As PC Shipments Rise, Opportunities Must Shift

By Joel Shore, |  Business

No doubt you've read the reports over the last couple of days that worldwide shipments of personal computers in 2004 grew 11.8 percent to 189 million units, according to market research firm Gartner. IDC, the other big research firm, had an even rosier report, saying that worldwide shipments of personal computers grew 13.7 percent in the fourth quarter. Gartner attributed the growth to strong sales of mobile PCs; IDC to strong demand from small- and medium-sized businesses, and holiday shoppers.

To me, this is a mixed blessing. While the numbers signal a return to growth and confidence, they also signal increased commoditization, lower prices, and thinner margins. Not exactly what integrators thrive on.

Worldwide PC shipments are forecast to grow in 2005, but moderate to about 10 percent, according to IDC. The company expects to see ongoing PC replacements and new investment as the drivers to commercial growth through the end of 2005.

According to Gartner, Dell's lead grew to a worldwide share of 16.4 percent in 2004, up from 2003's 14.9 percent. HP share was second, followed by IBM.

To me, these numbers suggest moving further away from hardware sales (desktop and laptop) and more toward services and non-commodity hardware (servers, security, storage, etc.). And I already see that happening: More often than not, when I walk into an SMB, they're using Dell systems; that's even now extending into the server room.

Look at IBM itself. Its mammoth size notwithstanding, the company sees itself as a service provider, no longer as a seller (or manufacturer) of PCs. Scale that down, way down, to our size, and the parallels become clear.

Services, whether it's application development, network management, deployment, or something else, represent brainpower, not the sort of thing that can be assigned an SKU and slapped with a barcode label. And it's services that sets one integrator apart from the next. The integrator that specializes in solutions for law firms or in reselling accounting software is increasingly spinning its wheels, to no profitable avail, by hawking PCs.

One integrator, with about a hundred people on its payroll put it this way for me: "The few dollars I'd make selling PCs isn't worth the hassle. Let them buy all the Dells they need; we'll make plenty of money installing, securing, and maintaining them. And we'll do very well with the other products and services we sell."

I don't disagree.

Correction: The 102-inch television on display in the Samsung booth of the recent Consumer Electronics Show in Las Vegas uses plasma technology, not LCD technology. I knew that, but the message apparently didn't get all the way from my brain to my fingertips as I was typing. Apologies for the error. Either way, the darn thing was just astonishing. I want one.

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