CES Countdown #11: Are the desktop PC's days waning?

The alternatives to ramping down, if there are any...

This leaves the industry with a serious problem. In a healthier economy, manufacturers could invest in the systematic shutdown of the conventional desktop PC division. But that would mean innovating what's left of it -- helping the desktop form factor metamorphose into something that consumers might actually want, even if fewer consumers end up wanting it.

Right now, the cash on hand for such capital expenditures just isn't there. What's more, manufacturers would need cooperation with the software producers whose functionality determines the end usefulness of the PC -- and by "producers" in this context, I mean "Microsoft." Intel's and AMD's separate collaboration with Microsoft has only resulted in three brands -- Viiv, AMD Live, and Media Center PC -- all of which have not performed to the level needed to "re-viiv," if you will, this form factor. Any new collaboration would have to incorporate the whole debate over intellectual property rights and who or what should enforce them (An independent media broker? The content producer? Microsoft?), which is something the industry literally cannot afford to tackle right now.

For its part, AMD cannot afford to de-emphasize any single division of its product line, since it needs every cent of revenue it can muster to pull off its dangerous, though hopeful, corporate transition. So to that end, that company apparently plans to throw everything it has toward keeping the desktop form factor on life support, even if that means maintaining product SKUs in the dual-, triple-, and quad-core lines that are distinguished from one another by dollars and cents in price. While Intel can afford a riskier strategy now, it cannot afford an atrophy of the desktop segment, either. So it appears that Intel will continue the tactic that was so successful against AMD two years ago: Maintain a single price/performance-leading SKU in the desktop CPU segment at such an attractive price that AMD can't compete against it, and let higher-performing chips command a premium.

The immediate answer to the main question of whether 2009 will see the beginning of the end of the desktop PC form factor, based on our read of the industry, is this: Manufacturers are in no position now to let something as small and trifling as plummeting consumer demand, kill an entire product line.