CIOs used to refresh PCs because they wanted to run the latest software. Now, software is not compelling enough to justify a PC upgrade.
Businesses and consumers will not be buying more PCs for the next two years, according to the latest predictions from analyst IDC.
IDC noted that while the PC industry was pinning its hopes on Windows 8 and the emergence of ultrathin notebooks to revive demand, efforts thus far have been disappointing. A lack of touchscreen components has contributed to a limited supply of touch-enabled Windows 8 models, according to IDC.
The analyst blamed the continuing economic malaise for curbing IT budgets, which led to an 8.3% year-on-year decline in PC shipments during the fourth quarter of 2012.
But there is an underlying theme: PC shipments are in decline. And the reason for that decline is that they have become the 21st century equivalent of the dumb terminal from the mainframe era.
IDC's Worldwide Quarter PC Tracker data shows that PC shipments declined 3.7% in 2012. In 2013, it expects shipment to decline by a further 1.3%. In 2014, however, demand for new PCs will increase slightly, leading to a predicted growth rate of 1.9%.
PCs have become the 21st century equivalent of the dumb terminal from the mainframe era
No killer app to drive desktop sales
“We still don't see tablets – with their limited local storage and file system, and lesser focus on traditional productivity – as functional competitors to PCs, but they are winning consumer dollars through their mobility and consumer appeal nevertheless,"said Loren Loverde, programme vice-president, worldwide PC trackers, at IDC.
It is not necessarily the popularity of tablets, such as Apple's iPad, that have resulted in the PC's demise. It has been a long time coming. The PC is not dead, it will remain a useful business tool, but there is less need for CIOs to equip the majority of business users with the latest powerful desktop or laptop computer. The killer app that will make everyone go out and buy the latest PC no longer exists in business.
Market leader HP recently reported a massive decline in its PC business, of 8% to $8.2bn, as a result of poor notebook PC sales.
Dell's poor financial performance is also down to lack of PC sales, which has seen its founder, Michael Dell, take the unprecedented step of re-privatising the company. It is believed this will pave the way to a major restructuring out of the public's eye, possibly culminating in Dell offloading the PC division.
As IDC noted, tablet computers are not personal productivity devices. To use them full-time in a business context would mean attaching a keyboard, docking station and possibly a large monitor, which begs the question, why not simply use a PC?
Latest software is not enough
Microsoft’s strategy for tackling the growing popularity of tablets has been to offer Windows 8 as a tablet-optimised operating system (OS). Why buy a tablet and a PC, it argues, when a Windows 8 tablet can work as both? Manufacturers now offer a range of devices, from pure tablets, to hybrid devices, to ultrathin notebooks with touchscreens, all powered by Windows 8.
But the high-spec Windows 8 tablet devices are significantly more expensive than Android tablets, and many businesses are not upgrading to the new OS, which makes these highly functional new devices redundant.
In an article for Computer Weekly, Quocirca analyst Clive Longbottom noted that the majority of enterprise applications in an organisation will have been written for Windows XP/Vista/7, and will default back to the traditional desktop user interface (UI) when run on Windows 8. “This is incredibly distracting for users should they then have to use anything under the modern UI – and switching between them is not that intuitive,” he said.
Apart from the UI issues, many businesses are in the midst of migrating from Windows XP to Windows 7, before the cut-off date for XP support in April 2014. After this time, Microsoft will no longer provide security patches for XP, unless businesses buy an expensive custom support contract. Given that most businesses will have refreshed PCs a few years ago, their desktop and laptop PCs are capable of running Windows 7, so there is no rush to upgrade.
Desktop virtualisation extends life of hardware
Desktop virtualisation is another factor that is starting to gain traction. Previously, running Windows desktop applications remotely resulted in a poor user experience, but thin client devices are now smarter.
Wyse, for instance, which Dell acquired in 2012, sells the D90D7 embedded Windows thin client, which includes Wyse Device Manager software and is certified for VMware, for $499 (£329). According to Dell, the device supports rich media and high-definition video applications.
Sunderland City Council has deployed Wyse terminals to provide staff with remote access to Windows applications.
Major PC refreshes are a thing of the past
Eventually, people will migrate to Windows 8, but this is unlikely to stimulate a major PC refresh, according Dale Vile, an analyst at Freeform Dynamics. “Even if businesses want to move to the latest Microsoft software, like Office 2013, Windows 8 is more efficient and can prolong the life of older hardware,” he says.
People used to migrate PCs because they had to, he said, but now they are in control of PC refresh cycles and many computers in current use are capable of running the latest operating system.
So, while CIOs may be managing the migration to Windows 7 today, many have no compelling reason to migrate to newer hardware.