Gartner: vibrant PC market in 2018

 The CAGR for the PC market in the five years till 2021 is -0.5%

 Business demand is holding up well. Windows 10 uptake is moving to the implementation stage, providing B2B opportunities for all vendors

 Hybrids show the highest growth opportunity of 23.3% CAGR. However, clamshells still provide the biggest end-user spend opportunity at US$30 billion by 2020

 Consumers continue to leave the installed base through 2018 but gaming remains a reliable niche market with good margins

Tay begins a presentation on the PC market in 2017 and 2018.

PCs* are hardly dead when the market is worth US$166 billion per year, and Windows 10 adoption finally kicking in for many. 2018 year-on-year (YoY) growth for PCs will actually grow 1% against a 3% drop in 2017 compared to 2016, says Lillian Tay Principal Analyst, Personal Technologies, Gartner. She predicts a flattening of the market only after 2019.

"The installed base of PC users have declined to a point where now what we get are the really engaged PC users," Tay explained. Tay said there has been a shift in the type of usage for PCs, listing analytics, gaming and simulations as some of the applications for engaged users. Users expect a richer experience with images, fast response times, and want to do video touchups and image stitching. At the same time, the hardware has improved with 4K screens coming onto the market and more powerful Intel Core i-series CPUs a standard feature in PCs today, she shared.

Case in point is HP's PC refresh, announced late October in Singapore. HP’s new premium commercial notebooks HP EliteBook x360 1020 G2 and the HP EliteBook 1040 G4 combined improved performance, enterprise-class security, collaboration features into ultra thin and light form factors, while the new HP Spectre 13 and HP Spectre x360 13 consumer PCs featured new processors, longer battery life, better sound quality, and brilliant displays in sleeker angular designs.

Tay also touched on vendor consolidation - Fujitsu and Toshiba have left the market, while Lenovo, Dell and HP are getting bigger every quarter. "The average selling price (ASP) is a very healthy thing for a lot of PC vendors," Tay said. "You can see from their financials that they are making quite decent margins nowadays."

ASPs remain fairly stable for desktop and laptop PCs through to 2021, with a clear fall in pricing for the ultramobile premium market. In 2018, the expectation is for ASPs to centre on US$566 (2021: US$549) for laptops, and around US$624 for desktops (2021: US$618). ASPs for ultramobile premium PCs will be at US$776 for 2018, coming down to US$729 in 2021.

One reason for the stable pricing is that components are in limited supply, keeping ASPs up, Tay observed. Many of these components, like screens, memory (DRAM) and batteries are also used for tablets and smartphones, leading to shortages.

"They don't sell PCs at US$399 and US$499. That market has gone away - the market is cannibalised by other devices like mobile phones," Tay further shared. "At that price point the usage is so limited it is just used for internet surfing...for basic productivity work."

The commercial PC market, those used for business, is rallying particularly well. It grew 0.1% YoY in 2017 and is forecast to grow 2.4% in 2018 YoY. In contrast the consumer PC market shrank 6.5% YoY in 2017 and will fall 1% YoY in 2018.

This is because businesses are replacing their PCs now, Tay said. Businesses extended the lifetime of PC - the period before replacing it - from four to five years, but with the move towards digital transformation, "a five-year-old PC doesn't do much for you nowadays," Tay noted.

Microsoft's end-of-life support for Windows 7 in 2015 is finally becoming real to businesses as well, resulting in them migrating to Windows 10, Tay added. "It is a whole new experience to the workforce. You have voice (support), you have touch, you have detachables," she said, referring to the hybrid PCs which are both laptops and tablets.

Tay said the space is quite active, with new technology being introduced and vendor collaborations occurring. She listed the following prevailing trends:

• Always-connected PC – Windows on ARM, and Intel LTE-based models

Always-connected PCs work with Windows 10 at LTE speeds on a compatible network while offering all-day battery life and thin, fanless PC designs.

“Always-connected PCs are instantly on, always connected with a week of battery life,” said Terry Myerson, Executive VP, Windows and devices group, Microsoft at the Snapdragon Technology Summit in the US on December 6. “Powered by the Snapdragon 835 Mobile PC Platform, these always-connected PCs have huge benefits for organisations, enabling a new culture of work, better security and lower costs for IT.”

