As PC Decline Continues, Systems Builders Find Bright Spot In Growing Enthusiast Market
The story has been the same for the worldwide PC market for more than three years now: a continuing decline in PC shipments, which is also being felt in the U.S.
International PC shipments declined 1.4 percent year over year in 2018's first quarter, a new Gartner report said Wednesday, marking the 14th consecutive quarter the market has been shrinking. But solution providers and other companies in the space are seeing the opposite in the enthusiast and gaming PC market, which has been boosted in the past few years by the growing popularity of esports and live-streaming.
"The typical commodity PC has been declining, but the space that we're in is quite the opposite," Wallace Santos, CEO of Maingear, a Kenilworth, N.J.-based systems builder that sells high-end gaming rigs, told CRN. Maingear is projected to double sales this year, Santos said, after growing annual revenue for the past three years.
Richmond, Va.-based Velocity Micro, another systems builder focused on the enthusiast PC market, has also been growing, with sales up 10 percent year over year, said CEO Randy Copeland.
PC gaming has been a driver for growth, both CEOs said, with Copeland adding that the enthusiast market has also been pushed by people who rely on high-end computers for their jobs.
"For the person that depends on a fast computer to either make a living or play intense games, the high-end market is still vibrant," Copeland said in an email. "There is no replacement for a fast computer and large monitor still, and we are seeing our [average selling price] continue to rise. There are some unbelievable advancements in CPU, graphics, memory and PCIe storage, and we are fortunate to have a supply chain that keeps us stocked with the freshest and hard-to-get components at reasonable prices."
This generally falls in line with reports from the past year pointing to PC gaming hardware as a bright spot for the overall market, with research firm GfK noting a 55 percent increase in desktop gaming PCs and a 24 percent increase in mobile gaming PCs in the first half of 2017. Another firm, Jon Peddie Research, said the PC gaming hardware market exceeded $30 billion in 2016 and is expected to grow at a compound annual growth rate of 6 percent through 2019.
The reality is, Santos said, is that there is no longer a need for entry-level PCs to perform everyday tasks, like checking emails and online banking, because they can easily be done on a smartphone.
Gartner also noted an increase in average selling price for the overall PC market, but for another reason: an uncertainty in PC replacement demand, which is leading component companies to be more conservative with production, resulting in shortages and higher prices as a result.
Santos said the recent boom in high-performance PC sales was first driven by virtual reality headsets released by Facebook and HTC in 2016. But after the hype around VR started to fizzle out, the growing popularity of esports and live-streaming sites like Twitch started to push more consumers to buy high-end PCs, he added. Most recently, the act of streaming video games became even more popular when rapper Drake showed up on a live-stream on Twitch, breaking the record for most concurrent viewers.
"Every player is an aspiring esports player. Every player is an aspiring Twitch streamer," Santos said, adding that the popularity of live-streaming means the CPU is more important now because of the need for streamers to run multiple programs in the PC's background.
"We are seeing more adoption of our upper mainstream computers and laptops by shoppers that are getting more disappointed with the declining specs and features of the multi-ational mass producers," Copeland said. "We are continuing to focus on ultimate performance and meticulous craftsmanship to stay out of the softer low-end markets, and business for us remains strong."