The future of home computing does not lie in expensive multimedia computers,
but more likely in some type of Internet TV, according to a new study released today.
Ironically, one of the problems the PC industry faces in the next five years is the same thing that has pushed millions of people to buy PCs: Internet access. Eight out of ten first-time buyers cite Internet access as one of the main reasons for purchasing a PC today.
But by 2003, set-top boxes will be able to provide limited Internet access for a fraction of the cost of a PC, leaving consumers with less of a reason to invest in a pricey desktop or notebook system.
Although the number of households with PCs will grow from 45.1 million in 1998 to 54.7 million in 2003, most of that growth is derived from households with more than one computer, not new users, according to Inteco.
The actual number of households with PCs will only grow from 44.8 percent in 1998 to 52.7 percent in 2003. This presents a problem for the PC industry, because dwindling prices and profit margins need to be offset by high volumes, said Snowden.
"That business is predicated on double-digit growth," he said. "The PC industry is at the stage in the growth cycle where it is becoming a commodity business, [and] it's becoming difficult to differentiate on anything but price."
About 30 percent of U.S. households do not own a PC and have no interest in purchasing a computer, the study found, because they still see no crucial use for a home computer.
"Cost is diminishing as a factor, but it is also tending to polarize people's attitudes," he said. "People who have never considered buying a PC, it's coming into the realm where they have to decide whether they need a PC and a lot of times, the answer is no."
Part of the problem is that the PC industry hasn't yet provided a compelling application for high-end PCs, he noted. "The PC industry can try and bring back the high-end PC, but there isn't any new application that's driving the specs higher."
Instead, limited local news, sports, and weather information via cable television or set-top box will likely captivate both PC and non-PC households alike.
"Our experience tells us that these types of interactive services reach across all demographics and so that's where you see the future of interactive services arriving."