Desktop PCs: Seeking relevance in a mobile world

Don't listen to those who say the desktop is dead in the "post-PC" market. Despite the explosive growth of mobile products in recent years, desktops have managed to hold their ground thanks to their price for performance value, scalability, and capacity to do the heavy lifting other machines cannot. Yet while enterprise demand remains strong for the veritable workhorse, consumer demand has clearly shifted toward notebooks and tablets.

Looking to revitalize the desktop category, PC vendors and retailers this year are turning to touchscreen all-in-ones, or desktops that house the screen and components in one chassis, as a way to bring the desktop back into relevance. While the touch all-in-one (AIO) concept is hardly new, this year has seen a particularly strong increase in the number of retail placements for the category, suggesting that consumer reception has been positive and that demand is growing.

Best Buy AIO assortment

The chart below illustrates that in the first half of 2011 several major retailers have allocated more shelf space to touchscreen all-in-ones, with nearly a quarter of placements at the below retailers now devoted to the desktop category. Since late December, Gap Intelligence observed a 28 percent growth in the number of touch AIOs offered within this panel of retailers. While this may seem slow in contrast to today's dynamic mobile market, a heavyweight industry such as desktops (which yields around $100 billion in global revenue annually) takes time to change its course

Gap Intelligence desktop AIO retail share report

You may be asking, 'why would anyone ever pay for a touchscreen all-in-one?' Touch AIOs are indeed expensive, selling at about a 40 percent premium to the average desktop in retail (see below), despite the fact that these systems are often made with notebook components. And, while a major justification for an AIO's premium is its touch-enabled screen, the fact remains that today's PC operating systems, built for mouse and keyboard use, are not touch friendly at all.

Retail Desktop ASPs

Market participants, however, are moving to address these issues:

• Vendors and retailers have already begun shifting toward more reasonable sub-$1,000 price points, as average prices in the segment fell by 5 percent in the first half of 2011.
• Software makers are certainly well aware of the touch AIO growth trend, and will likely release touch-friendly, app-centric software sometime in the next year.
• Lastly, as AIO desktops find their niche within each vendor's greater PC product portfolio, the expectation is that new proprietary ecosystems will arrive to the market with touch-enabled interfaces, complementing mobile products from the same vendor.