It's a very competitive environment in terms of pricing, and vendors began running out of room.
Initiatives like those done at Intel could ease the constraint of some barriers. But it's still a slow process.
You're seeing price drops and government-sponsored initiatives in many countries, in an effort to get PCs in. But you're still facing low per capita income and an immature economic structure.
The bread and butter of the industry are the mature markets, but because of the falloff in replacement activity, vendors are going to have to go out and look for growth elsewhere. That's the challenge for the industry.
Thanks to pricing and innovation in form factor and battery life, mobile PCs are appealing to a wider range of users.
People need to be convinced that it's a must have, and it's not clear that it is.
The quest for growth is forcing vendors to test the limits of PC price elasticity. The whole dynamic is compounded by the fact that buyers have increasingly come to expect sharp price declines.
PC vendors have succeeded in increasing the unit share of higher-margin mobile PCs. But this has resulted in a significant sacrifice of desk-based revenue as vendors struggle to maintain the value proposition of desktops at the low end of the market.
In some sense, the desktop market is being hit with a double whammy.
End-user concerns about availability and value of these new technologies could result in some buyers holding off PC purchases until later in 2006 or beyond.
