The P.C. business is dead — and Dell killed it. That seems to be the consensus in the business press these days, with the words “maturing” and “commodity” bandied about with ever-increasing frequency.
True, from a financial standpoint the picture looks grim indeed: margins at a paltry 1%, with all the profit sucked up by the Texas behemoth. IBM sold its PC division. HP cut R&D budgets and just dumped CEO Carly Fiorina for (in part) failing to make the Compaq acquisition succeed. The post-eMachines Gateway continues as an also-ran.
But look beyond the quarterly reports. In fact, look at your computer itself and ask: is this the best we can do? Today’s computers are truly awful: too bulky, too hot, too power-hungry, too slow, and too ugly (okay, on that last I’ll concede an exception.)
By bailing, IBM has signaled they have no solutions for these problems. Indeed, judging by the overwhelming majority of PCs on the market, you’d think there were no major improvements to be made, no possible differentiation that customers will pay for. Perhaps the PC has indeed peaked.
One of my favorite college courses was Management 478: Strategy. I remember my professor mentioning that innovation is possible anywhere. “Consider salad in a bag,” she said. “By saving the customer time, the lettuce producers created a much more profitable product. And if lettuce growers can innovate, your industry can too.”
Here’s another great example: Dyson vacuums. James Dyson was frustrated with the loss of suction caused by bags. So he invented a bag-less “cyclonic” vacuum that maintained its power. (We have “the Animal“, it’s great — and check out that average rating of 390 reviews.) Within two years, Dyson vacs were the best-selling in the whole of the UK, and his competitors were openly lamenting that they didn’t buy — and shelve! — the technology.
Both of these innovations came long after their respective products had “matured” (the vac was invented in 1869, and lettuce is, well, lettuce.) But I won’t even concede that the P.C. is anywhere close to mature. Consider this great paragraph from David Gelernter’s WSJ editorial, “How to Build a Better PC“:
PCs are roughly a quarter-century old. People who think of them as mature commodities might have thought the same thing about television in the 1970s–when TV was in fact on the brink of all sorts of revolutions. The airplane was 25 years old in the late 1920s; luckily, airplane companies kept inventing, developing and selling new types. The automobile turned a quarter-century old in the early ’20s–and Henry Ford did consign it to Commodity Limbo. He figured that the Model T was grown-up, settled-down, fully-evolved. He almost wrecked his business, but finally got the message and produced the Model A and a long line of subsequent new designs. Obviously there are big differences between the PC and these other technologies. But there is also a big similarity: all were (or are) destined to take a lot longer than 25 years to reach maturity.
So enough with this “mature” garbage. The real question: where are our innovators? Didn’t we all hear that the justification for outsourcing was that America was the land of ideas? Others could always assemble our products, the thinking went, because we’d come up with the blueprints, the plans, the value. Have we?
Surely if we can make vacuums suck more, we can make PCs suck less.