Opinion: Eulogy for the desktop

By Sholto Macpherson on Feb 12, 2010 1:24 PM
Filed under Hardware

The days of the family desktop must be numbered.

I was getting a quick bite with a PC components distributor yesterday when he told me about one customer who had come in to close his account. The reseller, who had been on the books and sold well for two years, had decided to get out of IT and open up a cafe.

Why? In short, he blamed the iPhone. He didn't see a future for small resellers like himself because desktop computers were being replaced by smartphones that could email, play games, surf the web and, well, make phone calls.

Selling PCs to consumers is a tough business that has been getting tougher. The need for a family PC has dwindled as laptops become a one-per-person commodity. Companies are often just as happy to give their staff laptops if it means they can work from home after business hours, and netbooks and laptops are popping up in more schools.

The smartphone boom has further weakened the case for a family PC by putting the "personal" into personal computing.

And then there's the competition. JB Hi Fi's recent $76 million profit for the past six months has got to come from somewhere. If you look in last year's annual report the outgoing CEO Richard Uechtritz identified "Computers", which it started selling four years ago, as a growth area.

"We are very pleased with progress to date and estimate that we are now in the top two retailers in the category," said Uechtritz.

Games consoles have narrowed the margin with dedicated gaming PCs, and browser-based games such as World of Warcraft can be played across multiple (and portable) devices.

My colleague Will Maher, editor of PC Authority, argued that the trend towards high-resolution video and photo editing would commit consumers to desktops for the extra power and storage, but I'm not too sure.

Last November I profiled Melbourne reseller Amexcom. The shop-front retailer had shifted its business from walk-in consumer sales to making machines and maintaining networks for local business. The margins were better, long-term relationships with customers meant ongoing business and predictable cash flow.

How many resellers have the guts to stick it out in the consumer-only space? Tell me how it works, because it looks pretty tough from here. It might be time to read the last rites for the family desktop.

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8 comments in this discussion

"pmc, the consumer range of pc is usually loaded to the gunwhales with bloatware, as these boxes are perceived to be the first and last purchase joe retail will ever make. sadly, it isn't. and the ..."

By plhau98

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Comments: 8

natecochrane Feb 12, 2010 2:50 PM	The lone, desktop desktop PC may be waning in importance as the information fulcrum around which the family orbits but with all those networked devices such as notebooks, smart phones and games consoles comes a greater reliance on networks. Broadband connections of at least ADSL2-standard become critical as more simultaneous users on more devices will hobble older 512 Kbps and slower services. Then there's networking in the house. Start shunting around a few HD videos, raw photo files and online gaming and soon wireless will have problems. With their digital life accumulating in the form of shared music and photo libraries primarily, the family will need to store it centrally where they can all access it - even if they are out of the house. Hello, RAID, and they will want to safely back it up so welcome Mr Disaster Recovery. Then there are the cloud services they need to access to keep it all humming along and following them as they move through their day wherever they are. Soon, unified communications sold in a box or as a service will replace the patchwork of devices that now take voice messages, reticulate calls and otherwise keep the family post-it notes on the fridge. What is happening in homes reflects what happened in businesses 20 years ago when solitary PCs were linked by corporate networks. The same lessons businesses learned then about availability and security home users are now coming to grips with.
spook1958 Feb 12, 2010 5:28 PM	Box shifting by small retailers has been dwindling for years. Supplying Desktops and Notebooks with support hasn't dwindled. Notebooks haven't sucked in the gamers yet. No matter what new trends there are, the constant is that it is never as simple to setup or use as manufacturers claim and so there is always work for the person who CAN make it work. Low end components that consumers tend to buy also have a failure rate that frustrates the buyer but makes the support person smile. After the consumer has wasted a couple of hours trying to make the cheapie work, they are pleased when told to take that piece of crap back to where you bought it, THIS ONE works! Desktops with support sell well. Ian
natecochrane Feb 12, 2010 11:24 PM	I wonder what proportion of desktops are sold with support contracts? We always used to advise our clients to buy some sort of annual subscription with their purchase. The little bit more those customers paid was more than compensated by the added utility they received from their investment.
tabletpc Feb 15, 2010 4:53 PM	Box movers will get caned every time - Not by the iPhone, but by your JBs and god forbid - Harvey Normans. They have location, brand and price on thier side every time! Desktops for home have been replaced by laptops and netbooks for home in every increasing numbers. If resellers would wake up to what's going on they could take refuge in the places where the desktop can succeed, but Harvey won't or can't go (at least well)... Like the HTPC - which is wide open for the taking.
plhau98 Feb 17, 2010 12:56 PM	rubbish. I know many resellers of Build your own pcs that are currently smashing harvey norman and JB. It depends on the end user. if they buy a computer loaded with bloatware from a retail outlet first time around, they are far less likely to buy another one now, at least 6 or 7 years later. They will be investigating a computer that matches their needs and wants. Build your own companies will always have a niche to explore. most users don't understand what they are buying now, and an informative sales person will win out every time. most of the informative sales people, i might add, aren't working in large retailers, they are out in the "wild" of the whitebox community. Retailers seem to gain low knowledge, fast talking sales people. FUD is not a good sales strategy...
spook1958 Feb 17, 2010 4:18 PM	Couldn't agree more plhau98 There is a reason why computer retailers are banned from premises within HN developments, HN cannot compete. Any sale for a machine you lose to them, you pick up more money fixing software and user issues within a short time anyway. National sales figures show whitebox losing ground, but considering what whitebox is up against from Microsoft, Intel and others that keep the playing field from being level, whitebox is doing remarkably well. Ian
pmc777 Feb 18, 2010 2:37 PM	I do not believe the playing field is level mainly due to deals done between manufacturers and large retailers. JB and HN and others clearly get exclusive access to models that us smaller retailers cannot. Commonly with toshiba for example I can buy a similar model to the retailer but they get access to a home os version while we have to buy it with pro os. Clearly this will make us look more expensive for little benefit to many customers. I have long felt this to be anti-competive behaviour so should be of interest to ACCC but apparently it is acceptable to do this in our industry.
plhau98 Mar 3, 2010 2:01 PM	pmc, the consumer range of pc is usually loaded to the gunwhales with bloatware, as these boxes are perceived to be the first and last purchase joe retail will ever make. sadly, it isn't. and the upgrade path is limited, whereas the pro boxes have a greater expansion direction... end users buy from HN for convenience. it is in stock. it may be $100 more than the little guy down the road, but do they have every product under the display bench? HN does. retail is a cutthroat business. the way to compete against HN is to be helpful, knowledgeable, and not condescending. Help the client as if they were your best friend. Many a time HN has lost a deal to me because I went out of my way to help the end user. There will always be a deal lost to HN, but at least they are a lot less than they used to be...