Is it the end of the desktop PC?

TAIPEI Wed Jan 7, 2009 1:20pm EST

1 of 3. A man shops for computers and LCD monitors inside an electronics shop in Taipei in this November 20, 2008 file photo. The age of the desktop PC appears to be over as its more portable cousin, the laptop, surges ahead with consumers clamouring for light-weight computers in funky designs for use at home, in cafes and on the train to work.

Credit: Reuters/Nicky Loh/Files

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TAIPEI (Reuters) - The age of the desktop PC appears to be over as its more portable cousin, the laptop, surges ahead with consumers clamoring for light-weight computers in funky designs for use at home, in cafes and on the train to work.

Not a single desktop model figured on online shopping portal Amazon.com's top 10 selling PC and hardware list the weekend before Christmas, while seven laptop models made the list.

It was yet another sign that the former dominance of desktop PCs is fading as wireless advances and lower prices make laptops the preferred option for millions of PC users around the world.

"On both price and performance, laptops are so competitive now it's surprising they weren't able to catch up with desktops even earlier," said iSuppli analyst Peter Lin.

"The ability to surf the Internet wirelessly at public places, the need to be able to take your office out with you when you travel, and an increasing range of notebook computers have all led to lower desktop sales."

Laptops posted a milestone in the third quarter of 2008, passing desktop PC sales for the first time, according to research group iSuppli.

With an entry level price of $300 for some basic models, laptops should bolster their position in 2009. They are forecast to take up about 55 percent of all computer shipments, according to data tracking firm IDC.

Many companies eagerly awaiting the era of the laptop are in Taiwan, maker of about 80 percent of the world's laptop PCs. They include the world's top two contract manufacturers, Quanta and Compal Electronics, and two of the most aggressive laptop brands, Acer and Asustek.

While those firms have seen their market share rise, the world's top two PC makers overall, Hewlett-Packard and Dell, have seen their share shrink.

Other companies that produce parts such as motherboards for bulky desktop PCs are already switching production to parts for other electronic gadgets such as iPhones.

While laptops used to cost more than double that of a desktop with equivalent processing power, advances in technology and economies of scale have dragged prices down so much that little price differentiation exists today for most consumers looking for a daily use PC, analysts say.

"It's just evolutionary I suppose," said Gartner analyst Tracy Tsai. "Things have reached a point where the price difference is no longer as pronounced as before for many consumers, and the average person is more likely to choose the option that offers him portability over the one that doesn't."

SPECIALISATION

To keep their growth coming, Acer, Asustek and others vying for laptop dominance are increasingly looking to segmentation, taking aim at the wide range of computer buyers.

The runaway success of low-cost mini notebooks, initially derided by many industry watchers but now one of the fastest growing categories, could foreshadow a coming boom in products offering a wide range of prices and functions.

"There is incredible choice in the notebook space now," said IDC analyst Richard Shim. "You can get notebooks at every inch size from 5-inch to 20-inch."

Alex Gruzen, Dell's manager for consumer products, agreed that the days when his company could offer laptops "in the same shades of grey" are coming to an end.

Segmentation comes in both form and substance. In the former, Asustek offers a bamboo-cased laptop for the environmentally conscious. HP has tied up with designer Vivenne Tam to release the "world's first digital clutch," a notebook designed to look like a woman's handbag.

On the more technical front, companies are offering an ever wider range of specialized laptops in varying sizes, processing speeds, wireless capabilities and prices. Battery life is also coming into play, with HP recently announcing that one of its notebooks had broken the 24-hour barrier.

Faster boot-up times and features such as touch-screens are also being touted as companies try to convert former desktop users and build new markets.

WHAT'S LEFT FOR DESKTOPS?

As portability becomes the norm, some are asking if there's any room left for desktops in the brave new era of laptops.

Salesmen at Taipei's Kuanghwa computer market, one of the city's top PC hang-outs, said hardcore computer game addicts may be one of the few groups to keep buying desktops that offer greater processing power for memory-intensive applications.

"Hardly anyone buys desktops anymore," said Elton Tsai, gesturing toward the solitary HP desktop sitting in his shop amid rows of laptops.

"Anyone who is enough of a geek to want real processing power can probably assemble his own computer, saving himself at least a few thousand Taiwan dollars in the process," Tsai said.

But not everyone believes the desktop, which was first introduced in the 1970s, will soon be relegated to the junkyard of history. After all, desktops can still offer substantial savings, especially for those who are handy with a screwdriver.

"How can a laptop compete with a desktop on price?," asked Gartner analyst Lillian Tay.

"Especially in the emerging markets where price is a consideration, laptops simply cannot compete on price with a group of people who slap a motherboard, a hard drive and a few chips together to get a desktop," she said.

(Additional reporting by Gabriel Madway in San Francisco, Editing by Doug Young and Megan Goldin)

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