Many in the channel expect the PC market to pick up in the second half of 2012, largely propelled by Intel’s Ultrabook push and Microsoft’s expected release of Windows 8.
Intel is preparing the next generation
of Ultrabooks based on Ivy Bridge processors
Published Thursday, 19 July 2012
Many in the channel expect the PC market to pick up in the second half of 2012, largely propelled by Intel’s Ultrabook push and Microsoft’s expected release of Windows 8. The mobility revolution too is making savvy resellers focus on developing niche expertise in a highly commoditised PC and notebook market. How should the channel prepare itself to benefit from all these advancements?
By Clayton Vallabhan
The PC market has always been one that is evolving and dynamic. With the perpetual advent of newer technology and the ever increasing demand for faster, more powerful hardware, there is never a dull moment in the PC sector. With tablets and Ultrabooks spearheading the mobility aspect of the PC, this segment is entering a new era of computing, where portability and battery power have become a pre-requisite.
Analyst and research firm IDC has forecasted that the global PC market will see 5% growth in 2012, and most of it will be evident in the second half of the year.
Bob O’Donnell, vice president of Clients and Displays at IDC said: “Many consumers are holding off making PC purchases at the moment because tablet devices like Apple’s iPad are proving to be a powerful distraction. However, end-user surveys tell us that few people consider media tablets as replacements for their PCs, so later this year when there is a new Microsoft operating system, available in sleek new PC form factors, we believe consumer interest in PCs will begin to rebound.”
PC manufacturers have a plethora of products that are ready to take on the expected boom. The question still remains on how prepared the regional channel is?
Taha Khalifa, regional director, Reseller Channel Organisation (RCO) Sales, MENA at Intel said the company provides its channel partners with the main building blocks to enable their businesses to be competitive. “Readying our partners is never limited to early-access of products, we also provide training and roadmap updates to give them market competitive advantage. We also executed special Ultrabook zones at small format retailers to develop a compelling zone that attracts customers to the latest products in the market,” said Khalifa.
Nicholas Argyrides, MD at Empa, said as distributors are catching up to achieve forecasted growth in the second half of 2012, Empa is expanding its channel breadth by extending credit lines to new resellers. Argyrides said: “The ‘EMPA Micro Credit Project’ offers fresh micro-credit, as well as extended credit facilities to numerous resellers in the market. We are quite keen in working closely with our vendor-partners in expanding our products range with a special focus on Ultrabooks and tablets.”
Industry pundits agree that mobility is where the PC market is gravitating towards. Ossama El Deeb, regional sales manager at chipmaker AMD, META said nowadays mobility is a computing necessity and presents a competitive edge for many companies. El Deeb said: “A few years ago, higher mobility meant a trade-off with performance and other things like the battery size and availability of other peripherals (e.g. CD/DVD drive), resulting in low-performance machines that barely got the job done. Now, technologies have changed, and there has been a strong shift in the market for mobile computing. Users want the whole experience on the go at an affordable price.” El Deeb also advised resellers and solution providers to be conscious of these demands and work with the appropriate vendors to provide products that meet this demand.
Although there is no denying that vendors, distributors and resellers have got their sights set on what they believe is the pulse of the IT market, what ‘arsenal’ are they carrying and how relevant will that prove for the channel?
John Coulston, channel programs and operations director at Dell, said: “Ultrabooks will be an interesting play in the coming few months.”
Remarking about what will drive growth for the PC market in the region, Coulston identified back to school promotions, religious holidays, the next generation of Ultrabooks and fixed capacity computing environments, such as public use of computers at airport terminals as factors that will propel sales.
Green Lin, notebook channel marketing at MSI agreed and said much of the second half of 2012 will be greatly affected by the ‘new Intel platform, Windows 8, Ultrabooks and high-end laptops’. Lin added that: “Windows 8 highlights a lot on its touch functions, and it will support multi-platforms, including tablets, PCs, and smartphones. This new platform will intrigue IT vendors to design new touch-based products.”
Intel’s Khalifa said the company is preparing the channel for devices built with the third generation Intel, Ivy Bridge processors. “These include the latest Ultrabook offering and Windows 8 based PCs,” he said. He added that the key ingredients for fuelling growth in the market are ‘access, content and productive features’. “At present, broadband penetration in the region is still at single-digits which is holding users back from purchasing ‘supposed-to-be-connected’ PCs because they can’t fully utilise and enjoy them,” he said.
