by Brad Moon | January 21, 2014 10:55 am
PC sales have been on a downward trend, with sales declining by 10% year-over-year despite the best efforts of Microsoft (MSFT), Intel (INTC) and PC manufacturers like Hewlett-Packard (HPQ).
The infatuation of consumers and businesses with tablets and smartphones gets most of the blame for the decline in PC sales, while the growing popularity of inexpensive Google (GOOG) Chromebooks sure isn’t helping matters.
Another factor in the fall of PC sales, though, is that PC replacement cycles have been getting longer — a trend that predates tablets and Chromebooks. One reason has been maturity; new Intel processors and Microsoft Windows releases haven’t been the radical improvements they were earlier in the PC era, so customers wait longer between upgrades.
Economics has also been a factor in sliding PC sales. When the recession hit, IT departments faced budget crunches and held off replacing PCs for as long as possible. That frugality only helped cloud computing and cheaper alternatives gain an enterprise foothold.
But at CES 2014, Razer — a privately held maker of high-end gaming PCs and peripherals — unveiled a surprise computer concept called Project Christine. The machine won the “Best of PC” category at the Consumer Electronics Show 2014 and raised more buzz around a Windows box than has been heard for years.
Could Razer and Project Christine actually help to reverse the ugly fall in PC sales?
Razer describes Project Christine as “a revolutionary new concept design that allows users to build and customize PCs in any configuration without any prior technical knowledge.”
In other words, Razer has reduced the PC to little more than a rack with a series of slots. Each of those slots accommodates a self-contained component that can be pulled out or slotted in at will. All the pieces that make up a traditional PC — the motherboard, graphics card, power supply and storage (plus others) — would be packaged and sold in these self contained modules.
Customers would buy the PC configuration they want with Project Christine, but would have the freedom to swap out those modules at any time for replacement or upgrading.
Desktop PCs today are largely black boxes to most people — a reality that sure doesn’t help the downward trend of PC sales. We buy them as a complete unit and when they’re finally too slow or too old to run the software we use, we generaly replace them. That makes PC replacement expensive and that helps to extend the PC upgrade cycle.
Project Christine re-imagines the model so PC sales are a completely different beast. Someone buys a PC, then never has to replace it. But that PC keeps up with evolving technology and software demands easily and inexpensively (at least compared to replacing the entire computer) because owners simply buy new components and swap them out. No technical knowledge or tools required; just pull the old one out and slide the new one in.
Want a speedy new Intel processor, although you’re happy with everything else about your PC? Under the Project Christine model, instead of paying $1,000 for a new desktop PC, you’d pay $200 for the CPU module. Turn off the PC, exchange the modules, restart it and a minute later you have the benefits of the speedy new processor.
The ease of upgrading and repair and the removal of that new PC purchase price barrier has the potential to revitalize PC sales. Project Christine is aimed at gamers — PC owners who frequently upgrade due to high performance requirements — but the concept could spill over into the general PC world. The Razer CEO even envisions the possibility of hardware subscriptions, where the latest modules are sent to customers in exchange for the older versions.
There are PC owners who are comfortable with opening up their computers and popping in a new CPU. But the vast majority will never do that. It requires technical knowledge, some skill, specialized tools and comes with risk. Project Christine from Razer makes upgrading any component of a PC the equivalent of plugging in a thumb drive.
This is the area where the difference between Project Christine and one of today’s PCs becomes immediately obvious. Current PCs are very spec-focused. PC sales seem based around what CPU a computer has, how much RAM, how big the hard drive is and what video cards are available.
One of the appeals of Project Christine is that the spec sheet goes away … unless you buy a system for the first time, but then you’d pick and choose the modules to customize your PC. That being said, here are the technical basics behind the new Razer concept Project Christine:
If the concept behind Project Christine — modular PCs — takes off, it has the potential to reshape the PC industry.
Even though PC manufacturers would see no relief from the Project Christine model (and would likely see PC sales slide even further), the PC itself would likely see a stabilization effect. Businesses may rethink the purchase of a Chromebook, for example, knowing that its initial cost advantage over a desktop PC might be eliminated over a four- or five-year period. The Project Christine PC could be kept current at minimal cost while the Chromebook might need replacement several times.
Plus, PCs that could easily — and inexpensively — be upgraded would benefit Microsoft. Around 500 million PCs are still running Windows XP — and it’s a safe bet that a lot are doing so because they don’t meet the hardware requirements for Windows 8.
A company like Hewlett-Packard that buys components and manufactures PCs, on the other hand, would find its market eroding. It could sell its own version of Project Christine but, after the initial sale, it may never see a customer again. Component makers — Intel, Samsung (SSNLF), Nvidia (NVDA) and others — would obviously be the winners here when new component purchases are no longer tied to a new PC purchase.
Of course, for something as revolutionary as Project Christine to take off, a lot of players would need to agree on standards. That is a huge hurdle to overcome, Naturally, Razer would want to be at the center of everything and that wouldn’t sit well with current PC giants. And even something as revolutionary as this rethinking of the PC is not going to prevent the continued adoption of tablets.
But, if Razer goes ahead and makes Project Christine a reality and proves the concept works in the gaming PC world, desktop PCs could someday be freed from trap of the replacement cycle. That would help the PC’s future look a lot brighter and less like a slow slide into a niche product.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2014/01/project-christine-razer-pc-sales/
Short URL: http://invstplc.com/MlWugy