Why the Desktop Is Dying

Business 2.0 writes:

Take two recent seismic shifts in the computer market: IBM’s (IBM) sale of its PC business to China’s Lenovo and Hewlett-Packard’s (HPQ) announcement that it would pursue profits over market share in selling PCs. Sure, Dell’s (DELL) unstoppable growth is a factor in both cases, but they also speak to smart business determinations that the days of desktop PCs gushing cash are coming to an end.

To survive, PC makers will keep cutting costs. But how much lower can they go? Sure, they can squeeze suppliers and redesign plastic casings until both are as thin as tissue paper. At some point, however, they’ll have to start discarding entire subsystems. First to go will be the optical drive. Flash memory will be a cheaper and more flexible medium for any data you want to store or transfer locally. Next goes the hard drive: Network storage will be abundant, and the bandwidth to move vast amounts of data will be cheaper than ever. Then PCs will lose the CPU, replacing it with a cheap processor that just shuttles data between the network and the screen, with all the computing taking place in distant server farms. (Sun (SUNW) already offers a stripped-down terminal like this, the Sun Ray, but given the company’s lack of experience in selling PCs, I doubt that it will be the dominant supplier of such machines when they become the primary computing platform.)

To be sure, there will still be some personal computers around. Engineers and creative professionals may still require high-powered workstations, and road warriors will still likely tote laptops, though they may shrink so much as to be indistinguishable from cell phones. (Tellingly, in the fourth quarter of 2004, laptops outsold desktops for the first time.) And dirt-cheap desktops will sell overseas for some time. But the vast majority of knowledge workers won’t need computing power on their desktop. Everything they need will be on the Net.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.