Khalifa explained that bearing in mind that almost 50% of the population in the Middle East is under the age of 25, application developers and digital media players need to increase efforts in providing relevant content, especially applications and educational material as they are key drivers for PC purchases by this age group. “Social media continues to drive users to the online world – but historically, this has led first comers to opt for smartphones and tablets due to prices and mobility features,” Khalifa observed. “With the changing face of social media platforms, devices should support highly intensive graphics. Therefore, the newest form factor of the PC such as the Ultrabook will play a massive role in propelling growth in the market.”
Ravi Kumar, GM of Mitsumi Distribution also concurred and said growth in the PC market will be spurred by tablets and Ultrabooks, along with the launch of Microsoft’s Windows 8. “Tablets will splash the PC market with new fuel for growth. It’s hard to believe that the iPad category created from scratch two years ago is now 20% of Apple’s total revenues. There will likely be 58 million iPads sold this year alone according to analyst’s forecasts. iPads are now aggressively competing for a share of consumer IT spend. In a nutshell growth in the PC sector will be stimulated by a combination of tablets, Windows 8 and Ultrabooks.”
With experts predicting massive growth in the tablets space, many have argued that the face of computing is changing and that people are moving away from traditional form factors such as the desktop PC. Pundits say all-in-one PCs (AIO) have started to gain wide acceptance in the market and this could pose a threat to the traditional desktop PC.
Lin argued that people who need a fixed place to work will always need a desktop PC, an immovable solution. He said that it will always be around for enthusiasts who like to modify hardware and challenge the current limitations of pre-configured PCs. According to Lin, the commercial and clone market still need desktop PCs. “AIO lack the flexibility of desktop PCs in terms of upgradability,” he said.
Mubeen Ghawte, product manager at Almasa IT Distribution, said there is still a strong demand for desktop PCs in emerging markets, predominantly for home and office use. He said: “For home use, it is still more convenient to use a desktop PC as they are more powerful in performance, suited better for gaming and have options to increase storage. In my opinion, the first PC used within a home should be a desktop. On the office front, the primary factor is security, and traditional desktops still hold ground as they remain much more secure.”
Ghawte believes that AIO PCs will complement the traditional desktop form-factor, but not replace it. However, he admits that there are certain industries such as education and banking, where the AIO may gain market share and may eventually replace the desktop. “The advantage of all-in-one machines is that they boast the same power as a desktop, yet offer the same simplicity of a notebook. Once the price gap between a traditional desktop narrows, we will begin to see the percentage of AIO market share increasing.”
El Deeb added that desktops will always be relevant, however, there will be a shift from consumers to organisations and commercial entities like banks, government and different businesses. He said whereas consumers are more likely to go for mobility and tablets alike, AIO PCs may not fully replace the traditional desktop but they will surely eat away from the desktop market share.
Dell’s Coulston disagreed, saying that AIOs are an addition and not a replacement for desktops: “We live in a multi-device age. The desktop PC is still relevant even more so in some geographies in the Middle East especially in particular industries such as education and fixed computing environments.”
Ashish Panjabi, COO at power retailer Jacky’s Electronics pointed out that desktops don’t necessarily face a threat from AIO, but from consumers who are opting for notebooks instead.
“Most tablet owners have a laptop or desktop PC. Tablets have been complimentary devices, but the PC market is still huge,” Panjabi said.
Even through the whirlwind that has morphed the traditional PC to take on many new forms, the desktop PC segment appears to be here to stay. But with the commoditisation of PCs, analysts say resellers and partners need to diligently work on differentiating themselves from their competition.
Coulston said differentiation could only be achieved through the services the partner offers its customers. He said it was crucial to understand the customer environment and explain to them how they can take advantage of particular technology available in the market.
Empa’s Argyrides agreed and pointed out that more focus is needed on educating customers and resellers. He said Empa provides frequent training and facilitates vendor-driven programmes. “We are also quite proactive in working closely with individual partners on their specific marketing, go-to-market strategy and growth plans,” he said.
Ghawte added that intelligent selling is vital, especially since customers have now become more tech savvy. “Education is key – we need to educate our resellers on products, as well as sell or propose products that are more suited to the end-user’s requirements. We need to analyse and differentiate before making a sale – intelligent selling is important. Customers are much more tech-aware than a few years ago,” Ghawte said.