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PC epicenter moving to Asia as Dell, HP regroup

Agam Shah | Feb. 15, 2013
Asia is fast becoming the epicenter of the PC market as Chinese and Taiwanese companies challenge the turf occupied for more than a decade by prominent U.S. PC makers Hewlett-Packard and Dell, whose laptop and desktop shipments are stumbling.

Mass-market products from Asia are cheaper and with numerous factories available to enable low-cost manufacturing and assembly, Asian companies can make low-margin PCs better than anyone else, Reeves said.

Falcon Northwest's desktops and laptops use high-end components and are typically priced at thousands of U.S. dollars. The company sources motherboards from Asus at a price of US$200 to $400, and gets specialized chassis from Taiwan. The company prefers PC assembly and customer support in the U.S.

"We prefer it U.S.-based, but that keeps the cost a little higher," Reeves said.

Analysts noted that HP and Dell won't leave the PC market in the short term and will continue to drive revenue and volumes of shipments. But the companies are dependent on Taiwanese manufacturers like Pegatron, Compal, Wistron to build and design products, which indicates that the PC epicenter in some ways has already moved to Asia.

Asia is more competitive at making commodity PCs, but the U.S. is skilled in manufacturing high-end technologies llike microprocessors, said Deloitte's Ciacchella.

In addition, the U.S. could have a fighting chance to retain some PC competency if it becomes increasingly cost-competitive to do business in some parts of the country as companies like Apple and Lenovo bring PC and tablet manufacturing jobs to the country.

A lot of the competitiveness in the U.S. may also depend on Dell retaining its PC unit under the proposed private ownership, which will allow it to execute on its product strategy without having to show the sort of steady quarter to quarter rise in profit that Wall Street demands.

"It's going to be an interesting situation to monitor," Ciacchella said.

 

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