PC Client shipments in free fall Q1.

[ShintaiDK]

Its becoming quite ugly now. Q1 may be the biggest setback for Intel and AMD yet in the client space.

http://blogs.barrons.com/techtrader...oo-high-as-q2-pcs-likely-weak-says-pac-crest/

Writes McConnell, after reviewing shipment data of “original design manufacturers,” or ODMs, who make the vast majority of PC laptops, such as Compal and Wistron, because of some pick-up in March shipments, the drop in PCs in Q1 will be a little better than he’d feared. Q1 units may drop by 24%, versus an earlier expectation of 26%. It will still likely be “the largest sequential decline (-24% q/q) in notebook ODM unit shipments on record,” writes McConnell.

But despite that big drop, Q2 won’t see a recovery:

Despite the depressed shipment base in Q1, we expect Q2 notebook ODM unit shipments to grow +3% q/q/-13% y/y, which is below normal Q2 seasonality of +6% q/q. Our conversations with notebook ODMs suggest that the sub- seasonal Q2 shipment growth is attributed to: (1) muted shipment demand forecasts for April and May after significant inventory replenishment in March, (2) a lack of new product introductions from PC OEM customers until June, and (3) a weak macroeconomic demand environment, particularly in China.

McConnell thinks estimates are too high for Intel and AMD:

Given the magnitude of sequential decline in Q1 unit shipments at notebook ODMs, the sub-seasonal and back-end-loaded shipment forecast for Q2, and relative sales exposure (notebook CPUs ~25% of Intel revenue, ~15% of AMD revenue), we believe consensus estimates for Intel and AMD appear too high.

Smartphones suffers the same. Production cuts and declines.

That's what happens when wealth is generated by finance capitalism and not production. People cant afford it and companies dont invest.

 

[frozentundra123456]

Or they just have a system that is already good enough. That is becoming true even in smartphones.

 

[BurnItDwn]

Yea, while in many ways, in principle I agree that "finance captisalism" is stupid and production of tangible things is real and should be the basis for an economy, frozentundra is right on the money here.

The improvements in new hardware vs old hardware are means its often not worth the time or cost to replace the old hardware.

We finally have hardware that can fully saturate most of the needs of most software used by most people.

There isn't much "market" to expand to since most people who use a PC or want a PC already have one that is already good enough to do what they want. (same applies to smart phones.)

 

[nenforcer]

Yea, while in many ways, in principle I agree that "finance captisalism" is stupid and production of tangible things is real and should be the basis for an economy, frozentundra is right on the money here.

The improvements in new hardware vs old hardware are means its often not worth the time or cost to replace the old hardware.

We finally have hardware that can fully saturate most of the needs of most software used by most people.

There isn't much "market" to expand to since most people who use a PC or want a PC already have one that is already good enough to do what they want. (same applies to smart phones.)

Except for VR - where a Geforce GTX 970 is the minimum entry level GPU (for Oculus Rift) at least. PC Graphics companies at least are banking on the "VR Revolution" and 4K to maintain or possibly even stimulate demand for more high end graphics cards.

 

[Nothingness]

Smartphones suffers the same. Production cuts and declines

Samsung seems to be doing very well with S7, and as far as I know the smartphone market is still expected to grow, though slower than previously. I bet PC vendors would like to endure the same "cuts and decline" as the phone market

 

[jhu]

Samsung seems to be doing very well with S7, and as far as I know the smartphone market is still expected to grow, though slower than previously. I bet PC vendors would like to endure the same "cuts and decline" as the phone market

They've been going through that for the past 20 years.

 

[StrangerGuy]

Samsung seems to be doing very well with S7, and as far as I know the smartphone market is still expected to grow, though slower than previously. I bet PC vendors would like to endure the same "cuts and decline" as the phone market

"Well" if you mean by profits dropping like a rock for 2 years, releasing the S-cycle one month earlier to frontload numbers and pulling all marketing stops just squeeze a +10% profit out of a 9% overall profit share. The last time I heard Macs was doing only 50% of the PC profits instead of 93% with the iPhones so PC OEMs on the whole are actually doing better than Samsung for their own respective market.

 

[Arachnotronic]

"Well" if you mean by profits dropping like a rock for 2 years, releasing the S-cycle one month earlier to frontload numbers and pulling all marketing stops just squeeze a +10% profit out of a 9% overall profit share. The last time I heard Macs was doing only 50% of the PC profits instead of 93% with the iPhones so PC OEMs on the whole are actually doing better than Samsung for their own respective market.

Samsung's profit boost probably came as a result of cost cutting, not really huge sales.

 

[StrangerGuy]

Samsung's profit boost probably came as a result of cost cutting, not really huge sales.

http://forums.appleinsider.com/disc...-than-expected-sales-of-flagship-galaxy-s7/p1

Actually the S7 did exceptionally well and sold 3x more than the S6 in the first month...But only because the S6 at 3M was an unmitigated disaster. Still, even having sold 6.5 million more S7s and Samsung still barely moved the profit needle speaks volumes of how margins are so razor thin even for a high end Android device.

