By Chris Hall

     Significant technology change seems to come in cycles in the IT world, and the past couple of years have seen a flurry of fads, changes and some genuine innovation in PCs, and also in Apple Mac machines. This year, 2008, will likely continue in the same vein, as multicore machines, the arrival of Windows Vista and a proliferation of form factors both on the desktop and in the notebook sector, pose challenges for vendors and difficult questions for consumers.
     In Hong Kong, we asked Kathy Sin, research manager for IDC in the Asia Pacific, to comment on the outlook for 2008, for the key PC segments.

CH: In the consumer desktop segment, what are the levels of performance we are likely to see available in 2008? Will the ability to run Windows Vista with the full Aero interface be a major factor in pushing consumer machines to relatively high levels of performance?

KS: Consumers have little choice. Most consumer-level PCs are bundled with the Home Basic edition of Windows Vista, where the Aero interface is not available. If consumers do want the Aero interface, then they will need to purchase Vista Home Premium edition. Then in some countries, particularly in Asia, vendors who want to lower the cost of a PC will bundle Linux with the machine. So in fact, the Vista Aero interface is not likely to be a major factor in the consumer PC market in 2008, unless users buy a high-end product such as the HP Pavilion. Overall, consumers have almost no choice.
     The problem for consumers is that the Aero interface uses a lot of system resources. Some consumers who do buy the Home Premium edition will disable the Aero interface for that reason. Other factors may influence the decision to buy a new PC, such as users wanting a faster, more powerful machine, or simply one that looks more beautiful than their old PC.

Vista: broad market acceptance
CH: As you see it, are consumers accepting Vista, or do you sense a backlash against Vista at the consumer level?

KS: Windows Vista has now been available for almost a year, so for many home PC users, it’s now a very familiar product, and it’s gained broad market acceptance.
     However, in some Asian countries MS-DOS and Linux are quite popular, and vendors can lower costs by offering Linux or DOS. In Hong Kong, though, new PCs are bundled with the Windows OS almost 100%. In the DIY market, we assume that about 50% of DIY home users will buy a Windows license, whereas over 90% of commercial users will buy a Windows license.

CH: What price points are we likely to see in the consumer segment in 2008?

KS: Overall, the average selling price for a consumer PC is getting lower. According to the IDC Asia/Pacific PC Tracker, 2007Q3, the ASP of consumer desktops in Hong Kong was US$737. This first quarter, we expect that figure to drop to US$726. We also expect that by the end of the year, the figure will have dropped to around US$700. These figures are for retail sales to end users.
     Other factors that could influence the buying decisions of end users include discounts at large retail outlets. In Hong Kong, for example, consumers can expect discounts of around 3% for PCs bought at outlets such as Fortress and Broadway. (This is provided they do not purchase on an installment scheme.)
     As well, a display is often bundled with the machine, so this quarter end users might expect to have a 19-inch LCD display bundled with the PC. So for around US$726, end users will probably be getting, this quarter, PCs with the latest Core 2 processors, with probably one gigabyte of memory, if they buy a PC from one of the large multinational vendors, and an LCD display.

CH: A related question might be graphics performance. Normally we would expect most consumer machines to run some form of integrated graphics solution, but is this going to be enough to run Vista?

KS: These days, at the consumer level, it’s quite possible that a PC will have discrete graphics, a card. It’s no longer the case that a consumer PC will always be running integrated graphics, although integrated graphics remain quite common for low-end consumer PCs.

CH: We’ve heard chip makers such as Intel and AMD, plus of course Microsoft and other software providers, saying they see a role for the PC in delivering entertainment to the digital home. Will home-entertainment features be an important factor in PC performance and pricing in 2008, or is the home-entertainment PC, the media-center PC, whatever you might want to call it, still a concept that has to be defined and thought through?

KS: The idea of the media center PC never really caught on, and a lot of systems based on Microsoft’s Windows XP Media Center Edition have been quietly withdrawn from the market. The concept of the Media Center PC has been abandoned for the low-end consumer market, and Windows Media Center Edition is not included in Vista Home Basic. However, a lot of PCs do support multimedia features, and the Media Center Edition of Windows XP is now incorporated in the Home Premium Edition of Vista.

The “living room” PC
     The new concept is the “living room” PC. This type of machine usually comes in a small form factor and is positioned horizontally, rather than as a vertical tower. The “look” of the machine is similar to that of a CD or DVD player, rather than the traditional “beige box” PC. However, this type of PC is still very expensive and at an elementary stage of development, although there have been shipments to the US market. People tend to use this type of PC for watching movies.
     Sony, for example, now has new desktop models for retail market, such as the Vaio TP series, which looks like a round wheel, while the Vaio LM and LJ series have a large LCD display that looks something like a TV. Still, only buyers who are, you might say, “technology pioneers” or “early adopters” will be interested in this kind of machine. In this region of Asia, shipments are in fact very low, and in Hong Kong most consumers focus on “value for money.”

CH: Of course, both Intel and AMD tried to float the idea of home entertainment systems and devices, Intel with its ViiV designation and AMD with its “Live!” initiative.

KS: It won’t be surprising, if we see Intel and AMD quietly start to de-emphasize their Viiv and Live! platforms, given the low shipments today.

CH: Presumably at the commercial desktop level, businesses have to consider how they can future-proof their purchases and lengthen the upgrade cycle, while minimizing TCO. How do you see this segment shaping up in 2008, and how will pricing and performance affect buying decisions? Are there in fact distinct segments within this segment? For example, if a business has an internal publishing department, are its requirements likely to be very different from those of the average office worker?

KS: We do expect commercial clients will want to lower the TCO and lengthen the lifespan of the PCs they buy. These are both very important factors in the procurement and decision making process. And of course everyone wants the very best performance at the best possible price. According to IDC data, the average lifespan for a commercial PC is now five to seven years.