Gartner Presents Four Strategic Alternatives to Maintain Competitiveness in the PC Market

Gartner predicted that in 2020, business leaders at PC companies would face a critical decision regarding whether to completely overhaul their PC business or withdraw from the market.

Gartner stated that companies wishing to maintain their PC business divisions must promptly adopt appropriate alternatives or changes to adapt to the currently oversaturated PC market.

“The traditional PC business model as we knew it has collapsed,” said Tracy Tsai, Executive Vice President of Research at Gartner. “While the market share of the world’s top five PC vendors increased by 11% from 65% in 2011 to 76% in the first half of this year, revenue and profits decreased. This does not mean the end of the PC market, but as the number of PC installations worldwide steadily declines over the next five years, the revenue and profits of PC vendors will continue to shrink.”


A visitor is examining a laptop PC on display at the exhibition.

Vice President Tracy Chai stated, “Over the next five years, the approach of increasing market share by stimulating demand through price competition is not expected to work in the PC market,” adding, “Existing PC companies must adapt to new trends shaping PC consumption.” For example, factors include the decreasing number of PC users who use their devices until the end of their lifespan, the shift from enterprise PC applications and storage to the cloud, reduced reliance on PC performance, and prices and specifications that make PC upgrades unsuitable. Ultimately, a new and enhanced consumer experience is the only way to provide differentiation,” they stated.

Gartner presented four response strategies for PC manufacturers to respond to the future PC market, based on corporate culture and assets, business operations and technological innovation, and comprehensive business restructuring.

1. Existing Products and Existing Business Models

This alternative represents the most conservative approach and can be applied by companies selling existing PC products while maintaining their current business operations. To cover business costs, sufficient cash flow must be generated, which requires significant volume. Therefore, mergers among companies are expected to be inevitable in the declining PC market. While the purpose of the mergers is to preserve the PC business, they entail significant risk, as Intel and Microsoft (MS) are shifting their strategies in new directions.

Vice President Tracy Chai stated, “To sustain their businesses in the long term, PC manufacturers must streamline operations and focus on increasing the sales proportion of mid-to-high-end products rather than market share.” She added, “Sales compensation systems are another key element that requires change. When operating incentive programs to promote sales activities by sales departments or distribution partners, PC manufacturers should pay more attention to margins and profitability rather than focusing solely on market share and sales volume.” He also added, “PC manufacturers must focus on the requirements of ‘users’ rather than the requirements of ‘distributors and resellers.’”

2. Existing Products and New Business Models

This involves a PC manufacturer establishing a team to test new business and revenue models for PC products, such as 'PC as a service.' The business model in this scenario is agile, risk-taking, and embraces failure. For example, it involves forming a collaborative relationship with a digital education content developer to package 2-in-1 devices loaded with digital content and offer them via a subscription model. In this case, the PC is provided to users free of charge through subsidies from the content provider.


Table 1. Number of PC installations worldwide, 2015–2019 (actual number). Source: Gartner (September 2016)

3. New Products and Existing Business Models

The third alternative is to take a more conservative approach to seeking new product lines and market access. Examples include transforming PCs into smarter devices through features such as sensors, voice output, emotions, and touch capabilities, or developing new products for connected homes or targeting vertical markets. This can serve as a gradual strategy for PC manufacturers to expand into new product areas while building upon their current business models.

4. New Products and New Business Models

The final alternative represents the most aggressive approach to change in terms of business operations and product innovation. In this scenario, PC manufacturers could establish new departments to manage business operations and seek new technological solutions to build entirely new product lines. This also includes collaborations with new channel partners, independent software vendors (ISVs), and startups, and the resources and revenue models involved may differ from the company's existing structure.

One example is personal assistant robots. Combining chatbots with voice-activated virtual personal assistant functions, PCs can act as 'information butlers' in the home and generate revenue from developers and third-party content and service providers in fields such as retail, healthcare, education, video, and music.

“PC business leaders need to consider business performance based on the four alternative strategies presented above. Some companies may need to completely overhaul their business and product strategies to change the landscape of the PC market,” explained Vice President Tracy Chai. “PC companies should identify their core competencies and evaluate their internal resources to adopt one or more alternative models for business and product innovation to maintain or divest their PC business.”