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

Playing Out Scenarios

Alan: You just have to want to be in the market for enthusiasts to get it. Samsung has a gaming notebook, and all you need for a good desktop that'll sell to gamers is good cooling, a good power supply, and an unrestricted BIOS. Actually, if you apply TV firmware to PCs, LG actually has the most customer-friendly firmware.

Chris: Well, it's a time and money thing, right? Often it's the case that we build PCs ourselves when there's a perceived savings that outweighs the time investment involved. I still put my own machines together, but I don't look forward to it nearly as much as I did 15 years ago, if only because I've done the same thing dozens of times. II used to format every couple of weeks; at the time I enjoyed it. With that said, the predominant choice is: build or buy. The idea of "buy and tear-down" still seems pretty fringe.

Alan: Scenario two is that HP is acquired by a firm that is unable to reverse the downward spiral of PCs. If the new buyer is unable to sustain HP over the next few years, it won't be the buyer's fault. This will just mean that the PC market is contracting significantly and impacts the enthusiast market in that we may see fewer companies investing in PC products. It will actually get better before it gets worse as each company tries to save itself by producing high-risk/high-reward products. I'm reminded of the DFI LANParty line of motherboards, any number of sound cards, or even HP/webOS. The most exotic and best products were when the companies were "doubling-down" on something as one final hurrah.

Chris: Let's define downward spiral, first. Five percent in Q2 (in the U.S.) in a depressed economy? Call the creation of exotic products throwing good money after bad, and it's easy to pick on an easy target. However, that's not always a Hail Mary pass, either. We've seen plenty of halo products that spawn derivatives and wind up heralding a successful age—Athlon 64 FX, for example?

Alan: Yeah but the Athlon 64 FX was an era of wealth and prosperity. We used to spend $1000 on a CPU! CPUs have gotten faster but also cheaper. GPUs somehow are still expensive. SSDs are getting cheaper but also command a premium. Motherboards have always been around $100-200.

Chris: All the more reason why this is a bad time for a spin-off. Just look at the all of the failed IPOs from China this year.

Intel still charges $1000 for its top-end enthusiast CPU…because it can. AMD would charge $1000 as well, if it had something competitive. The only reason we pay so much less for processors today is because AMD slots in between price point in Intel's lineup where it can offer competitive performance. Frankly, I think that if Intel wanted to charge more for its Sandy Bridge-based chips, it could (come on—$220 -2500Ks blow away even more expensive models in Intel's own LGA 1366-based lineup). But it's so afraid of getting burnt on anti-competitive practices that it pulls the bar down.

Alan: Scenario three is the one where HP doesn't find a buyer. This is definitely a possibility. Right now, HP's PC operations are profitable. But we know HP is considering selling because it doesn’t think it's sustainable in the long-term. Any company buying HP has to have a plan in place that will work in this economy to somehow outdo HP or fix the problems that HP had. Samsung might be able to pull that one off, but it's also a big risk. Making a Lenovo-esque move in which acquiring HP allows a company to go from unknown to major international player may not be a feasible in today's economy. The demand for PCs won't change with the collapse of HP. A company like Dell will automatically see increased sales as customers are forced to look for a different option. But in principle, every PC company will see a little bit of an increased piece of the pie. After all, the sum of market share always equals 100%. This would truly be a disaster to enthusiasts as it would show that the PC market is so limited that the #1 company was left out to pasture. Then as the PC market gets smaller and smaller, enthusiast level manufacturers will be forced to make high-risk/high-reward moves leading to the collapse of a number of companies. The next six months will be interesting times.

Chris: The glass doesn't have to be half-full, though. Is the market so limited that the #1 company was left out to pasture, or did the #1 company decide that a different segment of the technology market, which, by the way, still depends on the success of people using PCs and PC-like devices would simply be more profitable to chase after? Does HP not ultimately fail if, at the end of the day, it zeros in on the enterprise only to watch the PC market evaporate? Or, are we assuming mobility will fill that gap in its entirety?

Look, clearly, thanks to Apple, the tablet has been proven to be a successful form factor where slates based on PC technology failed to gain traction. Even netbook sales slowed dramatically after the iPad emerged. But I don't think mobile devices are destined to kill PCs any more than I worry Nintendo's 3DS will inhibit the success of Wii U. That is to say, you don't pick up one and drop the other.

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