Is the PC upgrade cycle dead?

The Earth still revolves around the sun, but the PC upgrade cycle is becoming less predictable.

A somewhat predictable PC upgrade cycle was a welcome fact of life back in the '80s and '90s, but it might be a thing of the past.

Or it might not. Analysts are debating it, and we will find out what they conclude next year.

Here's the brief history. In those long-ago days, PC manufacturers--and hence software developers, chipmakers, and computer dealers--would see a spike in demand every three to four years. Microsoft and Intel would come out with major refreshes of their product lines roughly at that cadence. The whole system of steady upgrade cycles culminated with the release of Windows 95 in 1995, still one of the best orgies of technology binge buying on record. Start me up!

After Windows 95, however, operating system upgrades were no longer strong enough on their own to prompt upgrade cycles. A slight bump in sales might occur, but it was hard to say whether it was related to a new OS. Few were buying new PCs so they could get their hands on Windows 98, or 2000, according to analysts at the time. Instead, people were upgrading when their PCs started to seem too slow or started to have problems.

The first cycle prompted by the physical wearing out of computers probably occurred in 2003-2004. Those machines, bought by corporations and some consumers in preparation of the Y2K bug (which you can argue was the last upgrade cycle inspired by software), were wearing out by then. Sales jumped.

The current PC environment, however, might now be too dispersed to be impacted in a major way by even somewhat simultaneous dilapidation or OS upgrades, speculated IDC's Bob O'Donnell.

Most of the growth is coming out of Asia and emerging markets. Thus, U.S. tech departments have less influence on overall sales. The consumer is also a much larger portion of the PC market now, and consumers don't buy in waves. In other words, although PC sales are growing, the larger number of buyers have attenuated any coordination in their actions.

Some thought that the service packs for Windows Vista might prompt an upgrade, but it didn't happen.

Here's some evidence that the market is less synchronized: the U.S. is mired in a recession, but PC sales jumped 14.6 percent in terms of units in the first quarter, compared to the same period a year ago, according to IDC.

"The main issue is the economic situation in the U.S.," said Doug Bell, PC analyst for IDC. "It was the only region really impacted by the recession scare."

For the counterpoint, there's Charles Smulders of Gartner. "I still believe that there is an upgrade cycle," he said. "I just think that people are keeping those machines longer."

And the next one could come next year, when those 2003-2004 machines bought to replace the Y2K upgrades will start conking down.

But Smulders agrees that PC sales are strong this year. Gartner saw an increase of 12.3 percent in units.

 

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