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AIOs May Keep PCs Relevant

3/12/2012 12:01:00 AM Eastern

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.