Tay said Windows was conventionally not offered on ARM devices because of hardware limitations of the ARM platform at one point, but Qualcomm is coming into the PC space very aggressively to make sure that as many PCs as possible are LTE-connected, and on its ARM-based Snapdragon platform.

"In the next year you'll see more PCs coming out with ARM-based CPUs," Tay said. "ARM is good in making sure that devices perform but actually use less battery." Lighter devices are also expected.

The first Windows on Snapdragon devices were announced at the Snapdragon Technology Summit in the US: the 2-in-1 convertible ASUS NovaGo, expected to be available early 2018 and a detachable HP ENVY x2 Windows on Snapdragon Mobile PC.

“Today marks the beginning of a new era of personal computing and ASUS is proud to be paving the way with Qualcomm Technologies and other companies to develop this new landscape for ‘Always Connected’ Windows on Snapdragon PCs. ASUS NovaGo reinvents the concept of laptop connectivity and productivity — it’s the world’s first announced laptop that is connected virtually anywhere, at any time, with the new Gigabit LTE network**; and lasts up to 22 hours on a single charge for ‘all-day’ battery life,” said Jerry Shen, CEO, ASUS at the time.

“Mobile intensive customers want a versatile device that keeps up with their busy lives and lets them be connected to everything that matters when they need to,” added Kevin Frost, VP and GM, consumer personal systems, HP, Inc. at the event. “The HP ENVY x2 is designed to go everywhere with an incredibly thin and durable design built to be always connected with ultra-fast 4G LTE and Wi-Fi.”

"In the next four years, there will be so much bandwidth, the data prices will be adjusted," Tay said. "All the complexities that the telcos (have) will eventually go away. It's a journey between the device and the telco providers."

• Virtual reality (VR)/mixed reality

Microsoft and a number of PC vendors have launched their mixed reality headsets at US$399 and US$499 price points that are creating a lot of hype in the market," said Tay, who pointed out that the older Oculus headsets cost more at US$599 and US$699 price points. "Lenovo, Dell, HP - all their VR headsets are available this quarter onwards."

• New data input methods – biometric touch fingerprints, infrared (IR) or 3D sensing cameras, rear-facing cameras

Vendors have introduced biometrics for authentication, with facial recognition for logins for example.

Rear-facing cameras might be used for videoconferencing or capturing images on the go, Tay added.

• Zero-edge display notebooks

Most screens generally have a bezel around the screen, but "bezel-less" screens, offering an even larger screen size for the same footprint, will be launched, Tay said.

• PC-as-a-service

There is a lot of interest in the 'as-a-service' model, Tay said, where businesses do not need to buy a PC under the traditional capex-with-depreciation model, but rent it instead under the opex model.

"Instead of US$1 million to buy PCs they could pay US$10 per employee each month to maintain the same type of PC and have a refresh after three years," she elaborated.

• New mobile CPUs – Intel (CPU) and AMD (GPU) cooperation

Intel and AMD used to be bitter rivals, but have come together to compete against common enemy NVIDIA. On November 6, Intel said a stronger combination of performance-level processors and discrete graphics would "open the door to even smaller form factors".

"The new product, which will be part of our 8th Gen Intel Core family, brings together our high-performing Intel Core H-series processor, second generation High Bandwidth Memory (HBM2) and a custom-to-Intel third-party discrete graphics chip from AMD’s Radeon Technologies Group – all in a single processor package," said Chris Walker, VP, Client Computing Group and GM, Mobile Client Platform at Intel in a blog post.

“Our collaboration with Intel expands the installed base for AMD Radeon GPUs and brings to market a differentiated solution for high-performance graphics,” said Scott Herkelman, VP and GM, AMD Radeon Technologies Group in the same blog post. “Together we are offering gamers and content creators the opportunity to have a thinner-and-lighter PC capable of delivering discrete performance-tier graphics experiences in AAA games and content creation applications. This new semi-custom GPU puts the performance and capabilities of Radeon graphics into the hands of an expanded set of enthusiasts who want the best visual experience possible.”

Explore:

Watch the video introducing the new processor that combines Intel and AMD technology

*Gartner categorises PCs as desktops, laptops (standard NB, or notebook), and premium thin and light laptops, which it calls "ultramobile premium".

**A compatible network is needed.