By October 28, 2013 Read More →

The PC market is shifting

The companies you know as computer makers buy, not make, all the component parts. Who’s to say the component makers can’t get into the game as well?

By Jon Peddie

Perhaps you’ve noticed the subtle but unrelenting move by component suppliers to enter into the device/systems/appliance markets. Intel did it with medical devices about four years ago; Microsoft did with the Xbox, then Xen, and lately tablets; Nvidia did it with Grid servers and Shield (and, some argue, with tablets); AMD did with Sea Monkey servers; and both AMD and Nvidia build AIBs that get re-badged by their partners. Cisco does it too (mostly through acquisitions), and Google makes phones, tablets, and OTT TV. There are very few pure ingredient suppliers these days.

The brand name says "Toshiba" but like every other PC vendor, all the parts come from somebody else. (Source: Toshiba)

The brand name says “Toshiba” but like every other PC vendor, all the parts come from somebody else. (Source: Toshiba)

The irony is that the device/system/server companies used to make their own silicon components. They exited those markets because of the associated costs of research and development, support, and in some cases even manufacture costs. The component companies may have been envious of the value-add profits the system builders were getting, but avoided it because of the marketing and support costs.

Today, largely due to Intel’s extraordinarily successful “Intel Inside” campaign, the component suppliers have expanded their investments in marketing and established powerful brands. So powerful are their brands that they can go into to the systems business and be successful.

The system builders, particularly the PC builders, have been in a tight spot with no prime IP other than box construction. Companies like Acer, Dell, Lenovo, HP, and Toshiba buy everything—the motherboard, the OS, the boards, disk drives, monitors, and power supply. They are basically assembly houses with great looking boxes and strong brands. Some of them have software apps for multimedia and security, and the bigger ones guarantee system integrity—all those disparate parts work together.

Where will this lead? Will Intel, AMD, Nvidia, and Qualcomm start making PCs, tablets, and phones? Why not? They basically make them now in the form of reference designs. What’s to stop them from going all in on the systems business? If they do, then what happens to the traditional box builders? Do they start buying semi companies to compete? You see, everything you know is wrong, and you can’t predict the future.

Jon Peddie is president of Jon Peddie Research, publisher of GraphicSpeak. 

email
Posted in: Blogs, Featured, HWD

About the Author:

5 Comments on "The PC market is shifting"

Trackback | Comments RSS Feed

  1. autodeskshareholder says:

    Wotta pompous jackanape:

    “You see, everything you know is wrong, and you can’t predict the future.”

    How incredibly, offensively arrogant! We must be stoopid, so we’ll need Commodore Peddie to predict the future for us, as he has tried to do with this article. What happens, Peddie, when what you predict in this article does not come to pass? Do you apologize for misleading your readers, and learn the meaning of the word humility? I’m asking because there is no way I can predict that future …

    • jon says:

      In fact I, and other responsible analysts do publish corrections when our forecasts don’t hit the mark. I’ve been doing this for almost 30 years and you don’t get a run like that by being wrong too often, or by being a jerk.

      No one can predict the future, we guess at it armed with as many inputs as we can gather. Baring major upheavals like wars and overwhelming weather events (like the floods in Thailand, which dramatically impact the storage industry) forecasting can be quite accurate — if you’ve been around long enough to know what’s reasonable and practical.

  2. I thought this article was interesting and a respectable view of some nascent–at least–trends which are affecting the market. I don’t understand “autodeskshareholder’s” perspective, nor share them. This is hardly a detailed prediction piece. Calling attention to a possible inflection point in the industry can be of great value. I personally see more disruption in the market as to who the top players are. Especially in the PC market as these players adjust to a post-PC era.

  3. From HP: In your latest article in GraphicSpeak, “The PC market is shifting” you state:
    …”The system builders, particularly the PC builders, have been in a tight spot with no prime IP other than box construction. Companies like Acer, Dell, Lenovo, HP, and Toshiba buy everything—the motherboard, the OS, the boards, disk drives, monitors, and power supply. They are basically assembly houses with great looking boxes and strong brands.”
    In the case of HP Workstations, which would be of interest to the target market for GraphicSpeak, this is not the case. While we may outsource the manufacturing of our motherboards, the design is done within HP and is unique to our platforms. Furthermore within the HP Z workstations, we take a whole-system design approach instead of simply assembling pieces procured from third parties. Our engineers design customized systems and work closely with our technology partners to test and optimize graphics cards, memory, operating systems, drivers and other system components for optimal performance, increased reliability, better thermal and acoustics solutions, and ultimately a better workstation experience across a broad usage range.
    As for our other class of computers, we spend a lot of time in understanding the customer, working with the engineering team to review the architecture of the platform, and making component and design choices. Our engineers do all the electrical/mechanical/ID work before an ODM is brought into the process. The ODM only implements, and brings to manufacture, the design that has been created by HP engineers.
    Therefore we would appreciate it if you could please correct your statement so it more accurately reflects HP’s approach to product design.

    • Jon Peddie says:

      Heather raises a good point, and my editorial was a little too glib. I’ve visited the Dell, Fujitsu, HP, and Lenovo labs, and they put an enormous amount of design and testing into their products, and especially workstation products. I think almost any IT buyer, consumer or enterprise, knows it’s almost a no-brainer to buy a top notch branded PC, because there is a tradition of R&D behind those brands and a commitment to support.