Before the COVID-19 pandemic struck the globe, the personal computer had become a staid, boring product with dwindling sales, as consumers spent their money on new smartphones every couple of years while letting their home laptops and old towers collect dust.
“It’s really a consumer and education slowdown,” Reith said. “If you think about all the consumers that purchased in the last two years, whether they were first-time buyers or they had not used a PC in the last whatever number of years, it’s going to take another few years before they buy another one.”
‘It’s essential! It’s officially on the essential list!’ On March 19, 2020, California Gov. Gavin Newsom ordered the state’s 40 million residents to stay in their homes due to the new pandemic threat, the nation’s first state lockdown order. Days later, Newsom issued a list of essential workers who were exempt from the lockdown, and among them were IT workers.
“I was sitting right here thinking, you know what, … it’s essential! It’s officially on the essential list!,” he said. “That’s when for us that phrase really was an inflection point of saying, ‘Wow, the world has changed.’ The PC is essential, it’s so essential for work, and for learning, even telehealth, and suddenly what we saw was this category was no longer this thing on the side.”
“Previously desktops weren’t something you used a lot, but it has gone up tremendously since the beginning of COVID,” Gwinnup said. “He went from a very small store to a very large store in one year and a half.” Incredibly, the most challenging supply chain issue revolved around the paucity of small and seemingly inconsequential chips, some of which cost about $1 each, such as video drivers and audio drivers. These tiny chips, because they were on older manufacturing processes, are made by smaller, lesser known companies. In addition, these chips, especially the ones for screens, had huge competition from TVs, cars, anything with an LCD panel, said Mikako Kitagawa, a Gartner Inc. analyst.
Wall Street, though, is bracing for a slowdown. In recent weeks, there have been a series of downgrades in the sector, focusing on expectations for slower growth. Morgan Stanley analyst Erik Woodring lowered his price targets on HP and Dell, citing a downward risk on hardware budgets, and more consumer caution, especially in light of inflationary trends.In a note to clients, Woodring said there were three reasons he had become extremely cautious about consumer demand for PCs in 2022.
So how long before these PC's get replaced and another mini wave of buying occurs? Some of this is work at home. Some of it is running specialized software that phones and tablets don't have or have yet.
1:1 correlation w/ the plague and working from home.