Desktop destiny

There is mounting statistical evidence that indicates the desktop PC sector is coming under intense fire.

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By  Andrew Seymour Published  May 22, 2007

In an industry where mobility has changed the face of the computer market forever, lingering doubts over the durability of the desktop market have begun to surface in recent times. IBM's decision to exit the market two years ago - coupled with analyst predictions that further consolidation of desktop PC suppliers is imminent - underscores the predicament of a sector synonymous with falling margins.

Figures just published by IDC show that while notebook shipments in EMEA rocketed 34% in the first quarter, desktop PC sales remained staid. In most parts of Europe, notebook volumes are now outstripping desktop sales. Evidence of this trend reaching the Middle East is compelling. "Notebooks are also growing at fast rates in the Middle East, representing twice the volume of desktops in Saudi Arabia, for example," confirmed Eszter Morvay, senior analyst at IDC.

There is a large market of people at which the cost saving from purchasing a desktop is greater, while desktops are preferred in the corporate environment because they can’t be taken from the office.

Saudi isn't the only market in the region to exhibit this pattern. Notebook volumes have also overtaken desktops in the UAE, contributing to mobile PCs emerging as the largest form factor in the Gulf region for the first time last year. 2006 also marked the year when laptops dominated the PC market in Kuwait. Qatar is touted as the next Middle East country to succumb to this trend.

Yet while data implies that certain markets in the region are becoming increasingly driven by a desire for mobility, PC vendors are at pains to point out that desktops remain very much in vogue. After all, the size of the desktop market is not shrinking.

"By no means is the desktop PC market dead," asserted Andrew Lamb, Middle East manager for volume products at Fujitsu Siemens Computers, one of several tier-one vendors that builds systems locally to reduce delivery times and minimise cost. "There is a large market of people at which the cost saving from purchasing a desktop is greater, while desktops are preferred in the corporate environment because there is not the associated risk that they can be brought away from the office. The growth may be flat, but the demand is still there."

This is a point emphasised by other PC vendors, which stress that there are market sectors where for functionality and security reasons notebooks can never replace desk-bound machines. Dave Brooke, Middle East marketing manager at Dell, says the region is still showing a huge appetite for desktops.

"Desktop is still larger by volume than the mobile market, but just as importantly it is a different market with different requirements," he said. "The desktop market in certain industries is significant and it will continue to be so by virtue of the end-user base. You'll find that mobile technology is not that important in departments where a high amount of data processing and data capture takes place."

Krishna Murthy, general manager at rival Acer Middle East, adds to those sentiments: "The GCC has shown a stronger adoption of notebooks, but if you look at the rest of the countries - like Pakistan, Nigeria and Egypt - laptop adoption is a lot slower. Desktops still account for 60% of the market in Egypt so there is more of an opportunity to grow."

Market research supports the argument that the Middle East desktop PC channel still has a lot going in its favour. In the UAE, for instance, desktop volumes expanded 24% year-on-year during the first three months of 2007.

"We saw replacement cycles in some of the main verticals in oil and gas, banking and government in addition to a pull from small and medium businesses," explained Omar Shihab, research manager for PCs and systems at IDC MEA. "Saudi Arabia was a bit more modest - desktops grew at 6% in the first quarter, but then again that's mainly because of the large projects we saw last year during the same time. We are still seeing healthy growth though. Markets such as Kuwait are growing 10% on desktops whereas if you look at Western Europe, the desktop market is declining by 12% a year."

One point that is abundantly clear is that the commercial sector has become the main stage for the desktop PC battle. Sameh El-Deeb, category manager for commercial desktops and displays at HP's Personal Systems Group, acknowledges that enterprise customers are the major buyers of desktops: "In this region, the trend is mainly driven by the public sector where you are talking about education, defence and healthcare. We are also seeing a lot of desktop demand in oil and gas."

AbdulQader Rahmany, executive manager at Zai Computer - the PC subsidiary of Saudi IT and distribution group ICC - believes the emphasis on corporate sales is down to the fierce shift in buying preferences occurring at retail level. "The consumer share of the notebook market is 60% to 70%," he said. "In the corporate sector the demand for desktops is much higher. Customers want these models because there are applications installed on a desktop that are still unique."

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