Return of the Guru

PC Shipments Are Off: But Why?

Ara Trembly
Insurance Experts' Forum, April 18, 2011

When things don’t go the way the experts expect them to go in the technology universe, it is always entertaining and instructive to watch how those who make predictions from on high cover their respective hindquarters.

According to a recent report from Bloomberg.com, global personal-computer shipments “unexpectedly” fell 3.2% in the first quarter of 2011 “as businesses and consumers held off on purchasing new machines and shifted focus to tablet computers, market-research firm IDC said.”

IDC had projected that worldwide shipments would grow 1.5% from the year-earlier period, the report notes. “Slower-than-expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market,” said Bob O’Donnell, a program VP at IDC. “While it’s tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

Higher fuel and commodity prices, as well as disruptions caused by the earthquake and tsunami in Japan in March, may also have curbed sales, IDC says. The Bloomberg posting separately quotes a Gartner Inc. statement that worldwide, first-quarter PC shipments fell 1.1% to 84.3 million units, the first year-over-year drop in six quarters. Gartner had forecast an increase of 3%.

Since IDC has itself minimized the impact of tablet computing growth as a cause, let’s consider the other possible culprits. Have “PC lifetimes” been extended? Not that I can see. The average shelf life of the personal computer these days remains at about three to four years, and the reason for that has more to do with seemingly endless changes in platforms, software and backwards compatibility of applications than it does with physical issues like power supply failure or hard drive breakdown.

I’m not sure what “lack of compelling new PC experiences” means, since any new experiences would inevitably be tied to software or remote services that continue to be accessible via the personal computer. And while we know that the tsunami did affect some PC production capability going forward, it’s hard to believe that this particular ripple actually reached the business and consumer markets by the end of March. 

What surprises me is that my fellow pundits did not seize on the more obvious answer for the cutback in computer sales—namely that businesses and individuals are holding on to their allegedly outdated equipment because they can’t afford to buy the new stuff. In case the cognoscenti have missed it, the economy here and abroad is still in a world of trouble, and purchases of new equipment are being scrutinized more than ever. Nowhere is this kind of frugality more widespread than in the insurance industry, which has become famous for keeping anything that remains even remotely productive—witness the staying power of so-called “legacy” systems and “green screens.”

While many consumers and less financially stressed businesses may believe they should buy a new box once their current device turns three, the truth is that many others have looked at their budgets in light of economic conditions and decided that they could make do with older, less-hip technology for another year or two. 

Of course, this is disappointing to those who want to see shipment numbers continue to increase, but even they must face the reality of a nearly bare cupboard.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at ara@aratremblytechnology.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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