Let me play industry analyst for a second and explain why I think computer manufacturers are in deep kimshee:
Hardware has vastly out-paced software. Besides gaming, there’s no compelling reason to upgrade your computer. I’m still running on a 1GHz/384MB machine I had built for me two years ago. I want for nothing in terms of performance. Admittedly, I don’t do any hardcore gaming (all I play is Total Annihilation from way back), but I do quite a bit of software development and I have probably a half-dozen servers running on the machine at any one time.
I’m sure the Michael Dell’s of the world are hoping that the Next Big Thing catches on soon and that it’s a resource hog. Computer manufacturers need a killer app that sucks up so much power that users are compelled to upgrade their machines.
However, if anything, the opposite is happening. Rather than load up new software, users are off-loading processing chores to Web-based services. We have an entire generation of computer users who are getting a Hotmail account instead of running a traditional email client. I just checked Task Manager and Outlook is sucking up a whopping 48MB of RAM right now. Mozilla is using less than half that and it’s browsing the Web to boot.
My wife tried using a traditional image editor like Photoshop Elements to prep images before uploading them to Shutterfly. She didn’t like it. Now she just uses Shutterfly’s Web-based editor. That’s one less client app that’s running on my machine, and one more thing that Internet Explorer is doing for the same resource hit as Web browsing. Less apps, less resources, one less reason to upgrade. At this rate, my computer’s actually getting faster.
Additionally, there’s little reason to upgrade software these days. Core apps like Microsoft Office have reached a functionality plateau, and they’re practically to point of diminishing returns. Am I going to upgrade to the next version of Microsoft Office? No way, I maybe use 10% of the functionality in Word now. No software upgrade, no need for a hardware upgrade.
Right now, gaming and video editing are the only things I see that people are really going to need more power for, but even that may be in doubt. Here’s a thought that must keep computer manufacturer CEOs awake at night from a great editorial on game originality (or the lack thereof) from The Adreniline Vault:
John Carmack — id Software’s technical wizard who just about single-handedly ushers in each new generation of visuals with his latest engines — recently said that graphics technology is quickly approaching an apex. He believes it won’t always be necessary for programmers to pump out new engines for each successive generation of releases. This could mean that it might not be long until technical innovation is no longer a driving force in interactive entertainment…
Yikes. Now we really don’t have a need to upgrade.
Gateway, for their part, has seen the impending doom and is running for the hills. They’ve started to move away from PCs and into consumer electronics:
[…] the company intends to revamp its retail stores and launch a broad range of new products for businesses and consumers. The list of products includes computers, PDAs (personal digital assistants), networking gear and services, home-theater equipment—and even furniture.
Have you been in a Gateway Country Store lately? I was in our local store over Memorial Day, and, sure enough, the biggest, coolest display was the home theater section. Good for them.
There’s an even bigger shakeout coming that the last one, and it’s not going to be pretty. Gateway is running for cover before the storm hits.