 

[VirtualLarry]

This is the direct result of obscene cost-cutting, and no longer delivering value to customers. The customers have collectively told the PC makers to "piss off".

(I'm kind of obliquely referencing the "rise of Atom" in the PC space, especially prevalent in lower-end consumer laptops and even desktops. Sooner or later, there was going to be a backlash because of that.)

Oh, and "no G3900 yet".

 

[senseamp]

Lost interest in PC laptops after they switched to 16:9 aspect ratio screens.

 

[Systems analyst]

I would think that STBs, DTVs, tablets, laptops and automotive entertainment will all grow, with 4K coming in over the next few years; the mobile phone will be the universal remote for all of these; auto-park your car, and summon it with your phone, then watch DTV in it as it drives you home, or out for the evening; a different world, for the affluent.

 

[AtenRa]

I like to drive my car, otherwise i would use a taxi.

But i can see other areas for computers in the car (safety, economy, entertainment, navigation etc etc).

 

[Systems analyst]

There is a rumour that Uber have ordered a huge number of cars, as self-driving taxis; this would suit most people, I would think, but the affluent will want their own luxury cars.

 

[coercitiv]

This is the direct result of obscene cost-cutting, and no longer delivering value to customers. The customers have collectively told the PC makers to "piss off".

In 2015 I told myself I give MS 2-3 years max to fix Windows: from UI coherence to configuration & maintenance tools, and even download and install experience. PC makers can't fix that, and it's quite ironic to see MS showing them how to make a proper modern PC (Surface) when MS is part of the reason they struggle with bad sales and mutant products in the first place. I agree OEMs shot themselves in the foot by diluting their brands, delivering junk and premium products under the same brand. Any grave mistake we see Apple do with their product line, the rest of the OEMs have done ten fold. They are also responsible for polluting their own OS installations as well, which is indeed incredibly moronic.

However, the same OEMs seem to be able to make decent products for the Android ecosystem. The s***storm is about to get worse, because both Android and iOS are now aiming for increased productivity in hybrid products.

 

[escrow4]

I only buy $100 smartphones, roughly speaking. Not even $200, unless its substantially better. They work fine for email and Youporn which is all that matters in the end. At the same time too. Of course they are slow and poky compared to an S7 if you really hammer them but an S7 over here is over $1000. Anything heavy I'll do on a desktop not a phone.

 

[meloz]

Its becoming quite ugly now. Q1 may be the biggest setback for Intel and AMD yet in the client space.

I think this is the new 'normal'. Everyone should get used to it.

For sure we might have some quarters which are not as bad as this one owing to business and governments replacing their very old systems, but otherwise a constant -if unsteady- sales decline is the future of both notebook and desktop PCs. Not even the virgin consumers of India, Africa etc will swing this megatrend.

Most people have 'good enough' computers already. Why replace what is not broke? By 2020 the market will really collapse because by then even the oldest notebook and PC will be a Sandy Bridge with an SSD. And that will be plenty powerful for >95% consumers, even in 2020.

About the only thing that will cause a reversal in this megatrend is emergence of a new product which suddenly offers a 2X or greater performance/$ and watt over what Intel is offering at various price points. Such a product might convince a lot of consumers to junk their old PCs and thus give a sales boost..........for one generation.

Otherwise it is all downhill from here.

 

[VirtualLarry]

I think this is the new 'normal'. Everyone should get used to it.

For sure we might have some quarters which are not as bad as this one owing to business and governments replacing their very old systems, but otherwise a constant -if unsteady- sales decline is the future of both notebook and desktop PCs. Not even the virgin consumers of India, Africa etc will swing this megatrend.

Most people have 'good enough' computers already. Why replace what is not broke? By 2020 the market will really collapse because by then even the oldest notebook and PC will be a Sandy Bridge with an SSD. And that will be plenty powerful for >95% consumers, even in 2020.

About the only thing that will cause a reversal in this megatrend is emergence of a new product which suddenly offers a 2X or greater performance/$ and watt over what Intel is offering at various price points. Such a product might convince a lot of consumers to junk their old PCs and thus give a sales boost..........for one generation.

Otherwise it is all downhill from here.

I think that you're not thinking outside the (marketing) box enough.

Consider, that possibly Intel and AMD and maybe NV, will collude with the relevant codec standards bodies, to develop new codecs, or new "profiles" of existing codecs, that require *new hardware* to support properly.

Basically, if that happens, then we get "model-year replacement policies", just to keep up with "standards" for multi-media playback.

It's cruel, it's crude, but it could work. Lots of residual e-waste from all the rigs from prior years that can no longer effectively function as web browser / media-playback devices though.

Especially, the budget line of Atom-powered (and likewise for AMD) laptops and tablets, that cannot be simply upgraded with a new PCI-E video card. They would become junk overnight, if they weren't able to effectively play web videos any more.

