Paul, re:their Notebook product line is a disaster
And notebooks may be where it's at
arizonarepublic.com
Prospects appear grim for PCs
By Edward Iwata
USA Today
Feb. 21, 2001
PALO ALTO, Calif. - The future of the troubled personal-computer industry can be found among the wired law students at Stanford University.
Instead of slouching over clunky desktop computers, the 600 students dash from class to class toting light laptops, hand-held computers and cell phones. They do legal research on the Web. They link with Stanford's Intranet. They take exams on their laptops.
"I grew up with Apple desktops, but laptops are the future," says 27-year-old Peter Levinson, sitting in the sun and studying one recent morning. "Every law firm will be using them when I graduate."
Figuring out what Levinson and millions of Internet-savvy consumers and businesses want is baffling the PC industry.
At the vanguard of the high-tech revolution for decades, the nation's PC makers are struggling in the Internet age. Their sales growth is slowing, and PC-sector stocks are down the past year. They're flailing with different business models. Critics say many of the PC companies are slow moving and inefficient, and some will get hit by mergers soon. Last week, industry leader Dell Computer announced its first major layoff in 16 years, and Intel Corp. on Tuesday launched a multimillion-dollar belt-tightening program.
Worse, the rise of Internet-based computing, mobile devices and jazzy wireless products threatens to drive the desktop PC into extinction. The new king may well be the laptop computer, which boasts faster sales growth globally than desktop PCs.
"The PC, as we know it, is dying," argues Clay Shirky, professor of new media at Hunter College in New York City and a former technology executive at CKS Group. "The industry needs to realize those putty-colored boxes are no longer the center of the universe."
Industry experts and leaders, including Oracle Chief Executive Officer Larry Ellison and Sun Microsystems' Scott McNealy, have warned of the PC's demise for years. Here are some recent danger signs:
• A mature industry. The PC industry is glutted with too many companies cranking out too many computers, argues Bear Stearns analyst Andrew Neff. Net profit margins on PCs have fallen to 2 percent to 8 percent from double digits last year because of the shrinking economy and brutal price competition.
Along with Dell, Gateway and Hewlett-Packard have recently announced layoffs.
Neff predicts that the PC field, like the auto and airline industries, soon will be swept by megamergers. In a recent investment report titled "A Manifesto for Change," Neff calls for Compaq Computer and H-P to merge, for Dell or a Japanese firm to buy Gateway, and for IBM to sell its low-profit PC business to Dell or Compaq.
• A wealth of new products. As their computing power gains on desktop PCs, portable laptops are emerging as the new workhorse for consumers and businesses. Led by IBM, Dell and Toshiba, worldwide laptop sales soared 21 percent last year over 1999, market researcher Gartner says, compared with sluggish 2 percent growth for desktop PCs.
The Net also has set off an explosion of products that may replace or complement PCs - especially when the wireless revolution sweeps the mass market in a year or two, as many predict.
Consumers can choose from hand-held computers, Internet appliances and Web-linked cell phones. Anticipating that, semiconductor makers such as Intel, Motorola and Texas Instruments are whipping out more chips for mobile computers, cell phones and broadband and wireless gear.
"The PC has been toppled from its lofty status and is no longer driving the industry," says CEO Wilfred Corrigan of LSI Logic, which makes networking chips for Sun and others.
• A weakening market. After a decade and a half of heady growth, the PC market is saturated. More than half of U.S. households own desktops.
Sales of desktop PCs in the United States have plunged 18 percent the past two years.
"Consumers see no compelling reasons to buy new PCs," says IDC analyst Anne Bui. "They're happy with what they have."
• New models of computing. The Internet has led to Web-based computing. In PC-based computing, people are beholden to proprietary software stored on their PCs.
In the Web-based model, software, data and music are downloaded from the Internet by anyone with any device capable of tapping into the Internet - whether a laptop, a dumb terminal connected to a central computer server or a simpler device.
The Web-based style of computing is backed by a growing cadre of technology giants, including Internet king America Online, digital-music firm Napster and business computermaker Sun.
"Any new device with a digital heartbeat is going to be connected to the (Internet) network," says Sun executive Shahin Khan. "In this scenario, the PC no longer is relevant. It's rapidly becoming nothing more than an expensive Internet appliance." |
