The PC is dead, if you believe Lou Gerstner, chief executive of IBM. However, if you take a closer look at the results of the latest research from analysts IDC, you'll discover that the PC in Europe, the Middle East and Africa is very much alive and that Gerstner's comments were most likely influenced by the fact that IBM's PC business unit is a huge loss-making black hole. That said, for a manufacturer that supposedly thinks the PC has passed from this realm to another, it's selling them faster than battered Mars bars in Glasgow after closing time.
In fact, according to its latest results, IBM's growth in PC shipments - especially servers and notebooks - jumped 31.6 per cent to maintain its hold on the second spot behind Compaq. The PC market overall grew a healthy 15.1 per cent, due mainly to a massive surge in consumers wanting another device in their homes that they find they can't understand.
You would have thought that we would have learnt our lesson after all the trouble we had getting to grips with programming our videos, but apparently the lure of the internet, combined with almost psychotic retail and business price wars, is enough to make us forget that we don't really know what we're doing when it comes to technology.
Still, this collective madness has helped keep the PC doddering along quite healthily. But it's not all good news - the price being paid for the ever growing number of boxes shifted is directly related to the price being paid for those PCs.
Price wars do great things for research figures but very little in terms of profit margin. Value add is the only way to make a decent few pennies on the back of the PC and this trend is set to increase as the price decreases.
Still, this is nothing new to those of you making three turnips, a ball of wool and a pig's foot in profit on each top-of-the-line system shipped to businesses. You only have to look at the results of distributor Ingram Micro to realise that price competition is as crippling as a shot of absinthe and far less fun (allegedly).
While not as bad as Wall Street expected, Ingram's figures show a 25 per cent drop in earnings for the first quarter is not insignificant.
In fact, it's definitely not insignificant when you consider that revenue for the quarter jumped to dollars 6.73 billion, compared with dollars 5.15 billion this time last year.
Despite not earning any spending money for shareholders, Ingram actually boosted its market share in the US with a 20 per cent jump in sales. Even though the distributor claims the second quarter figures will not improve greatly, it expects price competition in the channel to calm down. Considering the effect it's having on the bottom line, it would want to. Adding value to PCs may be the way to go, but the PC is not that easy to add value to anymore.
To make some real money, it's time to get away from the 'out of the box' PC package and move towards the 'you'd be out of your box to try to install it yourself' networking, storage and e-commerce systems. That's where the big money is these days. Just ask Computer 2000 - its first quarter figures are healthier than an enema thanks to focusing on anything but PCs, peripherals and software.
So don't despair, just look elsewhere. The PC may be alive, despite what Gerstner thinks, but it's cheap and getting cheaper. And the moral of the story? When consumers become solely responsible for propping up an IT sector, it's time to find something different to flog.
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