PC OEMs under pressure to diversify
IT professionals are increasingly buying mobile computing devices, threatening commercial PC sales.
For a long time now, it’s been a challenging environment for the PC industry. The tough global economic climate, particularly in Europe hasn’t helped. The iPad and other tablet PCs have proven successful in the consumer PC market. A similar situation is taking place in the commercial segment; IT professionals are increasingly buying mobile computing devices, threatening commercial PC sales. According to IMS Research’s, recently acquired by IHS Inc., World PC tracker in Q1 2012 the PC market observed a moderate growth; desktop PC shipments increased 2.2% and notebook PC shipments increased by 3.3%.
However, despite this recent news announcements suggest more tough times for PC OEMs and a change of direction.
Shares of Dell on May 23, 2012, plummeted 17.18% to $12.49, after the company reported its Q1 results. Dell said recently, “We’re committed to continuing our strategy to re-shape Dell’s business as an end-to-end IT provider.” Dell is strategically moving towards being a total enterprise service and solutions provider, no longer focusing on the consumer side. The consumer PC segment is much bigger than the commercial side, therefore this change hints at the fact that Dell may lose more market shares in the future.
Compared with Dell’s enterprise focus strategy, HP will still competes in both the commercial and consumer PC market, while seeking more profit at the same time.
On May 9, 2012, HP showcased its new line of computers in Shanghai at the 2012 Global Influencer Summit. This is the first time HP held this conference in China which indicates the Chinese market has become ever more important to HP. However, to win the Chinese market, HP needs to compete more heavily in the entry-level PC segment.
In addition, on May 18, 2012, HP announced that it would cut the jobs of approximately 27,000 employees (8.0% of its workforce), by the end of fiscal year 2014. Disappointingly, many of the job losses are expected to come from the Personal System Group which takes care of the PC business.
Another announcement from HP suggests that the HP ‘Compaq' branding will end next year. The ‘Compaq’ name will live on, but only for basic computing at entry-level pricing. This also indicates that HP’s strategy is to compete in the low-end PC market, but using its ‘Compaq’ brand.
For the Asian PC OEMs (Lenovo, Acer, Asus, etc.), strategies may continue to be volume driven. Cost is still one of their major advantages and they are good at competing on price. With this in mind, they are capturing more market share from emerging markets which are more price sensitive. As Dell gradually quits the consumer market and HP seeks more profitability, I expect Asian vendors to capture more market share.
The PC industry has already been commoditised and become a pure scale business and less innovation driven. That’s why PC vendors crazily compete on unit shipments to get more market share. However, while the volume growth has stopped , this market share game cannot continue and that’s why OEMs are looking for different strategies. Is the ultra-book the answer to their prayers?
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2012 Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.