Signs of the entire industry in a heap of trouble have been everywhere. Rumors just bubbled up – The Register cited “two sources” – that Dell, third largest PC seller in 2013 according to Gartner, would axe “precisely,” as a source had said, 30% of its sales and marketing staff in Europe, Middle East, and Africa and 20% of its sales staff in the US. There was speculation that Michael Dell himself thought the sales staff, put in place apparently during the Middle Ages to hawk now antediluvian PCs and servers, couldn’t be salvaged.
These cuts would be across the board, rather than carefully nipping and tucking here and there. The Register estimated that about a third of Dell’s 111,300 employees were in sales and marketing. If 25% of them were thrown out worldwide, it would amount to over 9,000 people. The paper then asked Dell about it and got a total corporate-speak non-denial, plus an interesting tidbit: the percentages were wrong, Dell pointed out. Which led The Register to clarify parenthetically: “but didn’t reveal whether too low or too high.”
This comes after a “voluntary separation program” last year that gave employees until December 20 to go and grab a buyout package on the way out. Maybe the packages were too stingy, or maybe other jobs were too hard to come by, and people ended up with morale problems – but stayed put.
Michael Dell is in a tough spot. He and private equity firm Silver Lake took the company private in a $25 billion deal and loaded it up with debt, even as the industry was struggling with what Gartner called “the worst decline in PC market history.”
Last year, only 315.9 million PCs were shipped. The category includes desktops, laptops, and mini-notebooks but not tablets such as the iPad. Down a dizzying 10%! In 2012, PC shipments had already declined 3.5%. And in 2011, shipments had only inched up a measly 0.5%. That’s three increasingly crummy years in a row. So now, shipments are back where they were in the crisis year 2009.
Within the battered market, Lenovo, with a market share of 16.9%, elbowed HP from its perch as number one and left it with 16.1% of the market. Dell clung to the third position with a 10.7% share.
OK, the market is swooning. But it isn’t dead yet. These workhorses are still doing their jobs in their utilitarian, unglamorous, uncool manner, and indoors they’re more useful than boat anchors, and some of them have big screens and full-size keyboards and lots of power, and they’re going to be around. But the hot air has hissed out of the market, and players are struggling to remain relevant. So they focus on executing bone-chilling cost cuts rather than creating dazzling products.
Particularly revenue-challenged HP, whose shipments declined 9.3%, as opposed to Dell’s 2.2%, had already announced on December 31 that it would raise the number of job cuts to 34,000, of its 330,000 employees. It cited “continued market and business pressures.” There just isn’t a lot of hope in that space – though industry hope mongers, and there are still plenty of them, are desperately trying to spread the word that PC shipments have bottomed out, that they would grow again.
It has gotten so bad for these Windows-based machines that Microsoft lost its enthusiasm for the booth babes or whatever at the Consumer Electronics Show in Las Vegas and announced last year that it wouldn’t show up this year. And so this year, the erstwhile dominant presence of Microsoft at the CES turned into a vacuum.
It was up to Microsoft’s hardware partners to showcase Windows 8, but there wasn’t a lot of new and exciting stuff in the PC area, and Windows devices stood out largely by their absence amidst thousands of hot innovations and new products and useless but cool gadgets. The Consumer Electronics Association claimed that the 2014 CES had been “the largest in show history with a record two million net square feet of exhibit space housing more than 3,200 exhibitors.” More than 150,000 industry professionals browsed through it all. But Microsoft and its platforms were essentially missing.
Google and Apple weren’t there either, but their platforms were – showcased by thousands of third parties, from startups to tech mastodons, that had created a myriad of products based on them.
Whether PC shipments in 2014 will continue skittering down the bumpy road to tech purgatory or whether they will, by the sheer force of a miracle, regain their footing despite a deafening absence of exciting products remains uncertain. Businesses still need them, but budget-strapped consumers have countless alternatives. And if the CES is any guide, there isn’t much on the horizon to turn this debacle around.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.