How Much Of A Slump?

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There’s a few articles out today which measure the slump in PC sales. You can find them here, and here.

Though the numbers are a bit different, they basically say the same thing: U.S. sales have dropped a bit more than 5%, and the rest of the world is paddling water.

What should we make of this?

A rather huge chunk of the PC market seems to have adapted the strategy of “MS SOAP” which means: “Microsoft, Save Our Asses xPlease.” If you look at the
Intel conference call, they’re planning for a big upsurge due to the release of XP.

I’m going to talk more about Intel’s efforts in a separate article, but I find
this upsurge dubious for a number of reasons:

Short-term:

In case you haven’t noticed, it will take a near-miracle for the world not to go into recession for a while. Computers are still big-ticket items for most personal or business budgets, and since they just don’t up and die; it’s easy to postpone updating them, especially when . . . .

There’s no terribly good reason for most people with a relatively modern machine to upgrade. Most people just don’t demand very much from their machines. and most software certainly doesn’t.

Except XP. If the numbers here are any real indication; XP wallops performance while not giving you all that much in return.

Even more bizarrely, what is being positioned as the replacement machine to power XP? Essentially a CPU/mobo combo that is arguably the worst of the available platforms.

This is going to be a hell of a sell to at best reluctant recession-fearing buyers.

Long-term:

However, a recession-induced malaise is really the least of the PC maker’s worries. These guys are thinking six-nine months max of grief. I think it’s going to be more like 5-10 years.

Let’s look at the world market:

For about half the world: talking about computers is complete nonsense. We’re talking running water and food and electricity and telephones first.

For maybe about 30% of the remaining half, computers won’t be ludicrous, just fairly ridiculous for most. This is the “growth market” and it will grow, grow a lot among the richer of that 30%, just not enough to sustain historical growth patterns.

That leaves the developed parts of the world. There’s two problems here:

First, just about anybody who wants a computer already has one. This market will gradually grow due to generational shift as the low-usage elderly die off, but that is a gradual process.

More importantly, the current tasks for which the average person uses a computer just don’t require a whole lot of computing firepower. Email, Internet use, word processing and personal finance just don’t need a lot of firepower.

Will new tasks emerge? Sure, eventually, but to keep it short, the most likely “killer apps” of the future require cheap, readily available fiber-optic broadband to be usable, and that’s not going to happen for another 5-10 years.

In the meantime, who needs the firepower? Servers, true power users, a sprinkling of gamers, that’s a small minority of computer users.

XBox: The Wave of the Future?

Potentially the most influential computer event of the year is going to be the XBox. It’s not ideal, but it probably comes closer to what most people are looking for in a computer than anything else out there. Especially price-wise.

Not saying it’s a guaranteed success, but I think the typical computer five years from now is going to look a lot more like “Great-Grandson of XBox/Playstation” than some 6Ghz PVI.

This will knock the PC market topsy-turvy like nothing that has come before it. Five years from now, I think we’ve going to see $5,000 powerhouse workstation for those few who actually need all the power they can get, and everybody else will be happily using simple $200 boxes.

You want to see Microsoft dead? No court is going to kill it, but this development probably would, along with the PC world as we’ve known it.

It won’t be business as usual the next few years. It’s going to be dinosuars trying not to go extinct after a meteor strike.

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