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Why The U.S. PC Market is On The Decline 317

Posted by Zonk
from the going-down dept.
conq writes "BusinessWeek reports on the recent woes of Apple and Dell. One possible reason according to the article: 'imminent price wars'." From the article: "'There's a softness in the market that's building,' says Richard Shim, a senior research analyst at IDC. In the past two weeks, IDC cut its 2006 forecast for U.S. PC growth to 5.7%, from 6.8%. 'In '04 and '05 there was tremendous growth. In a market that's as mature as this industry is, there's no way you can maintain those levels.'"
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Why The U.S. PC Market is On The Decline

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  • Old PCs Still Good (Score:5, Insightful)

    by Slider451 (514881) <slider451.hotmail@com> on Friday July 14, 2006 @05:40PM (#15721839)
    My fastest desktop at home, a P4 2.6 GHz w/ 1GB RAM, was built 3 years ago and still works just fine. Why upgrade?
  • by hotspotbloc (767418) on Friday July 14, 2006 @05:41PM (#15721850) Homepage Journal
    It makes sense: why upgrade now when you plan on upgrading your hardware for Vista? For better or worse MS drives home a lot of the hardware sales. Now next year should be a much better year.

  • by Aladrin (926209) on Friday July 14, 2006 @05:43PM (#15721865)
    So Dell and Apple grow 1% slower than previously expected and suddenly the entire market is on the 'decline'? Let's put it back in perspective.

    When they first started selling TVs, nobody had one, obviously. But very few could afford them, so they didn't sell many. Then they got cheaper, and more sold. And cheaper, and more, etc etc etc. Until everyone owned a TV. Oh no, people aren't buying as many TVs now. It's not because they are any less popular, or something replaced them. They are simply so common that there isn't a market for people that don't have one. There is only a market for replacements.

    This is the market PCs are enterring. My mother and father each have a PC. They can barely use them, but find them essential. My younger sister has a laptop and a PC. I have a PC, a server-pc, a pc that doesn't even get turned on, an old 733mhz pc that's in the closet, a 500mhz laptop and a 133mhz laptop. Everyone I know has a PC. Or 6.

    PCs are still in a growing market, as the 5.7% figure in the summary states. It simply isn't growing as fast. The real slump will hit when everyone has all the PCs they 'need' and are only buying replacements.
  • by IflyRC (956454) on Friday July 14, 2006 @05:44PM (#15721866)
    Exactly! The only real reason to upgrade these days is if you are a gamer...and unless you are into the high paced first person shooter games (not MMORPG) you will not upgrade at every new game release.

    Things work fine, nothing new has come out to entice people into thinking they need a new system and people are "content" with their install of Windows XP.
  • by bonch (38532) on Friday July 14, 2006 @05:45PM (#15721883)
    You've got that backwards. Hardware sales drive Windows sales. The majority of Windows sales come from OEM preinstallations, which is why Vista adoption will be so slow in the mainstream market. I saw one analyst quoted many months ago guessing 38% Vista adoption by 2008. Just a guess, sure, but I wouldn't be surprised.
  • Vista Factor (Score:2, Insightful)

    by guabah (968691) on Friday July 14, 2006 @05:46PM (#15721887)
    Among the concerns: delays in key computer-related technologies including the latest Microsoft (MSFT) operating system and next-generation DVD players.
    Many potential buyers are waiting for Vista to be released before getting a new PC. If I were planning to get a new PC(And if use windows at all) I would certainly wait for vista to be released next year.
  • by Tweekster (949766) on Friday July 14, 2006 @05:47PM (#15721897)
    Basically that is the same math they use in budget "cuts"

    The people complaining about governmental budget cuts are still receiving MORE than they did last year, but at a lower rate of increase.

