The Register pointed out this IDC survey of consumers, which indicates a pretty high level of saturation.
True, this is a survey of European customers, but given sales patterns, it’s probably even more true in the United States, where the saturation rate is even higher.
This computer slump is very lopsided. Business sales are down, but not by too much, and that can be explained easily enough by recession fears, 911, and a lot of surplus dot.com equipment floating around.
The real plummeting occurred in the U.S. consumer market. While fears of recession and 911 have played some role in this, it’s pretty hard to put all the blame there when purchases of even bigger consumer items (say cars) have done nowhere near as badly.
I think there’s more to this slump than lack of money.
Why Do I Need A New One Is Different Than Why Do I Need One
In the United States, most people who want a computer already have one. Pretty much all that are left are the insolvent, unwilling and incapable.
Eventually, the pre-PC elderly technophobes will die and be replaced demographically with the currently insolvent young. Some who are more “permanently” poor than the young will stop being too poor to buy computers. Either they’ll make more money or computers will cost less. Some technophobes could get converted by easier-to-use systems.
None of these areas are going to change radically and suddenly in the next few years. There are no more big virgin selling grounds in the U.S..
So now the mission changes from getting one to getting a new one.
The Two Joes
I’ve spoken many times about Joe SixPack.
Joe SixPack does not think like the typical person reading this. Joe does not love computers. Joe considers computers a glorified PITA VCR. He doesn’t know how they work and doesn’t want to know.
Joe SixPack has a cousin, Joe Suit. Joe Suit loves spending somebody else’s money to get a better status symbol than his fellow workers. If he can’t do that, his attitudes and feelings about computers are just the same as his cousin. OK, he consider his computer a PITA telephone/fax machine rather than VCR. Same difference.
Second, in the general computer market, the Joes rule. Between them, they’re at least 80% of the US computer market population, probably higher. In contrast, the hobbyist market at very most is 5%, and probably less.
That means what SixPack and Suit want is what we all get. They decide, not us. Period. No ifs, ands or buts. There’s many more of them than there are of us. Believing otherwise is just a pathetic attempt to feel self-important.
Where this audience does have some say is in some of the niche markets. If we’re talking about GF3 Ti500 video cards or Alpha 8045 coolers, these are areas where the hobbyists and enthusiasts have more say. Even there, though, to at least some degree, this audience is just a free beta testing grounds for the future, cheaper products Joe SixPack will end up with.
I am pounding this in because we’re getting to the beginning stages of push-comes-to-shove time, and we’re going to be on the shoved side.
Revenge Of The Non-Nerds
The non-nerds are revolting. On the business end, the Pied Piper stuff doesn’t work anymore; they’ve just been burned by BS too much. They’ve been promised too much, and gotten too little lately.
The home end has been burned another way. The computer was more trouble than they had bargained for. Eventually, they and/or their kid got it more or less working, and they’re certainly not going to go out seeking more trouble and trauma if they can help it.
Both sides have this vague sense they should treat computer replacement like car replacement, usually once every 3-5 years.
This translates out to lackluster growth at best and significant long-term contraction at worst for the U.S. market. Forget 15-20% growth a year.
This is only tragic to the blind, deaf and dumb. Unfortunately, that seems to include much of the computer industry.
It’s inevitable. Markets mature; they reach saturation point. The U.S. automotive market has been pretty much saturated for fifty years; they’re hardly doomed.
The Killer App Is A Snark
Many who have broached this subject have said the real problem is that there’s no “killer app” out there.
I’m here to tell you that not only isn’t there going to be one, there can’t be one for some time to come, for several reasons:
One is that the market has simply become too large and diverse for a single doodad to easily encompass both Joe SixPack and Joe Suit. Why should SixPack care about a business app? Why should Suit care about a game?
Another is that anything that can fairly easily be computerized has been computerized, and actually was quite some time ago.
Let’s take a former killer app: spreadsheets. For the average user doing average work, using a modern machine to do a simple tiny spreadsheet is like using an F-15 to deliver milk.
If you don’t believe that, why do PDAs have spreadsheet programs? It’s because most people don’t need Excel to do what they need to do. Most people don’t need Word to do what they do.
