The form factor of products is changing with the trend towards mobile devices from the traditional desktops, said Harry Zarek, president of Richmond Hill, Ont.-based PC reseller Compugen Inc.While that’s the case, Zarek said the movement towards mobility increases the average unit price – among other benefits – and that “that’s a positive.”
In addition, he said, the lifecycle of a mobile device is shorter than that of a desktop, which is partly due to fast-moving technology trends like products that are lighter weight, have better capacity, lower power requirements, and bigger screens.
“There’s also fairly heavy utilization. They get banged up. They generally don’t seem to go past the three year cycle,” he said, adding that in addition to short refresh cycles, Compugen reaps larger service rates on notebooks.
And the move to thin client environments doesn’t concern him either because customers will want to improve their back-end systems with more servers and storage. “So we more than make up for it on the back-end infrastructure.”
Oakville, Ont.-based PC vendor MDG Inc. currently experiences a 60 to 40 desktop to notebook ratio, and estimates in 2008, those figures will be pretty even. “We’ve been feeling the shift of desktops and notebooks for quite some time,” said MDG’s Marc Boudreau, senior marketing manager.
MDG has taken strides to keep pace with this mobility trend, said Boudreau, by sourcing different original design manufacturer (ODM) partners in Eastern Canada to customize their notebooks.
There is a trend towards longer equipment refresh cycles in the market, Boudreau acknowledged, however, with the arrival of Windows Vista, customers have been refreshing their systems more than what was anticipated.
However, he said, he expects the cycles to lengthen as systems become bigger and more durable.
To counter that shift, said Boudreau, MDG has a service component whereby the business reaps service revenue from customers regardless of PC brand. The company also tries to stay innovative in terms of its offerings – just last year, it began working with the public sector.
Refresh cycles are the “sacred cow in the PC industry” in that vendors want corporations to trade things in more often, said Simon Yates, research director with Boston, Mass.-based analyst firm Forrester Research Inc.
Vendors and resellers’ strategies are to shorten those refresh cycles by getting companies to renew their equipment sooner. “They’re fighting hard to continue to make money off the refresh cycle,” he said.
Continuing that source of revenue, said Yates, is vital considering the industry is rarely good at introducing new product categories. In general, PC innovation relies on making incremental changes to a platform and selling “the new version of the old thing with new stuff in it.”
Yates anticipates the emergence of new features to existing platforms, like laptops with VoIP capability.
Besides refresh cycles and mobility trends, Boudreau acknowledged the trend toward white boxes – or no-name branded PCs. Actually, he anticipates the sale of white boxes to continue to take half the PC market in Canada and even increasing a little more.
According to Boudreau, MDG started as a “pure white box retailer/OEM,” and although it has gradually grown its own brand, it continues to serve the white box market. “But we still know that that’s a part of the population that comes to us. They’re very price conscious and we want to make sure that we keep that white box mentality.”
Zarek acknowledged that the white box market share has always been around 50 per cent, Compugen doesn’t sell white box products nor has it observed customer interest among its larger corporate accounts.
But he does imagine small businesses would have an interest in the no-name PCs through local VARs or resellers.
According to Yates, over the next few years, the biggest change in the PC industry will be the ability to conquer emerging markets – China, India, Brazil, Russia, and Indonesia – where the vast majority of any growth in the PC industry will stem.
Boudreau agreed: “There is a large growth area in those areas, but I know there is still a lot of market share left to be had in Canada.”
Although MDG, for the time being, will concentrate on the Canadian space, he admits to internal discussions around “cross border” entrance but can’t yet specify timelines.
Zarek understands that those markets would have fast-growing economies considering they are made of first-time computer buyers.
“Here in Canada, it’s a mature marketplace and most of the business is refresh.”