    "ohhhh they cut our budget, instead of going up 25% this year it is going up a tiny 15%"

    Unless you are receiving less money than last year, or not keeping up with inflation over a period of time longer than a single year you should be beaten if you claim it is a cut / decline,.
  • by Average_Joe_Sixpack (534373) on Friday July 14, 2006 @05:48PM (#15721904)
    3+ gal gasoline and higher cost of borrowing are beginning to weigh the US consumer. Things are going to get much worse.
  • by Anonymous Coward on Friday July 14, 2006 @05:48PM (#15721906)
    ...and anyone who has heard about it probably only hears negative things.
  • Re:Vista Factor (Score:2, Insightful)

    by Tweekster (949766) on Friday July 14, 2006 @05:50PM (#15721923)
    I have not heard a single normal customer say "Hey, you know what, I am gonna wait for Vista to come out first"

    Outside of people directly in the IT field, hardly anyone cares about Vista. MS VIsta is not even on the scope of people's purchasing desires. The best buy guy may try to push the machine that is upgradeable to vista (which those customers simply wont be doing anyways) and they usually say "yeah thats nice, i may not know about computers, but I do know its not worth upgrading"
  • Re:Stupid Title (Score:4, Insightful)

    by cptgrudge (177113) <cptgrudge@NOSpaM.gmail.com> on Friday July 14, 2006 @05:54PM (#15721944) Journal
    It's just like how many people in government scream when they get their spending "cut". Not always really a "cut", but less than what it was set to increase. It happens everywhere. "Oh no! I only got a 3% increase instead of a 4% increase! I'll call it a spending cut and get people incensed!"
  • by wfberg (24378) on Friday July 14, 2006 @05:57PM (#15721968)
    It's a miracle the market is growing as it is.. For a while now, your 2 or 3 year old computer has been "good enough" for most people. Why would you upgrade if you don't really do new stuff with it? As I see it, reasons for buying a new computer are;
    - you don't have one yet (which is getting more and more unlikely)
    - you're doing new stuff with it, such as getting broadband or editing homevideos
    - you're a nerd/geek/gamer
    - it's broken in some fashion.

    In other words; a replacement market.
    Now, the OEMs know this. This is why Dell is getting into sidelines like PDAs, digital cameras, TV screens etc.
    And, in a certain way, they've always known this. OEMs have always sold PCs that were essentially underspecced when it came to the cheapest upgrade; RAM. A 1GB P3 will simply do for most people. I bet they're glad they shipped them with 256MB (or "double your ram limited time only offer" 512MB).

    A cynical mind might think that this is part of the reason why OEMs include so much "handy" bundled software.. Fill up that memory good, let the apps update (get bigger) once in a while, so the system gets cruftier and cruftier. Have the anti-virus software disable after a month or two to lower defenses..

    There actually are (I'm afraid to say: a lot) of people who buy a new computer simply because the old one got so bogged down with spyware. Dell should have a checkbox on their order pages "[x] my old computer is teh broken with virusses" so they can pick up the old computer as they bring the new one, and ship the old one to Africa, where a simple linux install makes it usable for at least another 3 years..
  • by Anonymous Coward on Friday July 14, 2006 @05:58PM (#15721974)
    Joe Sixpack isn't holding off buying a new box because of Vista. Only nerds do that. Joe is content with what he's got.
  • by WndrBr3d (219963) on Friday July 14, 2006 @05:58PM (#15721976) Homepage Journal
    In the past, the PC market would advance at an alarming rate. If you bought a PC in 1995, lets say a 486, then three years later it would make total sense to upgrade to the newer P2 processors that were out at the time because the performance leap was huge and commercial software was taking advantage of the new speed.

    These days, i find the average home PC for Average Joe Family need no more than a >2Ghz CPU, = 1GB RAM, ~80GB, GeForce 6200 or the likes. This computer would handle Word Processing, Internet Browsing, email and even simple multimedia (digital photos, whatnot). I think it's fair to estimate this PC was a decent 'new' computer back in 2003.

    What has changed for the home user? Windows XP is still the operating system in use. IE hasn't changed much, nor has Office. With that in mind, is it entirely necessary for this family to purchase a new PC? Probably not.

    It boils down to the only thing driving new PC sales is new games, honestly.. and since many home PC users aren't into the latest games at the HIGHEST FPS possible, then of course PC sales are going to sag.
  • I'm not shocked (Score:5, Insightful)

    by zakezuke (229119) on Friday July 14, 2006 @06:06PM (#15722024)
    If all you need your PC for is Microsoft word and powerpoint from time to time, and you already have something 900mhz or above, why on earth do you need another PC? It's hard to think in terms of an ordinary user, but there are typicaly only a few reasons to upgrade.

    1. What you need to do takes too long
    2. It broke and repair is to damn costly
    3. You need more "memory" (where memory = either ram or HD), need a burner, or need that spiffy software application which comes with the new PC.
    4. There is a super duper deal with losts of extras you don't need.

