AIOs May Keep PCs Relevant

By Doug Olenick On Mar 12 2012 - 4:01am




NEW YORK – The proliferation of tablets, smartphones and Ultrabooks might put forth the idea that the stogy, old desktop has been put out to pasture, but the truth is bit different.

The category will never regain the prominence it had from the 1990s into the early part of this decade, but two items are expected to keep the desktop a viable category for the foreseeable future. The emergence of the all-in-one (AIO) desktop PC as a popular consumer product and the continuing desire among certain market segments for the tried and true desktop tower.

Manufacturers said these new categories are winning the battle for the consumer dollar, and the desktop category will probably lose a bit more share to mobile devices. However, industry watchers do think the downward spiral for the desktop is finally flattening out.

“The AIO will help stop the erosion,” said Steve Baker, industry analysis VP for The NPD Group.

The touchscreen AIO was first introduced by Hewlett- Packard in 2007 as a potential kitchen computer. The pricey ($1,899) device did not fare well in that role, but over the last three years it has evolved into a more mainstream device to become the star desktop product for vendors who compete in that category.

Additionally, the AIO has helped stabilize the desktop market in the face of the onslaught presented by mobile products.

“There are lots of people who do not need mobility. There is huge interest in the AIO and its experiencing double digit growth as it replaces some other segments, like 17-inch notebooks for example,” said Baker.

IDC tags the worldwide share for desktops at about 40 percent, with many of these sales taking place in emerging nations.

Despite seeing its market share decline, the tower’s niche in the market is also more or less secure, primarily because it is now a necessity for many people, particularly those with families.

“The desktop tower is still a very valid format. It’s in the comfort zone of people who are used to buying towers so when replacement time comes they go with a tower,” said Xavier Lauwaert, Hewlett-Packard’s manager, product marketing, worldwide desktops.

With that said, Lauwaert said the world is going mobile, so HP’s aim is to embrace mobility, not fight it, by finding ways to integrate mobile devices with desktop platforms.

This is primarily being done via the AIO, Lauwaert said.

Since the AIO’s introduction, other companies have jumped on the bandwagon.

“The AIO is a particular success story for Lenovo, and there is still room for growth with the AIO,” said Michael Littler, Lenovo’s product group marketing, consumer segment.

Littler said the AIO market is now expanding upward in price. Initially, the lower price points up to about $800 was the sweet spot, but Lenovo is now looking to push models priced $800 and more.

The most visible sign of the AIOs success is the amount of shelf space they are gaining at retail. Littler said the AIOs are expanding at the desktop tower’s expense, even as the entire desktop category is losing out to laptops and tablets on store shelves.

David Daoud, IDC’s research director, personal computing and green IT, thinks there is a chance the AIO could eventually put the tower out of business in the consumer market.

“It gets difficult for the average customer to justify it, the desktop, Daoud said, but there are areas the desktop can still do well are with the AIO form, the enterprise space, emerging markets and with families.

He pointed to the AIO’s touchscreen and features like a TV tuner will hurt the tower’s ability to compete overall for the consumer dollar.

However, most vendors still believe there is some upside for the venerable tower.

Frank Chang, Acer’s Pan America director for desktops, said he views the tower as less a commodity item like a refrigerator but more like a consumer’s need for an SUV.

“Every now and then you need something with power,” Chang said, adding that the cool factor certainly falls to the tablet and smartphone. However, if a PC breaks, it has to be replaced.

Even with the positive outlook being placed upon the tower, its heyday as a consumer favorite is long gone. The majority of the tower business is taking place at the low end with families tending to buy these models for their children because they are easy to set up and the danger of a child breaking one is minimal compared to a laptop, said Daoud.

However, a healthy portion of the remaining sales are taking place at the high end as gamers and prosumers buy towers because they pack the horsepower needed for their specific tasks like video editing. They are also highly upgradeable making them popular with the do-it-yourself user, a feature not always available in a notebook or even an AIO.

Consumers also know that towers are more powerful than a comparatively priced laptop and that is a big draw, said Lauwaert.

He said about 65 percent of HP’s worldwide desktop sales are towers with the remainder being AIOs.

Small form factor towers are a popular niche, said Littler, and Lenovo sees the tower business gravitating to this area.

The other bright spot for towers is the enterprise market as most company’s still prefer to buy towers for their employees to help keep costs down.

The desktop’s future on the consumer space could still hold a few surprises, said Daoud. “The desktop could reinvent itself like the TV has, you never know,” he said.

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