Computex 2014 – New life

The PC market is far from dead. It is just changing.  

• Computex has kicked off in Taiwan and this year, more than ever, it is clear that the PC market is undergoing its biggest change in 20 years.
• This has confused many commentators who continue to count the PC market as just desktops and notebooks and consequently see the market continuing to decline.
• Radio Free Mobile argues that the best way to look at this market is to count tablets that run a full OS as PCs and tablets that run iOS, Android and Windows Phone as tablets.
• This is because laptops are becoming tablets with a detachable keyboard and users that previously purchased a laptop are increasingly likely to buy a device of this nature.
• This form factor gives the user the flexibility to use the device as a tablet for content consumption and then attach a keyboard and mouse for content creation.
• Furthermore, the ergonomics of having the keyboard and screen separate are vastly superior to a laptop allowing the user to work for longer much more comfortably.
• Hence, the news flow at Computex is all about the development of this form factor with Intel pushing new ultrathin form factors, AMD launching new mobile oriented chipsets and the PC makers getting on board with the 2 in 1 form factor trend.
• This form factor is poised to re-inject life into the PC market as I believe that the use case for the 2 in 1 device is strong enough to drive a big replacement cycle for laptops.
• The biggest problem remains price and here Intel is more to blame than anyone else for keeping the prices of these devices out of reach for most users.
• With 90% market share in PC CPU’s and 60% gross margins, the company is clearly banking on Moores Law to bring the price of the devices down rather than kick starting the market by cutting prices.
• Hence, I am not really sure that Intel cares when this market will take off as long as it does eventually meaning that it hangs onto its share and its margins.
• ARM is effectively out of this game with the death of Windows RT and in my opinion offers no threat to Intel in this market.
• When these devices are widely available at $600 and below, then I can see it really taking-off.
• However, I think that there is enough pent up demand for laptop replacement for 2 in 1’s to halt the decline of the PC market in 2014E and maybe even nudge it slightly in the right direction.
• A rising tide will float all boats and Intel and Microsoft are likely to be the biggest beneficiaries of this trend.