    From a goodwill standpoint, while there are still a number of PCs in the pentium I class, I'm starting to see quite a few AMD durons with gigs of HD space, a modest compliment of memory, and still operational save the spyware infections. I have to say the market is pretty saturated with PCs, more PCs than you can shake a stick at, so many that dell is apparently offering their Dimension 1100 for $50 plus tax and a modest fee for shipping, or free "designated carrier".

  • by Quiberon (633716) on Friday July 14, 2006 @06:12PM (#15722054) Journal

    I think it's a combination of 'home entertainment' being done better on the games consoles (surely XBox360 must be a growth market), and 'corporate' users figuring that a long-life PC (with parts replacement) is more environmentally friendly, does not fill up and pollute landfill space so quickly. Should a corporate PC now have a lifespan of 10 years rather than 3 years ? If Microsoft won't supply a software maintenance service at competitive prices, that leaves doors open for the likes of RedHat and Novell who certainly will.

    From what I can see of Microsoft Windows Vista, it's aimed at the games market.

    Corporate/professional use just doesn't get anything more out of Vista than XP; it's not as if a new version of Microsoft Word will help you think and express yourself more clearly than the old one does.

  • by xjerky (128399) on Friday July 14, 2006 @06:14PM (#15722064)
    Apple has yet to release an actual "Desktop" x86 machine, so hold your conclusion until then. So far, the x86 line is filled with competitively-priced 'specialty' items, like the iMac, Mac Mini, and Macbook (+pro).
  • by Guy Harris (3803) <guy@alum.mit.edu> on Friday July 14, 2006 @06:21PM (#15722091)
    Apple has yet to release an actual "Desktop" x86 machine ... So far, the x86 line is filled with competitively-priced 'specialty' items, like the iMac, Mac Mini, and Macbook (+pro).

    I guess it depends on how you define "desktop". The iMac is more of a "desktop" machine, in the literal sense of the word, than is the Power Mac - the Power Mac in my office isn't on the top of my desk, it's underneath the desk. You could put a Power Mac tower on your desk, but if you put an iMac on the floor, you're not going to be able to use it conveniently from your desk (unless you ssh into it from a machine on your desk).

    The iMac is the consumer "desktop" (as opposed to "laptop") model in the Apple line (although the Mac Mini could also be used with a monitor as a desktop); the Mac Pro or whatever it'll be called will be the "professional" desktop.

  • by Kjella (173770) on Friday July 14, 2006 @06:21PM (#15722095) Homepage
    Unless you are receiving less money than last year, or not keeping up with inflation over a period of time longer than a single year you should be beaten if you claim it is a cut / decline,.

    And unless you're being asked to do more for same amount of money. For example, in education you can get a budget increase of 5% and a pupil increase of 10%. You can hear the politicians about how they're spending more money on education but it's still a net decline. It works both ways...
  • by WillAffleckUW (858324) on Friday July 14, 2006 @06:25PM (#15722117) Homepage Journal
    Exactly! The only real reason to upgrade these days is if you are a gamer...and unless you are into the high paced first person shooter games (not MMORPG) you will not upgrade at every new game release.

    That reminds me of my son's reaction when we brought home his new Mac mini with LCD flatscreen - the last computer I got him was an iMac, 8 years ago. We plug it in, connect it, and go on the Net.

    His first reaction to the better graphics, faster CPU is "the Internet's not faster".

    Duh ... we still were using the same Comcast high speed cable modem - it's not like it would suddenly "speed up".

    Hence, why bother upgrading? The Net won't go any faster. Sure, maybe you'll get cooler graphics, or better resolution, but in the end if you spend 90 percent of your time online, you won't see much difference.

    So a "slump" in growth (aka growth that in the 70s would have been "fantastic") is just the fact that we as a nation haven't moved to Gigapop Internet like most of the real industrialized nations have.
  • Spyware factor (Score:3, Insightful)

    by a_greer2005 (863926) on Friday July 14, 2006 @06:40PM (#15722180)
    Many folks just scrap their PCs every year and get a new one rather than paying Geeksquad to fix the old one...this is a HUGE problem; imagine if folks just scrapped their cars in stead of changing the sparkplugs.

    this is contributing to a forthcoming social, ecological and economic disaster...and I am saying this as a conservative!

