How is the Tablet Market Affecting Puget Systems?

Written on April 14, 2011 by
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Yesterday Gartner released a report that worldwide PC shipments fell in the first quarter of 2011.† As I read over the article I couldnít help but compare this current state of the PC industry as a whole to that of Puget Systems, but before I get into those thoughts, hereís a key excerpt from the article:

"Weak demand for consumer PCs was the biggest inhibitor of growth," said Mikako Kitagawa, principal analyst at Gartner. "Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics. With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs. We're investigating whether this trend is likely to have a long-term effect on the PC market."
I think Kitagawa makes a great point and we have been saying the same thing for quite some time here at Puget Systems.† Take a look at our product line and youíll see that in a tangible way.† One of the first things youíll see in our product line is that we donít try to compete with the $500 Walmart computers.† We have predicted the decline of that market for a while now and as technology advances and things get smaller, it seems like the way of the tablet is inevitable.† Why deal with a big old computer rig for just sending email and browsing the internet when you can now interact with a similarly priced tablet that does all that just as well, travels wherever you go and weighs under two pounds?

Kitagawa asks if this is going to be a trend that effects the entire PC market.† I think the best response is: ďIt depends.Ē† For the sub $1000 computers, the writing is on the wall and itís only a matter of time before that category of desktops are long gone, but thatís not the whole PC market.

During the same time period as this report outlines, Puget Systems has experienced some of best sales numbers in our history, and things continue to look positive - and hereís why: There will always be a need for the high-end.† Highly specialized tasks will always require higher end computer power than mainstream consumer devices.† Sure, the form factor might change, but the niche for the high end isnít going anywhere anytime soon.

So what do you think?† Do you think the custom PC market is fading away in favor of tablets or other handheld devices, or will demand continue to grow as tech gets more and more advanced?

Sherry Saites

I love my new Obsidian! A table would have been cheaper, but certainly not a better option. You can't do serious photo, video or music editing on a tablet. A tablet is nice on the go, but when you have real work to get done a tower cannot be beat.

Posted on 2011-04-15 01:10:34
kory wit a k

I love my tablet, but for soid substance gaming, consoles and high end pc's rule the day. I feel a sense of empowerment when I sit down to a quad core, triple monitor gaming beast, and battle accross the battlefield with 64 other players, destroying targets miles away with a well placed shot from a sniper rifle, or main gun round from an M1AQ abrams.

You can't beat it, and keeping the latest and greatest hardware just ups the ante in curtailing a budget around getting the hardware that pushes the specs to the next level is all part of that love for the game.

Posted on 2011-04-15 02:11:42
Damon S

How can they look at the number of shipments in the 1st Quarter 2011 and make a valid comparison?
Intel's screw-up with Sandy Bridge has to have had a significant impact on desktop sales in the quarter.

Posted on 2011-04-15 14:26:39
Judi F

Need will continue for high-end towers for photo and video editing, music editing and recording, vector graphics etc. What will continue to evolve there is that a few high end systems will allow home and small business the advantage of increased in-house abilities. A small corner becomes a whole studio.

Tablet types will find an optimum size as will smart phones and those will be what we use for portability. Laptops will fade and lower end towers will be replaced by inexpensive all-in-ones that fit decoratively into any room. Wireless networking will improve and most homes will use wireless.

Posted on 2011-04-18 21:02:59
Phil B

I have an iPad and an iPod Touch, but I still need a fast tower PC for editing 4GByte batches of large (21 megapixel) digital photos in Photoshop. I can see no way for this type of application to change, but I realize it's not what most people are doing. This type of Photoshop work is *much* too challenging for generic PCs or tablets. Also, Photoshop and related software just keep getting more CPU and I/O intensive. Hard drive storage of 50,000 photos per season plus multiple backups will require access to multiple hard drives for some years to come - no practical way to accommodate this in very small generic desktop PCs, much less tablets.

Thus, I enjoy my iPad and iPod for the things they are good at (simple, portable media consumption, mostly), but I expect to use a large, fast tower PC for some years to come. I just wish I was sure that Intel will be able to do their part in making new computers several times faster in the near-term future (3-5 years). This seems to be more complicated than just making a faster CPU.

Long live Puget Systems!

ps: Can't wait to receive the new Puget system I just ordered!

Posted on 2011-04-19 19:55:43
Matt

I think there are two trends going on. (1) As computers become more powerful, more and more functions can be performed on comparatively smaller, cheaper, (comparatively) less-powerful devices. Now a notebook can easily handle tasks for which I used to need a desktop. My iPad can now do some things for which I used to need at least a notebook. (2) Big PC companies are focused on low prices and high volume, and neglecting product reliability and customer service, leaving an opening for firms like Puget.

In the short term I have no doubt that Puget will continue to do quite well due to factor (2); firms like Dell have just lost the faith of intelligent buyers, and if you're a small firm there is huge room for growth at the expense of the established players as long as the value proposition is there, especially if you can get away with premium, profitable pricing. At the same time, I also expect that over the long term fewer and fewer functions will require the use of, for example, a full-scale desktop PC due to factor (1). Yes, some people (like me) may always need it, but I have little doubt that the proportion of tasks and proportion of people will shrink overall.

Thus I think Puget and firms like it will continue to do very well in the short and medium term, but they will do so at the expense of mainstream, high-volume PC manufacturers and not because the PC market or even elements of it will continue to grow. If Puget were currently the size of Dell I think the prognosis would be pessimistic. As the overall market for PC's shrinks as a share of the total, and as the post-PC world eventually takes over for most users, it will eventually limit the growth for all players in the PC including firms like Puget. But if Puget could grow to a billion in sales in the meantime, does it matter?

Posted on 2011-04-26 20:14:53