Smaller PCs Cause Worry for Industry
SAN FRANCISCO — The personal computer industry is poised to sell tens of millions of small, energy-efficient Internet-centric devices. Curiously, some of the biggest companies in the business consider this bad news.
Context & Ripple Effects
The expected demand for compact, energy-efficient Internet devices follows Intel’s push into pocket-size Internet devices in April, showing that the category is attracting attention beyond conventional PCs. It also arrives after warnings of pressure on white-box PC makers, making a lower-cost device segment consequential for an already competitive hardware market.
First-order effects
- Major PC companies face a product-mix problem: the anticipated volume in small Internet devices may not carry the economics associated with their established PC lines.
- Intel’s earlier move toward pocket-size Internet devices gains a clearer addressable market as PC buyers consider smaller, Internet-centric machines.
Second-order effects
- White-box PC makers must compete for buyers in a segment defined by compact, energy-efficient hardware, adding pressure to a market already described as facing trouble.
- PC vendors’ component and design choices are likely to tilt toward lower-power, smaller-form-factor systems as demand shifts toward Internet-focused devices.
Third-order effects
- If small Internet devices become a durable volume category, the PC industry’s competitive center shifts from selling ever-more-capable general-purpose machines toward optimizing price, power use, and portability.
- The divide between companies that can adapt their product lines and those dependent on conventional PC economics may widen as device categories fragment.
The trend: Personal computing is beginning to fragment into smaller, lower-power, Internet-centric devices that challenge the established economics of the PC market.