Tech slowdown begs question ‘Where have all the buyers gone?’

Published on the 12/12/2016 | Written by Anthony Caruana

Gartner_IDC report tech sales

Market reports from IDC and Gartner show flat or declining numbers for PC, tablet and smartphone sales…

Markets for the major technology gadgets are mature, with growth figures in the low single figures if there is growth to be found at all. Even smartphones and tablets are feeling the pinch, as IDC said global shipments will reach about 1.45 billion units for 2016 – less that 1 percent growth on 2015’s numbers, when the market expanded by over 10 percent.

The tablet market, tanking for a while now, is expected to return figures for this year down 12 percent on 2015; PC shipments have declined by 3.9 percent, a number which is seen as a positive result as the plunge wasn’t as deep as the market expected.

And while the story of flaming Samsung Note 7 smartphones was big news, it’s impact may have been substantial on the Korean giant’s bottom line, but minimal on global numbers across the entire sector.

Perhaps server shipments were up, as companies continue to move to public cloud and hybrid cloud where local device power is less critical as lots of the storage and processing is handled remotely.

But the server sales stats are equally damning, with volumes and revenues down there as well.

However, when factoring in data centre growth, we see a very different picture.

Intel’s most recent earnings report reveals revenues were up by around 9 percent year on year. And data centre floor space projections continue to rise. A recent Frost and Sullivan report put that growth at 18 percent last year, with an expectation of continued 12 to  14 percent growth for the next five years. Interestingly, Frost and Sullivan also project increased power use per rack as more compute power is packed into the spaces.

With an apparent paradox emerging, what the heck is going on?

Although the spend on client hardware is down, IT budgets are still growing. But rather than investing in lots of tin in the local data centre or server room, it seems that IT has shifted its focus to services.

In other words, our thirst for computing power isn’t waning. But we are changing how we access it.

What’s this mean for businesses?

  1. Your PCs, smartphones and tablets are powerful computers that can handle almost everything you can throw at them. You can seriously consider extending their useful life from two or three years to four or five depending on the device and specific use-cases.
  2. Local data centres and server rooms are giving way to hosted or cloud solutions. Hang on to your cash and look at leasing capacity from a third party.
  3. You’ll need a plan for your IT team to move them operational system management to higher-value activities more directly connected to the business. If there aren’t as many servers to look after you’ll need to keep them busy or let them go.

Indeed, at least part of the slowdown in the devices market might be attributed to the longevity of these products, as well as the increasingly difficult perception of any performance gain to be had from upgrading to the latest PC, iPad or smartphone.

Take smartphones as a case in point. Apart from the Easter egg feature of spontaneous combustion, the late lamented Galaxy Note 7 didn’t do anything different from its immediate predecessor. A colleague reports that, apart from a notably better camera, his Galaxy S6 was indistinguishable from the S3 it replaced – and the S3, after more than three years of duty, found a satisfied second owner.

In any event, the maturity of the market may be a boon for consumers, who benefit from longer-lasting, capable devices which can take advantage of iterative new software long into the future. It could also be a boon for businesses, which can expect to sweat the device side of cloud computing a lot longer, particularly where the heavy lifting takes place in a data centre far, far away.

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