To stay competitive in the PC market, leading vendors must develop strategies that will allow them to adapt to the market of the future, or they run the risk of leaving the market by 2020, says Gartner.
This comment comes on the back of declining worldwide PC shipments. Gartner previously revealed worldwide PC shipments totalled 64.3 million units in the second quarter of 2016, a 5.2% decline from the second quarter of 2015.
According to the research firm, if PC vendors need to rapidly determine what changes to make or what alternatives to adapt in today's over-penetrated PC market.
Tracy Tsai, research vice-president at Gartner, says: "The PC business model as we have traditionally known it is broken...The traditional way of gaining shipment market share by competing on price to stimulate demand simply won't work for the PC market over the next five years.
"Today's PC vendors need to adjust to the new realities that are shaping consumption, including the fact that PC users are extending PC lifetimes until end of life, business PC applications and storage are moving into the cloud, and are less reliant on PC performance and, crucially, that price and specification are not enough for a user to upgrade a PC; a new and better customer experience is the only true differentiation," she says.
New strategies
Gartner analysts outline four alternatives that vendors need to develop to stay competitive in the PC market. These are based on corporate culture and assets, business operation and technology innovation, and completely revamping the business.
The first alternative is an approach that sees the vendor run a current business operation and sell a current PC product. It requires high volumes to generate enough cash flow to cover the cost of business. So, in a declining market, consolidation of vendors is inevitable, Tsai notes.
"The purpose here is to protect and keep the PC business running, but the risks are high."
The second alternative suggests PC vendors form a new team that can experiment with new business and revenue models for PC products, such as PC as a service. In this scenario, the business model is agile, allows risk-taking and accepts failure.
Alternative number three is a conservative way to explore new product offerings and new market opportunities, such as making PCs smarter in terms of sensing, speech, emotion and touch; expanding new products for the connected home; or developing products targeted to vertical markets, says Tsai.
Lastly, PC vendors can establish a new unit to run business in a different mode and explore new technology solutions to create a completely new product line. This would include working with new channel partners and independent software vendors and partnering with start-ups. The resources and revenue model might be completely different from a vendor's existing structure.
Tsai concludes: "Some vendors may need a whole new business and product strategy to turn their situation around. PC vendors need to identify their core competencies, evaluate their internal resources, and adopt one or more alternative business and product innovation models to stay in or leave the PC business."
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