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Face-Off: Does HP's PC Business Affect Us Enthusiasts?

Is There Any Growth Left In PCs?

Alan: Yeah, but here's the thing. If HP thinks that PCs themselves are unsustainable, it means that the profits that can be made on hardware are pretty small. If HP was using Asus motherboards, don't you think that the sales of HP motherboards helped Asus subsidize development of other high-risk, enthusiast-grade products?

Chris: Ah, but did it think that PCs were unsustainable, or that PCs are simply no longer a growth market with large enough margins to warrant fighting over? I think that's an important distinction, because PCs are still sustainable business.

Interesting question about HP/Asus. Don't believe they go hand-in-hand, though. Foxconn does tremendous tier-one business. That doesn't mean it has seen much success turning its competency into a strong enthusiast solution.

Alan: Well making tier-one business doesn't make you a good enthusiast platform. But the other way around is true. If you can make a system that handles crazy overclocking, striped SATA 6Gb/s SSDs, and the thermal management to stay stable even though you've got a ton of dual-slot GPUs, it's a walk in the park to do a basic platform. Remember DFI? One of the best enthusiast product lines for a long time. No surprise that its business stuff was pretty good. Heck, the reason Nvidia and AMD walked all over 3DLabs, Evans and Sutherland, and SGI was that the requirements for an awesome enthusiast GPU ended up exceeding the requirements for an awesome professional GPU.

Chris: Sure, but how many companies start by making the crazy enthusiast hardware and then wander into high-volume mainstream world? The original point was subsidizing high-end hardware with mainstream components. Clearly it'd be a blow to the ODMs if they lost HP's motherboard business. But that business won't disappear. It'll simply be satisfied by another company.

Alan: Getting back to my argument, HPQ is not IBM.

At the time that IBM sold its PC business to Lenovo, IBM was the third-largest computer manufacturer in the world. HP is not number three. It's number one. In theory, it should be at the top of its game. It has been able to identify the variables required to edge out Dell, Acer, Apple, and Lenovo and pull ahead. But the problem is that even though HP sells the most PCs and therefore has the best economies of scale, its profit margin isn't enough to sustain the business long-term.

HP's rationale for selling is clear. But if it can't do it, how is a buyer going to do something better than what HP is already doing?

Chris: Really, they're not. The desktop PC business isn't a growth opportunity.

Alan: So if that's true, is the PC enthusiast market a growth opportunity anymore?

Chris: I don’t really think it surprises anyone that revenues are growing slower than unit sales. That’s what happens when prices go down. As a subset of the PC market, the enthusiast sector is subject to the same influences. If power users know they can get “good enough” performance from a $1000 configuration, the number of folks willing to spend $2000 is naturally going to be far less. Unless we see the sort of innovation that compelled us to buy $1000 CPUs and $500 graphics cards almost a decade ago, then no, I don’t see how the enthusiast market can be grown far beyond where it is today.

Chris Angelini
Chris Angelini is an Editor Emeritus at Tom's Hardware US. He edits hardware reviews and covers high-profile CPU and GPU launches.
  • mayankleoboy1
    who is alan dang?
    Reply
  • AlanDang
    Who is Alan Dang? He is supposed to be Turkish. Some say his father was German. Nobody believed he was real. Nobody ever saw him or knew anybody that ever worked directly for him, but to hear Kobayashi tell it, anybody could have worked for Soze. You never knew. That was his power.
    Reply
  • tacoslave
    AlanDangWho is Alan Dang? He is supposed to be Turkish. Some say his father was German. Nobody believed he was real. Nobody ever saw him or knew anybody that ever worked directly for him, but to hear Kobayashi tell it, anybody could have worked for Soze. You never knew. That was his power.calm down kevin spacey
    Reply
  • cmcghee358
    Good analysis. The last bit really made me like HP, even though their consumer PCs are cheap enough to justify custom builds to my customers.
    Reply
  • nevertell
    Does HP's PC Business Affect Us Enthusiasts?

    No, it doesn't.
    Reply
  • demonhorde665
    nevertellNo, it doesn't. cheers TO THAT , dumbesta rticle ehader i've seen on tom's todate

    NO real enthusiast buys name brand , they build thier own period. pfft , alien ware, lenovo HP just pffft only a wanna be enthusiast would bther with any of these
    Reply
  • nerrawg
    Good article on a topic that I think a lot of enthusiasts have been dreading. I find it interesting that you guys often metaphorically relate hardware development back to the automotive industry. If PC hardware is the cars, then software is the road network that people driving have to put up with. At the moment I believe that in both cases it is the roadnetwork/software that is the limiting factor. This decade has given us the most thrilling performance cars with incredible bang-for-buck such as the GTR, Corvette, Camaro, M3, Focus RS etc etc. However most of these cars are so fast that most people could never really use them to their potential on a day to day basis. The same can be said about modern PC hardware - its overpowered for the average user. Only the relative handful of consumers who take their GTR to the track on weekends/spend their weekend playing FPS games, can actually take advantage of these products. This in turn is severely limiting the market potential of what on the surface looks like such an amazing product base. People know that even though 0-60 in 3.5 and top 180 is incredible, it makes no difference when your stuck starring at fenders and red lights all day.

    Really, the development in hardware tech is amazing, but what we need to keep it moving is a new class of ubiquitous productivity software that demands better hardware. My suggestion for this is to create more advanced interfaces between the user and the PC - we need to replace the mouse and keyboard with motion detection devices and speech recog that actually works. Once the software can do this I believe we will see a drastic increase in performance demand for office software.
    Reply
  • ZakTheEvil
    If you buy HP computers you're not an enthusiast. PC enthusiasts don't give rat's ass about HP.
    Reply
  • christop
    Enthusiasts and H.P don't go together..
    Reply
  • legacy7955
    This so called article sounds like "marketing" to me
    Clearly an agenda going on here, excessive greed by Leo Apotheker and his clown posse.

    Notice that "they" keep trying to "INFER" that the PSG division is NOT profitable without saying so, but then have to admit that it IS profitable.
    Reply