  • by KingMotley (944240) on Friday July 14, 2006 @06:42PM (#15722198) Journal
    I couldn't figure out how a 5.7% growth is a "decline" until my wife walked in and told me how much money she saved me at the store because she bought all this stuff 50% off that we didn't need.
  • by jawtheshark (198669) * <slashdot @ j awtheshark.com> on Friday July 14, 2006 @07:05PM (#15722334) Homepage Journal

    P-III 600MHz mobile with 512Meg RAM here. Works absolutely fine on WinXP/FreeBSD....

  • by Savage-Rabbit (308260) on Friday July 14, 2006 @07:43PM (#15722489)
    It makes sense: why upgrade now when you plan on upgrading your hardware for Vista?

    The only people that are waiting to upgrade their hardware until Vista arrives are nerds and techno freaks that get a kick out of building their own pooters and a healthy proportion of those wouldn't touch VIsta with a 18 foot pike because they either run Linux/OS.X or because they are die hard gamers who will stick with XP to wring every ounce of performance out of their system to be able to run Quake 4, Doom 3 (or whatever the latest gaming craze is) at an insane resolution on a 30" cinema display and still get decent frame rates. The vast unshaven mass of PC buyers is completely unaware of the existence of Vista and will remain so until they happen to see a news report on it's launch and even then they probably won't care much until they buy a new PC one day and... geeee... Windows sure looks different.
  • by Plaid Phantom (818438) on Friday July 14, 2006 @08:17PM (#15722641) Homepage
    There didn't use to be a difference in meanings between "personal computer" and PC. Guess I skipped that day of class.
  • by Anonymous Coward on Friday July 14, 2006 @08:25PM (#15722681)
    You are fucking dense, aren't you? Steadfastly refusing to see his (very logical and true) point.
  • by cliffro (964798) on Friday July 14, 2006 @09:37PM (#15722918)
    Well the only problem with consoles is the fact that FPS games as well as RTS are a horrid experience on a console regardless of which one. and then when it gets outdated you need to go buy the lastest greatest for several hundred more.

    on average my upgrades range from $20-$300 and thats not every year or even several times a year that most people seem to equate with a PC.
    Although i am about to build a new rig, but only because 200gigs of HD are running out from bigger and bigger games, my 6800GT is starting to show its age as well as my A64 3000+
  • by Zhe Mappel (607548) on Saturday July 15, 2006 @02:49AM (#15723787)
    Vista? iPod effect? Come on, that's too nerdy to matter. Slowing PC sales have to do with tightening purse strings.

    Everybody knows the obvious reasons (e.g., gas prices, interest rates, outsourcing), but the lurking fat girl ready to jump out of the cake and start farting up a storm is home equity borrowing.

    Under Bush, you borrowed against your fast-appreciating home as fast as you could. Then you went out and bought crap.

    That money's spent (though usually still owed). Unhappily for those counting on the "home ATM" to work forever, there's a glut of homes and condos nobody wants and that owners can't sell. Speculation is rife, values have ballooned beyond the reach of most buyers and new building is continuing like a bad thyroid problem: this will lead to declining values. The WSJ observed a plateauing in new equity borrowing back in March; just wait. There's more signs of the hard landing ahead today at WSJ.com, where it's argued that "the current slowdown in homes sales is more profound that many had first thought," along with mounting fears of recession.

    Under mountains of debt and delusion many Americans are going to learn to live within their means, which will be reduced by the reckless choices--financial and political--made in this decade. Obviously, that means fewer new Dells and Apples among other things. Anyone looking for good prices on systems might want to wait for the foreclosure sales in McMansion land--lightly used, you know, just a little porn and Rush Limbaugh. ;-)

  • by IdahoEv (195056) on Saturday July 15, 2006 @08:43AM (#15724281) Homepage
    Ridiculous stereotypes modded insightful? Grow up, people.
  • by IdahoEv (195056) on Saturday July 15, 2006 @09:20AM (#15724325) Homepage
    Anyway, you can keep paying extra money for your Macs and thinking they are the greatest things on Earth, I will keep spending my money on much cheaper hardware which has always been easier/cheaper to upgrade/custum build my own computer myself (I have heard Macs are getting better in this area, but I do not know for sure) and also "just work". I also don't have the pompousness that a lot of Mac owners (such as you) have which I think is much preferable.

    Wow, a good old-fashioned platform flame war. I love it! I'll chip in.

