Alan Goldstein: Analysts see arrival of the post-PC era

Wednesday, October 11th 2000, 12:00 am
By: News On 6

By Alan Goldstein / The Dallas Morning News

Dell Computer Corp.'s warning last week of a revenue shortfall, coming on top of announcements from Intel Corp. and Apple Computer Inc., inevitably led to concerns that the computer industry, an economic juggernaut for years, was in serious trouble.

But are the reports a signal of something more, perhaps the arrival of what has been called the post-PC era?

Some people think so, and they point to a variety of hand-held devices that are vying for our attention – and our technology dollars.

Although it's still a relatively small market in this country, the wireless Internet boom in Europe and Japan is huge.

People use their cell phones to read e-mail messages and even to send them, tapping out characters on a standard telephone keypad.

"The PC for a long time had no competition in terms of providing information services to individuals," said David Goldstein, president of Channel Marketing Corp., a research firm in Dallas.

"But the industry is on the cusp of a transition, in which the PC will be just one tool in everybody's toolbox to get, use and store information."

Not surprisingly, Michael Dell believes that much of the talk about alternative devices for Internet access is overblown.

At an analysts' conference last week in Austin, where the company revealed its news, Dell's chairman and chief executive said most people take in information most efficiently with their eyes – making the larger screen of a computer preferable.

"The PC was supposed to be dead 350 million units ago," Mr. Dell said. "It doesn't appear to be dead."

Mr. Dell has noted that people who use Palm organizers and cell phones almost always use PCs, too.

As faster Internet access speeds have become more desirable to users, he has repeatedly said that people who get broadband service via cable or DSL almost always soon upgrade their PCs as well – after the microprocessor becomes the performance bottleneck instead of the dial-up modem.

There has been some speculation that the global PC market is simply saturated, after years of growth of 15 percent to 20 percent.

Estimates from various research firms show between 53 percent and 60 percent of U.S. homes now have a PC, and they generally expect higher penetration rates to be reached very slowly.

One reason, Mr. Goldstein said, is that the PC industry is failing to come up with enough compelling reasons for users to buy new machines.

For years, Intel Corp. pushed desktop videoconferencing as a wave of the future and, no doubt, a way to justify more powerful computers.

But most of us still hold audio-only phone conversations – even though our powerful PCs are capable of processing video images, with help from a little camera and software.

Most users can easily get by with budget-priced machines, Mr. Goldstein said, and they still have plenty of power to spare for most applications.

"Why upgrade?" asked Mr. Goldstein, who five years ago was one of the first analysts to identify the enormous impact that sub-$1,000 PCs would have on the industry.

At the low end of the market today, he says, PCs sell for $399 powered by 600-megahertz processors and at the high end, the gigahertz-based systems sell for about $2,000.

"It's not even a doubling of power," he said.

Hardware is becoming more of a commodity, said David Coursey, an independent industry analyst in San Mateo, Calif.

"Today, I go to a warehouse store and see a gigahertz computer, and it doesn't mean what it used to," Mr. Coursey said.

"We've been in a post-PC era for a while, but it's not clear what era we're in," he said.

"There's a big disconnect between technology, Wall Street and the consumer. Each exists in its own world. And what we've been seeing in stock prices, well, expectations were set way too high.

"We all hate it because we all loved the balloon. But it's only to be expected. And it's probably a good thing it hasn't crashed harder than it has."

Mr. Coursey also believes that we will have multiple devices to get access to the Internet.

"It's a little like asking which device provides chief access to the telephone network," he said.

"People tend to say the desk telephone, but there's the computer, the pager, the cell phone.

"Over time, the question doesn't matter. Communications is just infrastructure. It's about which services you get."

Still, he thinks computer hardware will become interesting again, once broadband access to the Internet is more available and there are more appealing services available to consumers.