As the European home Internet has driven PC penetration to critical mass, hardware sales have stalled. But an increase in digital content consumption will spark demand for Wave 3 of the home PC in Europe — what Forrester Research (Nasdaq: FORR) terms the “pleasure PC.”
Forrester believes that renewed impetus for home PC replacement won’t come from the PC industry itself but from external factors like the growing proliferation of digital devices, the creation and use of digital content, and consumers’ desire to share that content with each other. So, instead of focusing on continually increasing raw processor speed, RAM, or hard drive capacities, Forrester advises PC manufacturers to center on design and functionality.
“In the first wave of home PC adoption from the early 1990s, the PC was used for a few very specific tasks or applications, such as word processing, home finances, or educational support,” said Forrester Analyst Paul Jackson. “The second wave, the ‘Internet PC,’ occurred in 1999 and 2000 with the mass take-up of home Internet connectivity. We’re now entering the third wave of PC functionality, what Forrester calls the ‘pleasure PC,’ which will be used to handle digital content, for advanced communication, and even for home networking. This will run through 2005, and will be followed by the fourth “command-and-control PC” wave where the PC will function as a command center for the home.”
The latest data from Forrester’s Consumer Technographics® Q4 2002 European Study of more than 23,000 European consumers suggests that early adopters are buying replacement pleasure PCs already, but in small numbers. In 2003, home PC penetration will increase by just 1 percent as less than 3 million households get their first PC. Some 4 million households will replace their pre-millennium PC — about half of Western Europe’s 8.7 million replacement PC sales. 2004 will be better, as PC unit sales increase by almost 30 percent. Wave 3 will hit the mainstream in 2005 and 2006 with new technologies like Microsoft’s SPOT, Smart Displays, easy wireless networking, and PVRs. Home PC sales will recover, and penetration will reach 66 percent by the end of 2006.
“As the likes of HP/Compaq and Packard Bell squeeze the final breath out of the Wave 2 life cycle, they need to rethink their PCs to surf Wave 3,” Jackson said. “The pleasure PC must be backwardly compatible and as easy to use as a CD player if it is to convince mainstream consumers. Following Apple’s and Sony’s impressive design track records, PC makers must start to design hardware based on how it fits with a wide range of consumer lifestyles. Every PC maker needs to learn from the audio sector — and design hi-fi-component-size base units with sleek monitors, wireless keyboards, and mice. Manufacturers need to avoid becoming victims of the next PC purchase stall — designs should allow for upgrades to Smart Displays and Media2Go devices, expected to hit the mainstream by 2005.”
For the Report “Where New For The Home PC?,” Forrester used its Consumer Technographics Q4 2002 European Study of more than 23,000 European consumers spread across seven markets: France, Germany, Italy, the Netherlands, Spain, Sweden, and the UK.