    As a freelance developer (LAMP and Java), I have both macs and wintel boxes at my desk, plus intel-based linux servers in the basement. I think all the platforms can be made to be perfectly functional development machines, but there are drawbacks. For me:

    1) The mac os is imho cleaner and more stable, faster to navigate files and easier to maintain. I spend less time doing technical support for my own mac than for my own PC by a large margin.

    2) Despite the hype, software support for the Mac is still not as good. Office for Mac is buggy as all get out. Bugs are far more rampant in Eclipse when running it on Windows. Guides for simple things like installing MySQL are harder to find. These are all basically because the platform has fewer users, so problems with 3rd-party code are not addressed quickly. I regularly run into 3rd-party apps with no mac equivalent, like the software for my Garmin Forerunner GPS system.

    3) The mac interacts with linux and LAMP infinitely better. Out of the box it has a shell, Apache, ssh, sshd, and most of the basic stuff you'd expect from a trim linux distro. I use a cron job and rsync to back up my mac filesystem to a linux server; this took about 30 seconds to set up. This makes it a much better environment than windows when developing LAMP applications.

    4) Linux has no Adobe suite. For me, that's death on the desktop; I use Photoshop and Acrobat pro daily, plus Illustrator at least 2-3 times/wk. But it's great for servers, I've got a posse of them.

    For me, #3 and #1 outweigh #2 so I use the mac for most of my daily work and use the Win PC for compatibility testing. There are certainly days when I curse that Eclipse/mac doesn't work right, though. (Subversion integration doesn't work right on the mac in either Eclipse *or* Zend Studio ... grrr!)

    Other item ... the most common reason I hear for PC's around /. is "I can build them myself / I can upgrade them". Anyone who really believes this doesn't work for a living, or can't do simple math. I built my last PC, saving approximately $250 over a comparable Dell. I will NEVER do that again. It took two days to get it working right, with a delay in between while I returned the RAM for a different brand with slightly different parameters. I bill my time at $100/hour. The time lost getting it working right cost me around $2500, enough to buy a new Dell AND a new Mac.

    Meanwhile, any machine (including a mac) is trivially upgradable with RAM and disk space. Hell, because of the gorgeous case design memory and storage upgrades are easier on a Mac.

    But by the time you'd want to upgrade anything else, there will be a new CPU you need that requires a different socket, a new graphics card that requires a different bus (PCI,AGP 2x,4x,8x,16x,PCI-X,PCI-E) a faster type of RAM, and the memory throughput of your old mobo won't be satisfactory. You'll need a whole new system anyway - "upgradability" is pretty useless IMHO. All you can save yourself is a $50 case and PSU. Big whoop. Maybe you can keep your old HD for a while, but if you do important work you really want to replace your HD's every 2-3 years anyway.

  • by ce33na66 (988044) on Saturday July 15, 2006 @12:49PM (#15724905)
    There are currently seven functioning computers around my house. Three Ubuntu desktops, one freessco box, one headless XP machine, a wireless XP laptop and a wireless Ubuntu laptop that absolutely rocks.

    My personal desktop is a 766Mhz celeron running Ubuntu. It does everything I feel I currently need. My son is happy playing his online games on a three year old Ubuntu machine. My wife is perfectly capable of doing anything she needs towards finishing her college degree with the remaining systems.

    The XP desktop would not even be here if it were not for my wife foolishly buying a Canon "3 in 1" printer that only works on windows.

    Think about it. My family can do anything they decide to do with what amounts to other peoples throw away machines. Most of our closer friends have come to us when they felt that they needed new computers. If they were ready for linux, we put them on the favorite linux distro at that time (currently Ubuntu). If they were not ready for linux, we set them up with a 98lite gutted version of ME (don't laugh, its a pretty slick little system if you go the "micro" route). They are all still running along happily with no major complaints.

    I've been doing my part to stop this mentality that says "we have to upgrade because Microsoft has a new system." The old argument about how hard it is to use anything other than Mac or Windows doesn't fly in my house. We swapped to Linux in 1995. I'm not an IT pro. I'm a steamfitter. Guys, its just not that hard.

    Even my Macintosh nazi father-in-law is beginning to question this continual upgrade cycle.

    Perhaps the rest of the community is starting to figure out that they are getting ripped off by computer and software manufacturers.

    If it isn't broke, don't fix it.

Never test for an error condition you don't know how to handle. -- Steinbach

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