One billion PCs…and counting

Based on a Forrester Research, Inc. report titled, “Worldwide PC Adoption Forecast, 2007-2015,” it is estimated that by the end of 2008, there will be more than one billion PCs in worldwide use and, by 2015, there will be around 57 million new PC users within Canada and the United States alone.While the report found it took 27 years to reach one billion PC users, Forrester believes that combined with advancing technology, lower price points and greater global demand, it will only take seven more years to reach the next billion users. The report was conducted by Simon Yates, vice-president and research director at Forrester, headquartered in Cambridge, Mass.

An important finding of the report found that emerging technology markets such as India and China hold plenty of long-term growth opportunities for vendors that wish to serve in those areas. However, Yates says in order to successfully penetrate these markets, vendors need to commit to massive volume production levels.

“Margins are so thin and are barely there [in emerging markets] so massive volume is required,” Yates said. “No one knows how long [people there] will hold on to these PCs before getting new ones, so vendors need to look into building long life spans. This is a challenge for vendors because they need to keep their products in the market for a long time.”

Will Canadian VARs look elsewhere?
Yates says another challenge vendors face when it comes to emerging markets is finding the appropriate PC applications for users because what is required in North America is likely not necessary in India and vice versa.

According to Forrester, vendors could enter emerging markets in one of three sectors, including retail, government or education.

“The biggest market in China is the Chinese government,” Yates said. “The government could then set up subsidized programs to help support both education and economic growth. These are vehicles we think will work to help with the introduction of PCs in emerging markets.”

While tackling emerging markets in such a strategic fashion is key, Yates says when considering North America, vendors need to take on a different approach.

“If you look at the North American reseller industry in general, once margins started geting thin, they moved towards support and maintenance services,” Yates said. “They were more focused on the break, fix, add and change aspects of software.”

The North American market space in general has already been fairly saturated when it comes to acquiring new PC users, says Keith Groom, director of systems and networking and peripheral solutions at Softchoice for North America, a Canadian solution provider with corporate headquarters in Toronto and a U.S. office in Chicago.

“We’re very much focused on the North American market,” Groom said. “We predominantly focus on the mid-market space. We focus on the refresh cycle in North America because we think we can gain sales from better PC lifecycle management services.”

After learning of the opportunities in emerging markets, Groom says Softchoice has no immediate plans to open up shop overseas, but there’s always the possibility that the company will later branch out into these emerging countries.

“Emerging markets are where the PC business will be,” Groom said. “We do have demands from particular customers that are on a global level, but in the PC business, there are a lot of export restrictions. I’ll never say never to these markets though as dynamics in the market continue to change.”

For Softchoice, Groom says it’s important that the company focuses on lifecycle management as more of an IT asset which includes PC acquisition and even product disposal. “We think if we go to customers with the message to help them build and plan with the acquisition, management and disposal of PCs, we can offer tremendous value to our customers,” Groom said.

“We focus more on a solution approach because it’s about more than just price nowadays.”

Andrew Stewart, vice-president of corporate services and marketing at Compugen, a Richmond Hill, Ont.-based IT service provider and PC systems integrator, thinks the increase in the number of PC users will have a positive effect on his company.

“We touch base with roughly 2,000 customers in Canada,” Stewart said. “Computing is becoming an essential and ubiquitous part of everyday life in North America. The growth in the number of PCs is good because it will continue to fuel the stability of the business marketplace we focus on, which is mostly the mid-to-large size business market.”

Like Softchoice, Compugen also takes on a PC lifecycle management type of approach. Stewart says Compugen’s customer base continues to expand and is rapidly growing by double digits every year.

While Stewart agrees that the emergence of new overseas markets offers a wealth of opportunities for new entrants into the PC space, Compugen is not one that will likely branch out into these areas.

“Our priorities are in the continued expansion of the business in Canada,” Stewart said. “Our business continues to grow here and we see future growth opportunities in Canada and our public sectors.”

Developing locally

The Forrester forecast report anticipates the majority of new PC users will come from emerging markets over the course of the next 10 years; therefore, vendors are recommended to target new PC users within these spaces.

“[Emerging markets] will take time to mature,” Yates said. “In reality, there’s not a lot of money for [vendors] to make in the early days. Like any company going into emerging markets, you need to be committed to the long-term. Don’t expect to make a lot of money right away because there could be years and years of flat or no growth.”

While it’s still early to say whether or not resellers will tackle emerging markets, Yates believes that the resellers who will go to these markets are ones that have sufficient capital and resources to invest in a long-term commitment.

“These companies would initially develop locally and would perhaps be acquired later by a larger company in the future,” Yates said.

“In the long run, I think PC deployment in the emerging markets will follow the same North American and other developed country tracks.”

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Jim Love, Chief Content Officer, IT World Canada

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Maxine Cheung
Maxine Cheung
Staff Writer, Computer Dealer News

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