Does that mean spreadsheets and word processing programs have essentially hit a dead end? No, but the next real step is a huge one.
We Need Monkeys, Not Donkeys
I’ll tell you what a killer app would be. Get a program which can “read” a few source documents and then write a draft report on a subject based on what it read. Hell, forget about reading and writing. If that’s too much, how about one that’s pretty good at just finding the relevant portions of documents and putting them together for you?
A program that can just answer your routine email and make automatically make appointments for you would be a Death Row app for sure.
Those killer apps are really murder to make, aren’t they?
Computers have always been good at donkey work: simple tasks easily and precisely definable beforehand. Set up an Excel spreadsheet to do a million math calculations, no problem. Tell it to draw any conclusions from the result, big problem.
The problem we have is that our current computers are now supersonic donkeys, but most of us only have to go a hundred yards. We don’t need faster donkeys, we need the damn donkey to make the trip all by himself.
For that, we don’t need a donkey but a monkey.
This even applies to gaming. Why does any self-respecting gamer end up having to make a connection to play against others? Because the game is too stupid to give you any kind of real challenge. It’s a lot easier to improve the graphics and leave it to you to find natural intelligence to play against.
Right now and probably for quite some time, we’re stuck between donkey and monkey status. For most things, current computers are massive overkill for donkey work, and laughably insufficient for monkey work.
We face the paradox that it’s easier to imagine a good use for a thousand or million times more computing power than we have now for three or four or ten times. We’re here, we eventually will get there, but we really don’t have much useful to do in the meantime.
If You Can’t Make A Monkey, Make Cheaper Donkeys
There’s still plenty of room for sales expansion in this world; it’s just not going to be (or be much longer) in those places that comprised what used to be called the Free World.
One rather big problem is that most of the potential buyers for the next ten to twenty years or so will probably be rather poorer than those in the advanced economies. Not “I am eighteen and have never eaten” poor, but certainly poor enough to find spending $800-$1,000 a bit too much of a stretch.
Companies like Via are banking on that; why do you think they’re making those C3 processors?
The day is dawning where a good-enough-for-most-people computer can be built for a price well south of $500. Good news for those in emerging countries, horrifying to the established computer companies.
It’s horrifying because that cheap box will be good enough for Joe SixPack and Suit, too, and say goodbye to the old way of doing business once they figure that out.
That’s the nightmare Intel and AMD and Microsoft and Dell and just about anybody outside of (maybe) Via faces. They can’t continue to expand unless the price point plummets, but if they build it, they lose most of their most lucrative business.
Unless, of course, they can BS the two Joes of the advanced world into continuing to buy what they really don’t need. Do I think they can? Maybe for a couple years, but much longer than that? I don’t think so.
A Few Can Use Faster Donkeys
There are some who can use every bit of additional power they can get. Not only do you want hypersonic donkeys, you could use donkeys that can do warp speeds.
But how many of you are out there? I mean, really out there? Sure, you’ll take all you can get, but at what price?
Let’s separate the men from the boys. How many of you would pay $5,000 for a machine five times faster than what you can get for $1,000 today?
Not too many men left (and I’m sure not one of them), is there?
The reason why high-performance computers are so relatively cheap is that Joe Sixpack and Suit have been buying at least the same generation of products, too. They really haven’t had any other option until recently.
But if Joe Sixpack and Suit find out in a few years that they can do anything they need to do fast enough with a $100 or $200 box, what do you think happens to the computer industry?
Rather than having everyone more or less paying for the development of new generations of products, now you have only a small minority paying for it, and that will mean skyhigh prices.
Look at the workstation market. There are people from whom paying thousands of dollars more for a somewhat faster system makes great sense. Their time is worth a lot of money, and a few extra grand means nothing.
The average person reading this isn’t one of those people.
Now that may well change back once you get a killer monkey app (or maybe not). Until that happens, though, the only thing stopping your choice from being between essentially a glorified Playstation/XBox or the future equivalent of a Xeon workstation some years from now is going to be the computing establishment’s marketing magic.
And if the magic breaks, and they’re shown to be Oz, not only are the two Joes are going to buy those Playstations. They’re going to make you buy them, too, and this audience will have about as much say against it as Mac users.