Thankfully, the standards people take a while to come up with new ones.

Edit: The other possibility, if such a scenario does happen, is that people don't have money to upgrade their hardware every year (such is the case with "good enough" smartphones already), and instead, we end up with a bunch of effectively dis-youtube-ized netizens.

 

[ShintaiDK]

This is the direct result of obscene cost-cutting, and no longer delivering value to customers. The customers have collectively told the PC makers to "piss off".

(I'm kind of obliquely referencing the "rise of Atom" in the PC space, especially prevalent in lower-end consumer laptops and even desktops. Sooner or later, there was going to be a backlash because of that.)

Oh, and "no G3900 yet".

The iPhone SE is Apples answer. A low cost phone with all the best tech in the battle for the shrinking volume. But its going to cost profit big time.

And move on with your G3900 nonsense. It was wrong when you first posted it and its still wrong.
http://geizhals.eu/intel-celeron-g3900-bx80662g3900-a1387263.html

 

[ShintaiDK]

I think this is the new 'normal'. Everyone should get used to it.

For sure we might have some quarters which are not as bad as this one owing to business and governments replacing their very old systems, but otherwise a constant -if unsteady- sales decline is the future of both notebook and desktop PCs. Not even the virgin consumers of India, Africa etc will swing this megatrend.

Most people have 'good enough' computers already. Why replace what is not broke? By 2020 the market will really collapse because by then even the oldest notebook and PC will be a Sandy Bridge with an SSD. And that will be plenty powerful for >95% consumers, even in 2020.

About the only thing that will cause a reversal in this megatrend is emergence of a new product which suddenly offers a 2X or greater performance/$ and watt over what Intel is offering at various price points. Such a product might convince a lot of consumers to junk their old PCs and thus give a sales boost..........for one generation.

Otherwise it is all downhill from here.

I fully agree. We are at a point where replacements are fault driven in all client type segments. TVs, Phones, PCs, domestic appliances etc. The great revolutions are behind us.

 

[seitur]

Consumer computing could have transitioned from high-growth industry to stable growth industry (like i.e. car industry) with occasional high-growth peroids / high growth niche segments instead of this free fall we see now.

That would require much better economy though.

With ~90-95% of population getting gradually shorter end of an economic stick you just cannot have that.

You need both overall economy growth and to reverse a situation in which 1-5% upper part of society get increasing % of overall growth at expense of remaining ~95% part of societies.

We don't have this, so population instead of using part of income to increase their comfort (changing smartphone to newer one, changing 120$ 22 inch TN/e-IPS cheap PC monitor to 250$ one that is better on the eyes, bigger and so on) they cling on "good enough" old or new cheap segment equipment to conserve their $$$ in times of economic uncertainity or because they simply don't have any $$$ for anything outside of food, clothing and housing.

 

[ShintaiDK]

I assume you refer to this issue:

And its certainly true. You cant buy something for money you dont have. So after you reach the "good enough" area. Be it TV, services, appliances, electronics and so on. You stay there.

And in the other end of the scale, no matter how many billions you got and earn. You still only need 1 iPhone, 1 laptop etc.

 

[StrangerGuy]

Consumer computing could have transitioned from high-growth industry to stable growth industry (like i.e. car industry) with occasional high-growth peroids / high growth niche segments instead of this free fall we see now.

That would require much better economy though.

With ~90-95% of population getting gradually shorter end of an economic stick you just cannot have that.

You need both overall economy growth and to reverse a situation in which 1-5% upper part of society get increasing % of overall growth at expense of remaining ~95% part of societies.

We don't have this, so population instead of using part of income to increase their comfort (changing smartphone to newer one, changing 120$ 22 inch TN/e-IPS cheap PC monitor to 250$ one that is better on the eyes, bigger and so on) they cling on "good enough" old or new cheap segment equipment to conserve their $$$ in times of economic uncertainity or because they simply don't have any $$$ for anything outside of food, clothing and housing.

When given a choice between an useless by its own i3 chip and a more than good enough smartphone at the same price that also has a ton more real world utility than a PC, it's pretty clear which options the poor folks would pick.

 

[Adored]

People are getting squeezed in every area of their lives be it power bills, health bills, petrol, food costs or whatever. Then upgrading their phones is far, far ahead of upgrading their PCs.

PC's are just going out of fashion, I'm surprised they are still selling at all tbh. I have 4 in here, 2 ancient AMD systems that the kids use and have zero requirement for upgrades and a couple of Intel systems both myself and the other half use. Yeah I'm personally waiting on Zen but tbh if it sucks I'll probably just keep this 2500K I've had forever anyway.

 

[poohbear]

This has been talked to death already. The future us in software, , cloud computing, & VR. Will Nvidia & AMD benefit from VR? Absolutely. Will Samsung & Apple sell more smartphones that r VR capable? Maybe. Depends if it takes off the way everyone thinks it will.