PCs and Laptops are Now Essential for the Work At Home Crowd but are in Short Supply

Given the mandate for people to work from home, it seems logical to assume that most, if not all, who are doing this are using a desktop, laptop, or possibly a tablet to do their work.

For most of the history of the PC market, PC vendors have always had more than enough stock in place to meet demand during regular times, but these are not normal times.

In parts of the country, big outlets are reporting shortages of laptops, and demand for desktops are on the rise for the first time in years. And with people not being able to socialize in person, they are deferring to various digital means, and laptops and desktops are the preferred medium for things like video conferencing and games.

One key factor for the short supply of these products is the fact that almost all of the factories in China were locked down for at least a month from mid-January to Mid February. The average time for Chinese factories to be offline is about ten days during their New Year, which starts in mid-January. That pushed out the manufacturing of PCs and laptops at least another 2-3 weeks from normal.

The other reason is that Q1 is the slowest time for most PC and laptop sales during the year, and PC makers order smaller numbers in this quarter and then ramp up output in larger quantities by the end of Q2. That means that in Q1, at best, they only had about 6-8 weeks of inventory in place before the factories in China shut down.

The work from home mandate means that many companies had to move quickly to help their people connect from their homes. In about 38% of the cases, businesses sent people home with company based machines. In a recent NordVPN report, they found that about 62% of people working from home are using their personal PCs, laptops, and tablets for work purposes.

Our research is showing a couple of significant trends that are very favorable for the tech industry, and it starts with what we see in IT purchases. PC Vendors are telling us that demand for commercial laptops is very high, and this is forcing them to expand their manufacturing pipeline fast.

One vendor we know has increased their orders for Q2 by 60% to meet the demand of their business customers.
We hear similar numbers from those making consumer PC’s and laptops, as they too are seeing an upswing in demand and have increased their PC and laptop orders by an average of 25%-30% for Q2.

Families who have children that have been using Chromebooks are now in the market for laptops with better cameras and better audio. This is driving demand for consumer laptops into higher price ranges as parents see the need for better and more powerful laptops to meet the increased requirements the kids are getting from their teachers and online courses.

One question we are getting is whether this bump in demand for laptops and PC’s are a short term event or one with longer legs and bigger ramifications for the tech industry.

It is too early to have any stats to see if this is a long term trend, but some things are coming out of this WFH experiment that bodes well for tech and could harm at least one or two major industries.

IT buyers are signaling to PC makers that they will begin to speed up their PC and laptop upgrade cycles. Their tendency to keep laptops in circulation for 4 to 5 years is biting them as these laptops are being used at home and have inferior cameras, slow processors, and poor audio.

This could cause a huge wave of new laptops going into corporate for at least two years as they prepare for any other significant pandemics or economic disasters that could force most of their workers home again in the future.

Gartner recently surveyed IT directors, and they said that they are also rethinking their work at home policies. For many white-collar workers, they have found that their productivity has not gone down and instead improved. Less mindless meetings with people arguing and talking over each other, and instead, their virtual meetings are more focused, and they get more accomplished.

With this in mind, IT directors told Gartner that they could see allocating up to 20% of the workforce to their homes, and those people would only need to be in the office for major events or highly secure meetings.

The impact of this on business real estate and office building construction in the future could be a difficult one. While the tendency in a good economy may be to expand a companies
in-building workforce and augment real estate holdings, if WFH works for more companies, there could be a tidal wave shift in less demand for business real estate and offices.

One other thing that is becoming clear is that companies who have resisted moving to a full digital transformation will start moving in this direction faster than planned.

Smaller businesses are seeing the need to have as much of their operations include various elements of digital transformation in their business operations. This will need to happen if they want to grow and be prepared for any other types of interruptions that could impact our global economy and way of life in the future.

What is also coming out of this forced isolation is the fact that tech is now “essential” for people’s existence and sanity. PCs and laptops are people’s windows into work and entertainment. While tablets and smartphones can be used for these purposes too, when it comes to working at home and productivity, laptops and PC’s have risen in importance as the workhorses for any WFH initiatives.

Although the economy will indeed face a severe recession, with PC’s and laptops emerging as essential tools for business and families, this part of our tech industry should be able to weather this downturn without too many serious bumps.