IBM and HP are in danger of being forced out of the PC manufacturing industry by 2007, according to analyst firm Gartner.
Gartner said on Monday that if profit margins and profitability drop too low, HP and IBM could be forced to cut their losses and leave the PC market.
"Of the top 10 worldwide vendors, only Dell has consistently been profitable in the past several years. The PC divisions of HP and IBM are vulnerable to being spun off if their drag on margins and profitability are deemed too great by their parent companies," wrote Gartner in a research note.
HP and IBM were both unable to respond to requests for comment at the time of writing.
Gartner predicted that PC vendors are facing a gloomy future, and that three of the top ten companies in the computer manufacturing industry will exit the market by 2007. Although it hinted that HP and IBM could be two of the companies, it did not mention a third.
The company said that slower growth rates and reduced profit margins in PC manufacturing will cause a drought in the market and cause companies to adopt consolidation tactics.
"The end of the replacement cycle is likely to strain viability for even the largest PC vendors in 2006 and beyond," said Leslie Fiering, research vice president for Gartner’s Client Platforms group. "Global vendors will be forced to continue maximizing supply chain efficiencies and, finally, abandon any efforts to differentiate other than on price and service levels. Exiting the market may be the only logical choice for global vendors bleeding profits and struggling for share."
Gartner said that the top 10 worldwide PC vendors by unit shipment are Dell, HP, IBM, Fujitsu, Fujitsu Siemens, Toshiba, NEC, Apple, Lenovo and Gateway.
Talkback
You say only Dell was profitable. NOT TRUE. Apple has been profitable with its PC business as well.
I've said this many times before...
The open architecture of the x86 PC business may have led to great success in the 80s 90s and early 00s but it will inevitably lead to there being only one PC manufacturer (at best) or (at worst) only the opportunity to make DIY PCs.
Because every x86 PC manufacturer has access to the EXACT same components as his competitor, there is no way for them to differentiate their products from the competition except through price. When a business model is structured this way, it inevitably forces all those that attached themselves to that model to price themselves right out of the industry.
I foresee, only the proprietary consumer-focused platforms surviving and them thriving as a result of this fact. unfortunately, there is only one. Good news for Apple. Bad news for everyone else.
Dear Sirs,
I read you article about PC vendors and I noticed a mistake:
Apple is the only other PC manufacturer that has consistently been profitable in the past several years.
Regards
Yeah, but come on, who actually wants an apple?
They are generally the territory of hardcore graphic designers and artists only, apart from the sad people who spend all that extra money just so they can snobbily say "I've got an apple not a PC, aren't I different"
What is there you can do on an apple that you couldn't do on a PC for a lot less money?!
Yes I used to have an apple. No I don't like them.
I think Kelly McNeill may be too pessimistic. Washing machine manufacturers all have access to exactly the same components, but there are still different companies making them, and competing, to some extent anyway, on grounds other than price. (Er--how about different operating systems?)