Technology Reseller talks to Exertis about opportunities in the PC market
The PC market has been under pressure for some time, so much so that Gartner recently described the existing model as ‘broken’ (see page 30). However, not all is doom and gloom. Worldwide PC sales were down year-on-year in Q3, but not by as much as many had feared, and for IDC’s Loren Loverde, vice president of Worldwide PC Trackers & Forecasting, there is much to be optimistic about.
“Industry efforts to update products, to leverage new processors and operating systems, to deliver a better computing experience encompassing more mobile, secure, and faster systems, and to accelerate PC replacements have been critical. These improvements are accumulating, and set the stage for a stronger market going forward,” she said. Her optimism is shared by Simon Barnard, General Manager of Computing at Exertis, who points out that people have been writing off the PC market for all 16 years he’s been in the industry. Technology Reseller recently caught up with Simon and Exertis Business Development Manager Steve Hewins to find out more about the opportunities that still exist in the PC market.
Technology Reseller (TR): Why have PC sales been declining?
Simon Barnard (SB): PC sales have been declining, in unit sales and in terms of revenue, in part due to the pressure on budgets and the drive to cut costs. Combined with that, you are seeing growth in other markets. If you go back five years, a laptop/mobile computer typically had a big 15in screen and weighed about two kilos. Today, devices are much thinner, much lighter; there’s a bigger drive around portability; and, importantly, users are becoming far more tech-savvy. Today, they tend to buy high ticket value products that perhaps last a bit longer, and that’s driving overall numbers down.
In the business arena, IT managers and procurement are clearly maximising the lifetime of their machines. That said, we could see a surge in sales in 2017, as the last big refresh came three years ago, in 2014, when Microsoft ended support for Windows XP. IT managers are looking at their PC estates with that in mind.
TR: Even with the cloud and mobility, PCs are still an essential business tool.
Steve Hewins (SH): Yes, absolutely; in business, the PC is as vital as it ever was. The difference now is the type of platform being used. Five to 10 years ago, a typical 200-seat organisation would have 80-90% desktop PCs, with laptops for field sales teams. If you go into a business today, you will see a much smaller estate of desktop PCs and a much bigger estate of traditional clamshell laptops. You will also see some 2-in-1s, some tablet devices, some hybrid convertibles – a real mixture of platforms.
TR: Does this choice create unwanted complexity in the market?
SH: Not so much for resellers, but possibly for end users in terms of the functionality they are after. Is a traditional clamshell the right device, or a 2-in-1 or a convertible with a 360 degree hinge? That’s where manufacturers, distributors and resellers have a role in terms of educating the market.
SB: It’s a double-edged sword for end users. There is so much choice now, it can be a bit daunting. But ultimately, choice can only be a good thing, as it lets you pick the perfect product for your specific application. Resellers can provide real value by understanding all the different platforms and where they can be applied and helping end users to choose the right device for them. That’s a real opportunity for resellers and distributors alike.
TR: Could resellers do more to educate their customers?
SH: You can never have enough education and knowledge in this space. Resellers, distributors and the channel have a responsibility not just to supply products but to educate end users on what’s available so that they can make an educated decision. It’s our responsibility and we should always strive to do a better job. We focus very much on education, but we can always do more.
TR: With so much choice in the PC market, what are the key growth areas?
SH: 2-in-1 is a key growth driver, albeit from a very small base – Microsoft is leading the charge in that space with Surface. The desktop market is challenging, but all-in-ones will continue to be a positive form factor there. Then, there’s the gaming side of things, from high end, high spec notebooks to desktop devices.
SB: From a revenue perspective, gaming is one of the biggest growth areas and it’s going to be very, very big in 2017 thanks to Virtual Reality (VR) and the introduction of more and more applications that can take advantage of it. Because you can’t have VR without the hardware to run it, there’s a real push to have VR-ready machines in the market.
VR in business and education will also start to take hold in 2017. I am already talking to some resellers and some software companies who are working on applications to bring VR into schools and universities. That will drive demand for hardware with a powerful, dedicated graphics card, strong processing and a good amount of RAM. VR drives that value-add and moves you up the stack away from a £299 machine to one with an RRP of £900 plus.
TR: What are some of the applications of VR in business and education?
SB: The potential applications are endless, and we are continually looking at how we and our partners can use VR technology in education, health, estate agencies, architecture etc.. That said, it’s still early days for VR in the B2B space and it will take time for opportunities to emerge. For now, gaming is the key focus and that’s where we have put additional resource. We recently appointed a head of PC gaming, focused not just on the retail space but also on system integrators. That investment has brought together our overall gaming proposition, from our strength in the consoles side of the business to our strength in the components side, including graphics cards, where we have been market leader.
TR: Do you think vendors are doing enough to generate excitement on the desktop side of the business? Is there enough innovation?
SB: I think vendors do a very good job with desktops. With the trend for mobility and changing working practices, there is a natural decline in desktops, but I’ve been in this industry for 16 years and people have always said the desktop market is on the way out, yet it is still here. It’s a good solid heart beat – a very strong market. You only have to look at Microsoft’s Surface Studio to see that innovation still exists.
That said, most innovation will be in the all-in-one platform and, with Surface, Microsoft is challenging the status quo regarding what an all-in-one device does and is capable of. Towers and traditional small form factors are well established in the market and they absolutely have their place and serve their purpose, but innovation will come from the all-inone platform and mobility in the laptop computer space.
TR: Will the end of free Windows 10 upgrades help drive sales?
SH: I think it will absolutely drive adoption in the home market – now everything is pretty much Windows 10 out of the box from a consumer perspective. In the business market the bigger change will be Microsoft restrictions on the ability of manufacturers to pre-install Windows 7 at factory. Because many business customers exercise a downgrade right to specify the OS of their choice, manufacturers have been producing professional devices pre-downgraded to Windows 7. That option no longer exists. The requirement for manufacturers to supply devices with Windows 10 Professional will encourage a lot of businesses to accelerate their migration from Windows 7 to Windows 10.
TR: What can resellers do to generate additional business from PC sales?
SH: I will always push the ‘attach’ message – what else can be attached to that hardware? It’s a message we drive hard internally with our sales teams, because in a world of ever greater competition, customers are always looking for the best and strongest deal. Every reseller is trying to maximise margin – margin’s our key word – and margin really can be delivered via attachment.
I only have to look at my desk: I have a notebook computer and attached to that I have a keyboard; I have a mouse; I have a second monitor; I have Microsoft Office; I have bags; I have USB sticks, dongles, cables and adapters. My desk is covered in bits and pieces that I plug into my laptop. Do I buy all of these at the point I buy my notebook? No. I have accumulated them over time.
A reseller can maximise margin by catching all these attachments when they sell the notebook. The utopia is to offer all possible options and attachments at that point because, in my opinion, that is when the customer is most likely to buy. If I am spending £500 on a notebook, I won’t think twice about spending £15 on a bag to put it in. My big message is ‘attach, attach, attach’.