The PC is dead, or is it?

by Frank 7. October 2012 06:00

The financial and IT news services tell us very pessimistic stories about the major PC players like DELL and HP. The general gist is that sales of PCs are down and sales of tablets are up and that the share prices of DELL and HP are falling. Just yesterday, the CEO of HP announced to a stunned market that 2013 will likely be worse than 2012. She also lamented the frequent turnover of HP CEO’s since the demise of Carly Fiorina. But to my mind that was a strange thing to do when also announcing that she won’t be improving anything and in fact will be in charge when things get worse. The mental picture I get is of the captain steering the ship into the rocks. My guess is that the musical chairs game at the top of HP will continue for some time yet because market analysts don’t like bad news and shareholders don’t like falling share prices.

So is the PC dead? Will we see it completely replaced in our homes and offices within a few short years? Are you still planning to buy a new PC? If so, why? Is business still planning to buy more PCs, for example to support Windows 8?  Will business in fact move to Windows 8 in 2013 or 2014 or 2015? Why would anyone be investing in expensive new PC hardware for their home or office? Are there better alternatives available now?

To my mind the global financial crisis that began in 2007/2008 has at least as much to do with falling PC sales as the advent of clever tablets from people like Apple. All over the western world people are holding back on spending money and are simply not replacing ‘older’ PCs or notebooks. In fact, I see the current crop of tablets as complimentary devices to PCs and notebooks, not replacements.  I blogged about this previously in “Why aren’t tablets the single solution yet?” and still believe my arguments to be valid.

My customers for example, still use PCs in the office to run my enterprise content management system RecFind 6 and use notebooks to run it when travelling. However, they are also now demanding that I provide support for a range of mobile devices including smartphones and tablets. But my customers are not replacing their PCs and notebooks with tablets, they are using tablets in an appropriate way to extend what they can do with mobile workers.

I also think that companies like DELL and HP are their own worst enemies. They have both exhibited a surprising lack of innovation and salesmanship and their marketing people seem to be about five years behind the market. They have both outsourced their services and support to awful Indian call centres and focussed more on reducing costs than on improving customer service. Customers have a way of showing their disapproval by walking away and I believe this is what they are doing.

So whereas I think tablets are the future I don’t think they are capable enough yet to replace PCs and notebooks in the office environment. I think most people have a tablet in addition to their PC and notebook (and smartphone).

I don’t see tablets, even the next generation, having all the functionality and screen size and power we need to replace PCs in the office. Even in the home, the small screen size of a tablet mitigates its value as does the lack of applications and connectivity; not everyone wants to replace their working backup drive and USB printer just to accommodate Apple.

I also think that PCs and notebooks are too expensive and that Intel, DELL and HP are too used to big margins. In economics we talk about the intersection of the price and demand curves; the theoretical point at which we make the most money. Set the price too high and you sell fewer and make less money. Set the price too low and you sell more but make less profit. Somewhere in the middle is the point where we set our price to get the optimum sales and profit results.

For example, if Apple priced the New iPad at $5,000 if wouldn’t sell any and it wouldn’t make any money but if it priced it at $10 it would sell a shed-load but also wouldn’t make any money. At $400 plus it seems to sell as many as it can produce and also make the maximum profit. Apple has found its optimum price point.

Every vendor struggles for the optimum price point and over time as technology matures and becomes more common, prices have to drop. I don’t think the prices of PCs and notebooks have dropped enough. It’s just economics stupid, your PC and note book prices are way above your optimum price point and that’s one reason why people are not buying them.

So no, I don’t think PCs are dead. I think their sales have dropped because of a combination of the ongoing global financial crisis and poor management and product decisions from the major players like Intel, DELL and HP. Apple has cleverly capitalised on this situation, it didn’t create it. Apple is clearly innovative, HP and DELL are not.

I believe that we are yet to see at least one more re-invention of the PC and notebook, albeit of a higher quality and with more innovation that Intel’s Ultra Book attempt at reinventing the notebook. The re-invention should also come with a new lower pricing algorithm, not a raising of prices as attempted by Intel with the Ultra Book range of notebooks.

So, Intel, DELL and HP; the ball is firmly in your court. You all employ scores of really smart and innovative people. Why don’t you give them the challenge? If you come up with a realistically priced and innovative new PC solution I would certainly buy a few. But, please do something about your service levels; I for one am really tired of being bounced around Indian, Singaporean and Philippine call centres. If foreign call centres are part of the new deal I am afraid that I want no part of it. That model is broken. If you want my business then I demand better service.


Oh Dell, wherefore art thou?

by Frank 23. September 2012 06:51

I own and run a software company that designs, build and supports enterprise content management solutions. As such I have a lot of servers and workstations and performance and reliability are of paramount importance to me.

I had been a loyal Dell customer for many years. I have bought 40 or 50 servers, hundreds of workstations and dozens of notebooks plus other assorted paraphernalia such as racks, projectors etc. Back a few years ago Dell was a great company to do business with and its website made the selection and ordering of all the equipment I needed a breeze. Its support, both sales and technical was also top notch.

Even though I still think that Dell servers and OptiPlex workstations are great quality I no longer buy anything from Dell.

The reasons are to do with lousy service and the quality of its Australian web site.

The website is no longer easy to use or bug free and it is just annoying and no longer the really helpful resource it used to be. I have tried to tell Dell this on many occasions but no one is listening.

I also hate dealing with Dell’s Indian support centres and absolutely refuse to deal with an Indian based sales representative. If Dell wants my business then it needs to start doing business in Australia with Australian resident staff.

Every time in the recent past when we have had problems with Dell equipment it has been a nightmare trying to get things resolved. Again, I have gone out of my way to document these occurrences and tell the local Dell people but no one is listening because nothing has changed. If anything, and based on my experience today trying to get service for a Dell printer, it has gotten considerably worse. I do not enjoy being bounced around Indian call centres. Why does Dell senior management think it can reduce its costs by making me waste hours or days of valuable time when all that should be required is a few minutes?

Obviously, the powers to be at the top of Dell think reducing costs by reducing the service level is good business. Let me tell you as an ex Dell customer that it is not good business. Because I am a small customer in the scheme of things Dell probably doesn’t care that I have stopped buying Dell equipment. But, I can’t be the only Dell customer that is absolutely fed up with the new model with everything outsourced to India and the annoyances of the Dell website.

My point is that Dell used to be the best hardware company in the world to deal with and that it had the most reliable equipment and the best service level. Then someone at the top had all these bright ideas about how to lower costs. In my humble opinion, that person at the top needs to be replaced with someone who understands that customer service is paramount and that as the service level drops then so too will sales.

I still love my super reliable Dell servers and OptiPlex workstations and would dearly like to deal with Dell again but I and my staff are simply no longer willing to put up with the frustration of trying to do business with Dell via Indian call centres.

Hopefully someone with clout in Dell will read this Blog and realize that Dell’s fall in sales world-wide has less to do with the global financial crisis and more to do with its cost cutting. Hopefully that person will also be concerned with the massive eroding of its customer base and want to do something about it.

Here is my free advice. Dump your useless and unbelievably annoying Indian call centres and bring support back to the local country. Stop playing around with your website and give us the previously easy to navigate, easy to use and easy to configure and order website of previous years.

I would love to start buying Dell equipment again but you have alienated me just as I am sure that you have alienated hundreds of other previously loyal Dell customers.

Dear Dell, please give me a reason to come back.

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