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Dell's Lexus
June 10, 2005
The first 25 years in the history of the personal computer were an aberration. Here's why: The business and consumer markets for the product were essentially the same. When you went out to buy a computer for your home, you used more or less the same criteria that corporate purchasing agents used when buying fleets of PCs for employees. The drab, utilitarian PC on the desk in your study (or spare bedroom) looked the same and worked the same as the drab, utilitarian PC on the desk in your office. That wouldn't be remarkable for, say, a pencil, but for an expensive and sophisticated product like a computer, it's an odd state of affairs, to say the least.
But it's not going to last much longer. I think we're finally at the point where we're going to see the home PC diverge, and diverge quite radically, from the business PC. The home PC is going to turn into a real consumer product - or fragment into a whole bunch of consumer products. My loyal readers (that means you, mom) will know I've said this before. Earlier this year, I wrote a piece arguing that Dell would have to "class up its act" if it was going to flourish in the home market of the future. I drew an analogy to the car industry, pointing out how consumers first embraced the drab, utilitarian Model T and then dumped it for snazzier models.
So what happened last week? Dell announced that it would unveil a premium brand of home computers in time for Christmas, and it would launch a big advertising push to promote them. Dell consumer veep Mike George even rolled out his own automotive analogy in making the announcement: "Consider this the Lexus of our lineup," he said. (I don't believe he actually thanked me by name, though.)
The news was overshadowed by Apple's embrace of Intel, but in it's own way it's equally surprising. And I think both stories are related. Apple and Dell both want to win big in the home. To do so, Apple will have to reach down-market and Dell will have to move up-market. Those shifts, which go against the competitive grain of both companies, began in earnest during the past week.
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Comments
I suspect you are wrong about Apple. The Intel decision will only help Apple maintain its hardware equality (in terms of performance - it will still be a premium brand with proprietary hardware). Apple will gain marketshare though other means: ease of use; resistance to attacks and spyware; superior user interface; additional home functionality/innovation (I am anxiously awaiting a combination CellPhone & iPod... why does everyone need a camera phone?).
Posted by: Stuart Berman at June 10, 2005 09:20 PM
Simple divergence between home and business market probably understates the fragmentation you mention that will take place in the PC market over the long term. However, I don't think it has anything to do with "snazzier models" - what happens to the PC has more to do with how we use technology in the workplace and at home. For example it was reported recently that laptop/notebooks outsold desktop PCs in the US. So the idea of a desktop PC at work may also become a thing of the past, when what people need from time to time is a big screen and big keyboard. Also, we shouldn't forget the third market of small business owners, where the overlap between work and home use of PCs is blurred.
Posted by: James Dellow at June 10, 2005 09:47 PM
The thought occurred to me that this idea assumes that people will continue to have a standalone unit of what ever description for computing. The grid model may introduce the idea of an access portal like a TV where the user requests user access and data is stored centrally - that way we end up with truely mobile computing with data accessible from anywhere
- work or home. Program access would be on a registered user basis and accessed as required.
Posted by: Tony Sudworth at June 11, 2005 03:47 AM
Personal computing is evolving to new era where the PC hardware itself looses interest. Diversification is happening both in home environment and business environment. Is the desktop or even laptop really the best tool for most of the information workers? Or could there be more suitable solutions like Nokia Communicator? Or even simpler devices. PDA's are widely used in warehouse environment, logistic centers etc. But information workers are still bound to boxes from last century.
This is of course due the costs. With large volumes PC manufacturers have lowered the price to the level where personal computing in home makes sense. The key thing in business environment is not anymore only the cost, but productivity. And the control of valuable information that corporations own. Worms and viruses are big threats from the technology side but the users still are the most risky and fragile peaces in information manipulation industry. I believe that mobile solutions, all kind of them, are going to takeover desktops and laptops in business environment. Big firms need devices which are cost effective and more suitable for particular business needs, and more in control so that business use and private use is not mixed.
In home, PC’s are becoming more like media centers: you watch on-line video streaming, listen your favorite music in diverse formats, high and low quality, your kids (and yourself) are playing video games, you share your digital photos to the rest of the family etc. Your media center will be connected to sub-centers in different rooms with wireless technologies and so on.
PC as a box is shading off and losing its relevance, yet it will not totally disappear.
Posted by: Pertti Mäkitalo at June 11, 2005 06:03 AM
I think the consumer / business divergence will go a little bit differently. I don't want to see my home computer(s). I just want to be able to use it wherever I happen to be in my home in all of the capacities currently available. I prefer to think of the snazzing-up in terms of available functionality and ubiquity. In that sense, the consumer grid could be the way to go.
Posted by: Chris Boebel at June 14, 2005 01:41 PM
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