The Appeal of Consumer-Focused PC as a Service

on March 31, 2017

“PC as a Service” has started to gain traction in the corporate world, and over the next few years, an increasing number of companies will embrace this new way of procuring personal computers. The concept has the potential to appeal to a subset of consumers, too. And once they see the benefits, many will likely look to obtain additional technology products the same way.

I first wrote about PCaaS back in July 2016 and, since that time, we’ve conducted a great deal more research on the topic at IDC, including surveys of IT decision makers in multiple countries and a forecast around the uptake of such services. While each providers’ definition of PCaaS differs slightly, the main components revolve around paying a monthly fee for a service that includes the deployment, management, and eventual replacement of a PC. Companies like PCaaS because it lets them shift spending on PCs from a single, large upfront expenditure to a smaller, known recurring cost. PCaaS is different from leasing because the package typically includes IT services bundled with the hardware, which can drive some cost savings for the company over buying each separately. firms with existing IT departments sometimes choose PCaaS to lessen the burden of PC management or to free up staff to focus on other key IT initiative. Employees (and PC vendors) like the idea of PCaaS because contracts typically lead to more frequent PC refreshes.

I believe a certain percentage of consumer PC buyers would find PCaaS attractive as well. IDC is currently fielding a consumer survey where we asked about this topic. The US survey is still in the field but I took a sneak peek and, with more than 1,500 collected responses, about one-quarter of respondents expressed an interest in obtaining their next PC through a PCaaS program.

Like Leasing a Car
Some people hate the idea of leasing a car, preferring to pay cash or finance the purchase, so they eventually have a period of time after it is paid off to not have a monthly payment. Because they expect to keep the car for a very long time, these consumers typically keep up the required maintenance, even though it costs them in the form of time or money. PCaaS is obviously not for these consumers.

However, those consumers who do lease a car often do so because they’re comfortable with the idea of always having a monthly payment, they like the idea of getting a new vehicle every few years, and they also appreciate the fact that service is often part of the negotiated fee. These are the types of consumers who would likely embrace the idea of PCaaS. Somebody who is willing to pay a monthly fee, in perpetuity, to have a PC with the cost of service updates, tech support, and even repairs factored into the monthly cost. Best of all, after a certain period of time, they turn it in for a brand new one without having to front a big lump sum payment.

If that sounds vaguely familiar, you’re right: Apple currently offers such a program for the iPhone. With the iPhone Upgrade Program, which I discussed here, Apple collects a monthly fee (starting at about $34) and, once per year, the consumer can trade in their iPhone for a new one. The plan also includes AppleCare+.

Apple’s experience with the iPhone upgrade program, the fact it has nearly 500 retail stores worldwide where people can bring hardware for service and support, and its reputation for delivering high-end notebooks and desktops, make it an excellent candidate to roll out as-a-service plans. Coupled with the company’s growing list of services, including iCloud and Apple Music, the appeal of “Mac as a Service” is undeniable. In addition to catering to high-end buyers, Apple could also reap the benefits of collecting and reselling Macs, just as it does with iPhones today. As well as offering these Macs to consumers at lower-than-original prices, the company could divert some reclaimed units to education channels and other cost-sensitive segments.

Apple isn’t the only one with stores: Microsoft has them too and the company has been testing the waters with a commercial-focused Surface as a Service program. A consumer version could be viable. Companies such as HP, Dell, and Lenovo have already launched commercial PCaaS programs and they have extensive support networks already in place. But the lack of physical stores could be an inhibitor to their ability to offer such a service for consumers who want the ability to walk in and get service.

Clearly, not every PC buyer would embrace the idea of PCaaS. But a significant number of consumers have expressed an interest and there is clear upside for the industry in terms of stable, recurring hardware revenues, improved services uptake, shortened product life cycles, and, perhaps most importantly, happier customers.

Should the idea of consumer PCaaS take off, the possible iterations are nearly endless: smartphones, tablets, wearables, AR/VR headsets, and more. Drones as a Service, anyone?