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Recession speeds up the death of the desktop

Analysis: Notebooks and netbooks rise from the gloom
Tue Sep 08 2009, 12:44

COMPAL ELECTRONICS is the latest outfit to see growth in its notebook shipments during the third quarter.

Compal president Ray Chen said the company will see a 20 per cent sequential growth in notebook shipments in the third quarter and 10 per cent for the fourth quarter, as demand in Europe recovers.

On one hand this is an indication that the IT market is recovering, however it seems that the laptop and notebook markets were fairly resilient during the recession and will grow like topsy once the recession disappears into history.

But few people expect desktop PC sales to pick up as fast or as certainly then. Most desktop PC makers suffered a massive bashing during the recession, which was not felt as much by the makers of laptops.

The same thing was noticed with Apple. Its laptop sales did quite well during the downturn, growing by 60 per cent. However Apple's desktop segment didn't do nearly as well with its Intel-based systems in the second quarter, with its sales volume declining 20 per cent year on year.

Some of this could be due to a statistical anomaly. Most computer desktops are sold to companies, and if there is a recession they don't buy them. Since corporates are the biggest users of desktops, then it is understandable that sales have plummeted. Similar problems have been noticed with server sales.

But corporates are also the biggest buyers of laptops and yet these sales have not suffered nearly as much. So why have companies been buying laptops and not desktops?

It is part of a trend that was noticed long before the recession bit, we reckon. While the desktop might be better at what it can do relatively cheaply, it can't handle the one thing that people want - mobility.

Businesses have wanted their employees to be able to work from anywhere and so laptop use rose from one in five workers to one in three in 2005. Before the recession IDC predicted that more than half of all workers would have laptops within a couple of years.

The recession has also made cash-strapped IT departments wonder why a worker would need a desktop and a notebook. It makes much more sense to just have the notebook, particularly with the evolution of WiFi networks.

Laptops and netbooks have enough horsepower to do most anything that a consumer or worker wants to do with a computer. They are cheaper than a full desktop and can be taken from cubicle to conference room to customers' offices. True, they may not last as long as a desktop and are harder to fix if you pour coffee over the keyboard, but generally they as cheap as chips.

Obviously a company is always going to need desktops for some work, but the majority of workers simply do not need one if they have a notebook and a decent screen.

This change was expected before the recession, but it seems that the recent economic woes have sped the process up considerably.

Matthew Wilkins, principal analyst for compute platforms for iSuppli, said in a press release last month that that even in weak years PC unit shipments typically rise by single-digit percentages. The last decline, in 2001, was a 5.1 decrease in unit shipments due to the extraordinary impact of the dot com bust, which caused inflated IT spending levels from the previous years to collapse.

Wilkins said that mobility is winning out in the PC market. Businesses and consumers continue to embrace notebook PCs because of the benefits of mobility and the near-equal performance and feature set. This is cutting into desktop PC shipments. He thinks that shipments of desktops will rise but conditions will remain weak compared to 2008.

The next growth in desktop PC shipments will likely occur after Microsoft releases Windows 7, but it is interesting to note that the Vole's latest operating system seems to have been designed for the notebook user far more than the desktop PC user. Vista required heavy resources that Windows 7 does not.

It is possible then that Microsoft has decided that its future operating systems are less likely to be used on deskside boxes and more on lapwarmers. µ


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