Dive Brief:
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Intel CEO Brian Krzanich said at the Bernstein Strategic Decisions Conference in New York that the upgrade cycle for PCs has slowed down from an average 4 years to nearly six years, according to Computerworld.
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PC upgrades have slowed down because current operating systems can function well on older Intel-based models. Consumers are also opting for incremental internal upgrades to their current PCs for improved performance, instead of buying a new one, as reported by CIO.
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The Intel CEO says the company will begin transitioning from mostly PCs toward cloud and other Internet technology, though he makes it clear that the PC market will still remain important to Intel's development.
Dive Insight:
At the conference, Krzanich said that in response to a trend of slower replacement cycles for PCs, the company will need to focus on innovative tech and new features in order to encourage buyers to upgrade their PCs, as reported by Computer World. He also said PC makers need to make it easier for people to upgrade. A new cell phone, for example, can be easily ported from an old one, but the process is not as easy for PCs.
According to Gartner, worldwide PC shipments fell nearly 9.6% in the first quarter of 2016. Gartner attributes the slowdown to a variety of factors. One of those factors may simply be that newer PCs last longer and don’t need to be replaced as often as older models did. Consumers are also shifting toward buying 2-in-1 PCs, which can be utilized as tablets and laptops. The CEO says that the decline in sales will level out eventually, but he is not sure when.
The good news is enterprises can save money because they don’t have to update as often. However, the decline points to some difficulties for PC producers.
The declining PC market has impacted Intel’s revenue, forcing the company to look elsewhere for future growth. In April, Intel announced plans to cut 11% of its global workforce—up to 12,000 positions—by mid-2017. Krzanich recently wrote an article for Intel's website, in which he described how the company plans on shifting its business strategy toward cloud and other Internet technology.
"Intel will focus on autonomous vehicles, industrial and retail as our primary growth drivers of the Internet of Things," Krzanich wrote. "Similarly, we view our core client business of PCs and mobile as among the many variations of connected things, which is driving our strategy of differentiation and segmentation in the Internet of Things business."
