How HP May Have Just Saved the PC Business Forever

If PC sales are tanking (they are), then maybe the thing to do is to stop selling them and, instead, devise a program that includes PC hardware as part of an overall IT bundle of devices, software, and other services. HP Inc. (NYSE: HPQ) on last week announced just such a program that the company calls “Device-as-a-Service” (DaaS).

In some ways it sounds more like a program from a wireless phone carrier than a traditional hardware company like HP. For a monthly per-user fee, customers receive the latest technology and customized services and support from HP, including PC configuration and installation, data migration, onsite support and technology recycling. Except for the customer support it sounds pretty much like the now-dead wireless phone subscription plans.

Will it save the PC and tablet makers like HP? The latest forecast from IDC shows PC shipments falling by 7.3% year over year in 2016. The decline is expected to be smaller through 2017 before shipments level off at a new (lower) level in 2018. First-quarter PC shipments fell by 12.5% according to IDC as a result of weak currencies, depressed commodities prices, political uncertainty, and delayed projects. The analysts noted:

Although growth rates for devices such as phones and tablets continue to fall, potentially reducing the competitive pressure on PCs, we have not seen this translate into stronger PC shipments. The financial pressure on consumers across regions, and the availability of alternatives such as delaying a PC replacement by using a free Windows 10 upgrade or relying more on other devices continues to pressure consumer PC shipments. Similarly, while a large share of enterprises are evaluating Windows 10, the pace of new PC purchases has not yet stabilized commercial PC shipments.

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Whether a scheme like HP’s will work remains to be see. The benefit to HP is that by lumping all device, software, and service costs together, hardware costs can be partially covered by the higher margins on software and services. As usual, if HP can get the pricing right and still make a profit, rumors of the death of the PC may be greatly exaggerated.

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