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As PC sales slump, laptop makers turn to services

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The PC market is in troubled waters, and has been for much of the past year. Worldwide PC shipments are down 16% in 2022, according to a recent analysis by Canalys, while Gartner reported a 28.5% year-over-year decline in the fourth quarter – the biggest quarterly decline in shipments since Gartner began tracking track the PC market. All PC makers except Apple saw year-over-year declines. Laptop sales are said to have suffered the most.

This has all created a somewhat uncertain backdrop for CES 2023, the annual conference where technology companies showcase products they will launch in 2023. During the show, executives and representatives from several PC makers acknowledged that the industry has a big task . ahead of this year: keep the laptop exciting.

Some companies are trying to do this with dumb hardware stuff (like Lenovo’s dual-screen, dual-OLED, no-touchpad Yoga Book 9i). But others are moving away from the hardware – and the raw power the hardware can provide – and emphasizing quirkier software features in this year’s lines.

Las Vegas Hosts CES Annual Fair

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Laptops have reached a point where they can do a lot of what people want them to do, and where – above a certain price point – they’re beefy enough to last a while. The incremental upgrades that subsequent generations of chips bring are usually not enough for most consumers to justify buying a new machine. To convince people to choose something new this year, fancy features could be the key.

That’s certainly the opinion of Jason Banta, corporate vice president and general manager, OEM customers at AMD. The Banta theory, postulated in an interview with The Verge, is that the covid-19 pandemic and the consequent explosion of remote work led many consumers to buy better PCs than before. The question on their minds right now is, “Is there something new I need to do or something new I can do?” Banta said. “We know a lot of people bought PCs in 2020 and 2021. And now that they’ve figured out how critical it is for them, what’s the next thing that will drive them back to a new PC?”

For chip makers, part of the answer to that question has been artificial intelligence and the use cases it enables or might enable in the future.

While Intel and AMD announced extremely powerful laptop chips this year, they came with equally flashy AI announcements. AMD has revealed that some of its new chips will come with its first Ryzen AI engine, built on its XDNA architecture; Intel’s upcoming Meteor Lake chips will also bring AI capabilities. AMD was so excited about this aspect of its CES keynote that it brought Microsoft’s Panos Panay to the stage, where he insisted that “AI is going to reinvent how you do everything in Windows.”

There aren’t many applications for these AI engines yet. But the most immediate are the webcam’s features — eye tracking, background blurring, auto-framing, and bright teleconferencing objects of that sort — and other software that adjusts based on your behavior.

“What I’m excited about in the AI ​​space is actually the experiences or the use cases that haven’t been developed yet,” Banta said. “It’s like a console: a new console is cool, but it’s the games that follow that really make the experience important.”

“The AI ​​stuff is not something we want people to see all at once and then make a decision about,” he added. “It’s something we want people to keep looking at. Look at it as an enablement vehicle for a lot of exciting things happening in the marketplace.”

Shortcut keys on the HP Dragonfly Pro keyboard.

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In a similar vein, many OEMs seem to have taken their foot off the throttle when it comes to individual laptops at this CES in favor of things like resources, solutionsand ecosystems.

HP is a prominent example. Alex Cho, president of personal systems at HP, emphasized to me in an interview that the company was going through a “transformation” – hoping to be seen this year not as a PC company, but as a “solutions” company. “We’re not just going to sell PCs,” Cho said. “It’s not around computers. It’s about computing.”

Announcements centered on HP laptops were fairly small at this CES. The company has updated some of its gaming platforms. The most significant announcements concern its cloud gaming ecosystem – and new features for the Omen Gaming Hub, including integration with Nvidia’s GeForce Now. This gaming hub was mentioned in discussions about components, desktops, and accessories. “Our intention is not to be a PC game supplier. It’s about being a gaming solutions provider,” said Cho.

The business side has brought webcams to the forefront, including a new “multi-camera experience” to allow video callers to automatically switch between two connected cameras, as well as Keystone Correction (which automatically flattens and clips camera feeds to help share documents and whiteboards in calls). and many other features linked to HP’s presence detection software. Other announcements highlighted new remote management and insight services for IT. A consumer Windows PC, the Dragonfly Pro, was also unveiled, with its integration with HP’s new “live concierge” service touted as a highlight.

Will all these features help HP get out of a declining market? Cho, at least, is confident that it does. “You shouldn’t be tracking us based on the performance of the PC market,” he said. “Is it how are the games, how is the hybrid workspace?”

And HP isn’t alone in this conviction – some other manufacturers that had a big presence at CES this year emphasized flashy software features that utilized camera tracking and AI, from the glasses-free 3D displays from Asus and Acer to the soundbar from Razer that follows your head to optimize your music. Even Lenovo’s aforementioned dual-screen Yoga Book is a software offering in more ways than one; the form factor isn’t new (RIP Surface Neo), but the investments Lenovo has made in an impressive gesture control system are what make it a viable product.

This kind of pivot is something we also see in the TV space. As display technology stagnates, nearly every manufacturer has turned to AI gimmicks to woo more customers. It will be interesting to see whether this strategy can succeed for PCs this year, in part because we’re talking about a number of companies that are known for pushing bloatware (hello, Lenovo), flawed management software (hello, Razer), and poor customer service. labyrinth (hello, HP) to customers. Extra automatic software can sometimes be more of a burden than a help if it messes up processes that were already working. (I often find myself disabling preloaded AI items for this reason.)

The lid of a closed Asus ROG Zephyrus G14 seen from above on a blue table.

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Granted, the boom cycle that was the pandemic-era laptop market probably wouldn’t last forever. It’s true that companies that make consumer-oriented Windows laptops need to consider the fact that Apple’s current MacBooks are eating their lunch. It’s also true that fancy videoconferencing features (and the heavier AI apps that AMD and Intel promise) aren’t yet as relevant to large swathes of the PC market as basic metrics like performance, battery life, and price. .

Selling products, no matter what space you’re in, requires convincing lots and lots of customers that they need something they don’t already have. More than half of American employees still have the opportunity to work from home at least one day a week, and companies still seem to be figuring out what needs this ecosystem creates. 2023 could be a year that reveals how much automation customers see as a luxury and how much they see as a necessity.