The AIB is here to tell ya, I’m not dead yet

Posted: 05.26.16

PC sales are down, it’s the end of an era, woe oh woe, what’ll we do? 

Relax. The hysterical headlines of shares pushers on Seeking Alpha, Motley Fool, and various “news” sites are enough to make anyone think the world is coming to an end. As usual, the end isn’t near, it’s just shifted its place on the horizon. 

Yes, PC shipments have declined, When the only choice we had was a PC, we bought them. And when software and other devices like memory were changing rapidly, we replaced our PCs every second or third year. Now software developments have slowed to a crawl, memory density and speed are pretty much good enough, and the fractions of a GHz improvement in CPU speeds don’t make much difference, so why buy a new PC? 

But. If you’d like to play a cinematic, high-resolution, fast-refreshed, and fast-paced game, put that $500 10-inch tablet with Angry Birds down and get serious. Get a PC. If you’d like to delve into interactive VR (not just passive 360 videos), put down those cardboard thingies and get a PC. If you’d like to design the next-generation jet airplane, or 900- story skyscraper, don’t even look at your phone; get a PC. Or, if you’d like to edit 4K 10-bit video and see the results without growing old in the process, get a PC. 

Shocking, isn’t it? We all know this, and yet the popular press, Wall Street sharp-shooters (those clever fellows who brought us derivatives) don’t seem to get it; they’ve decided its RIP time for the PC. And so goeth the PC go add-in boards too, right? Besides, haven’t integrated graphics caught up with those expensive AIBs? 

Overall, AIBs shipments have declined slightly, but not as much as the PC. 

As a percentage, AIBs in desktop PCs have been increasing. 

Gaming and professional graphics continue to drive the PC and AIB markets. And compared to a year ago, desktop PCs slipped 15% in shipments whereas AIBs grew 6%. 

Likewise, in the notebook segment, notebook PCs have dropped, but not so much for discrete GPUs. This reflects the strong interest in gaming and workstation notebooks. 

What’s going on here? 
With lackluster applications (other than games), and the failure of Windows 10 to spur the market, consumers, for the most part, and commercial buyers extended their buying cycle out from three to four or more years. They still need and use PCs, but not the latest ones. The exception, and only bright spots, have been the gaming segment and professional graphics. As a result, we see consumers buying AIBs to gain performance improvements and not upgrading the PC as frequently. 

Great games.

The gaming market in particular has enjoyed two uplifts, one from a half dozen really great AAA games that came out in Q4’15 and Q1’16 (more are expected in the next quarter). It has taken a few years, but all the software tools and new APIs, new powerful game engines, killer powerful GPUs, big high-resolution monitors on the desktop and in the notebooks, have come together to create a gaming platform like never before. 

Big money in eSports. The second development was from eSports, which commands the attention of hundreds of thousands of participants and over 140 million online viewers. The contestants play for seriously big prizes with over a dozen players raking in over $1 million—the top grosser collected $2.2 million.

People watching those players get excited and go buy top-of-the-line gear. 

And this isn’t a fad. 

Can all that save the PC? No, but it sure changes the mood and the money. And as mentioned, the next wave will be VR. Not this year, probably not even next year, but if the consumer doesn’t get turned off by stupid games in VR, by 2017 all the pioneers will be saying, told ya so. 

So let’s shoot Chicken Little—feed him to the Angry Birds, and recognize the greatness of the amazing graphics on an amazing screen right in your home, or for that matter, on your lap in an airplane. The king is dead—long live the king