, PC Industry Growth Expected To Slow? Many Indicators Say Otherwise, The Nzuchi News Forbes

PC Industry Growth Expected To Slow? Many Indicators Say Otherwise

, PC Industry Growth Expected To Slow? Many Indicators Say Otherwise, The Nzuchi News Forbes

A rare silver lining in the cloud that is the Coronavirus pandemic, is that while some industries suffered, others flourished, as evidenced by the explosive growth in the PC industry over the last 12 to 18 months. This growth was fueled by new work-from and learn-from-home use cases that required many consumers to revamp their tech toolboxes with new laptops, desktops and supporting peripherals.

Though it’s logical to consider that the pandemic-driven demand bubble won’t continue indefinitely, some large industry analytics firms are forecasting a near-term decline that doesn’t necessarily add up in my opinion. In fact, some of these firms have been consistently raising their unit sales guidance throughout the last couple of years, and I think the PC industry will continue to prove them wrong.

PC Refresh Cycles Are Shrinking

There are a number of factors to consider that could lead to continued growth in the PC space. The fact is, a large portion of the current installed base of PCs is relatively old. Nowadays, it is not uncommon for businesses and end-users to hold onto their PCs for 4-5 years or more. In light of recent innovations and platform enhancements, however, those older PCs provide a vastly inferior experience in a number of key areas, from IO and wireless connectivity, to responsiveness and power efficiency, not to mention raw compute power. On their own, the enhanced experiences and performance offered by a modern PC may be motivation enough to spur many new purchases and upgrades, but we must also consider Microsoft’s upcoming next-gen operating system.

The Windows 11 Effect Will Be Significant

Windows 11 is due to arrive soon and it marks the first major OS overhaul for Redmond since 2015. Anytime Microsoft releases a new OS, system and peripheral upgrades inevitably follow. In addition to the marketing push that will promote Windows 11, and ultimately the PC, there are a couple of additional wrinkles with this new OS to consider. First, to fully support Windows 11, Microsoft will be requiring specific functionality for Trusted Platform Module (TPM) technology, which may not be an available feature for many aging systems. In addition, a highly sought-after feature for gamers – DirectStorage – may perform better with Windows 11 due to deeper integration, according to recent reports. DirectStorage will leverage high-speed NVMe solid state drives (SSDs) to drastically change how games can load assets into main system memory, potentially eliminating load screens in the future. It’s a storage technology similar to what’s being employed in the current-gen game consoles from Sony and Microsoft, and if a new PC is required to get the most of out that feature, you can bet many gamers will take the plunge to alleviate the load time pain point.

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In addition, if you reconsider the massive growth the PC industry experienced back in 2011, with new form factors, use cases and an OS from Redmond that did not require a hardware refresh, imagine what the demand might look like when Windows 11 rolls-out in full, with new features and more stringent requirements.

The PC Is Hot For Work And Play At Home And More

For the last few years, and in the lead-up to COVID-19 lockdowns, there has been renewed interest in the PC, as virtually all of the major players in the space have released newer, more powerful and more efficient products. In 2020 there was more than a 32 million unit gain in PC shipments, an over 12% gain year-on-year, due partly to increased per-household density and refresh requirements of consumers.

, PC Industry Growth Expected To Slow? Many Indicators Say Otherwise, The Nzuchi News Forbes

Laptops continue to evolve and become faster and more powerful, while offering increased battery life and a better overall experience. Slimmer, more portable (and more attractive) form factors are also increasingly more common. We also have ongoing initiatives like Intel’s EVO and AMD Advantage to consider, which are designed to enhance mobile platforms as a whole and don’t focus solely on a couple of internal components. These initiatives can have a significant, positive impact on the entire mobile user experience, which also can drive growth.

Desktops continue to get more powerful and refined as well. High core count processors, which were previously relegated to only those with deep pockets or enterprise budgets, are now affordable and commonplace. Workloads that previously required massive, expensive professional workstations can now be run on many mainstream desktop PCs at acceptable performance levels.

PC Gaming continues to grow as well and game streaming on services like Twitch, YouTube and Facebook remain hot with no sign of slowing. In a conversation with one of the premiere, boutique system builders Wallace Santos, CEO and co-founder of MAINGEAR, said “I still think we’ll see higher demand than before COVID. The TAM expanded and the new blood is now hooked on PC gaming”.

Intel, AMD, and NVIDIA all have next-gen products based on new architectures coming down the pipeline that will attract new PC gamers and streamers, potentially enticing them to upgrade, especially now that we’re finally seeing signs that the chip shortage is easing up and high-ticket items like graphics cards are becoming available for new desktop builds. Intel, AMD, and NVIDIA define the PC gaming platform from a hardware perspective, and all of them plan to turn the heat up on the competition over the next few months and into 2022.

Intel is also poised to make its official entry into the discrete GPU space and PC gaming is a major driving force in that move. Rumors suggest Intel will be targeting mainstream PC gamers with its initial wave of graphics card products, which is where the bulk of the market resides. Further, the continually increasing popularity of eSports, which is comprised of many game titles that do not require massive amounts of horsepower and run just fine on sub-$1000 systems, will likely continue to drive up the install base of lower-cost gaming PCs.

PCs In Education Now The De Facto Standard

And speaking of lower cost of entry, as Chromebooks in education continue to make significant inroads, demand is still surging. The staggering fact remains that some estimates put the average ratio of students to computers at 24 to 1, which is nearly five times the ratio recommended by the U.S. Department of Education and millions of homes in the U.S. still lack PC as well, according to the most recent Household Pulse survey. So, to say there’s significant room for growth in education would be an understatement. The reality is our children face a world that is increasingly more connected and more tech-centric, such that to compete in the new global economy, accessible, reliable and stable compute and connectivity resources are simply a prerequisite for students around the world.

In short, though we may not see the massive uptick in unit shipments we saw in late 2020 continue, it appears that the PC industry has hit an inflection point and is headed for a period of sustained growth into 2022 and beyond. Though big analytics firms often like to temper sentiment, I don’t think the COVID bubble has completely popped, and in fact it likely wasn’t really a bubble at all. In my view, COVID underscored the need for ubiquitous computing resources and accelerated a process that was already in motion. The pandemic was more of a launch platform that brought technology even more-so to the forefront, as the Biden Administration specifically underscored it as “critical infrastructure.”

And if you speak to some of the major industry players, the measured optimism is clear. “Technology has always mattered, but people are increasingly realizing they want devices that help them do more and collaborate easier. We see the PC industry expanding as millions of children still need PCs for education, the number of PCs per household has increased and refresh cycles are accelerating with the shift to notebooks. It’s also important to keep in mind that this isn’t just about PCs. There is a broader client ecosystem of keyboards, displays, headsets, webcams and more. We believe the market – including software, peripherals and services – is more than 2x larger than the PC market alone” said Sam Burd, President, Client Solutions Group at Dell Technologies.

So, where is the softening in the PC sector going to come from exactly? We’ve got larger TAMs, waning chip and component shortages, and increased demand in a number of important market segments. From what I read in the tea leaves, there are still many good things on the horizon.

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