing power consumption and important goal. So everyone is insisting on power savings, even though the payoff period may exceed the useful life of the equipment.

    Incentives matter. And this should provide at least a little impetus to PC upgrades.

  • Ingolenuru

    Really? Are you serious? Do you know anything about games at all? Civilzation V on huge maps would make a 2007 system explode. Have you hear of MMOs? Unless they are the kid versions with anime tiny avatars a 2007 pc won’t even start them. New games are recommending 2g of DDR III ram as a minimum. In 2007 you could only dream of having that much RAM clocked at that speed. Please find me even 1 top ten title in PC games that will even load up with a 2007 PC. I understand your desire to make the decline of PC sales apparent to everyone, but you cannot do that with absolutely ridiculous claims. I am a gamer by the way. I have 32G or RAM and an 8 physical processor running at 4G. PLEASE do not tell me I can have the same experience on ANY system sold in 2007 for the consumer market. That is just completely ridiculous crap.

  • Glaurung-Quena

    “I do think he is focusing more on business / professional consumers.”

    Then why did he mention games? Sorry, can’t have it both ways. Corporate upgrade cycles are, as I said, an entirely different matter, driven mostly by accounting’s decisions as to how quickly a given piece of equipment is to be depreciated. But corporate computers are generally prohibited from having games on them at all.

    If you’re talking games, then you’re talking personal buying decisions, in which case I stand by what I said — the only legitimate reason to upgrade, regardless of the constant drumbeat from technophiles that anything more than 18 months old is hopelessly obsolete, is if what you have is no longer up to the task.

    “But PCs don’t last forever”

    For laptops, true. For desktops, sorry, no. Aside from hard drive failure (less of an issue now than it used to be), PCs are extraordinarily long lived devices — I’ve never had a computer that I had to replace because it died on me. Barring tobacco smoke, pet hair, and inadequately ventilated discrete graphics cards, there’s no reason a computer shouldn’t last a decade or longer.

  • Glaurung-Quena

    I did not get the impression he was talking about enterprise purchasing. When he mentioned games, that caused me to see everything he was saying in the light of personal buying decisions, in which case buying a new computer because it will save you a few pennies of electricity is total nonsense.