Techaisle Analyst Insights

Techaisle’s SMB research on Tablets, PCs and Smartphones usage has found that 28 percent of SMBs are aware of 2-in-1 PCs, and 15 percent are considering purchase in the next one year.  Marketers have done a generally good job of building awareness which is highest at 73 percent within the 500-999 employee size businesses in the US. However, marketers have not succeeded in creating consideration to purchase from awareness within mid-market segments.

Globally there are 265 million mobile SMB employees who are telecommuting, traveling and/or using cloud-based services.  The potential market is therefore massive. However, most SMB employees are already two-device users and are on their way to becoming a three-device user as they gain power of device choice, bringing personal experiences to work and vice-versa. The odds of a tablet and notebook both needing to be refreshed at the same time is low, and therefore it may be difficult to position a 2-in-1 PC as a replacement for either device. Nevertheless there are seven different potential market opportunity segments and each of these seven opportunity areas has scenarios in which 2-in-1 PCs might gain share – but each has its challenges.

The SMB survey data also indicates that general-purpose devices are losing ground to task-specific devices, a trend that would negatively impact middle-ground opportunity. Further, 2-in-1 PCs will likely be at a price disadvantage to Android PCs, which will begin targeting this same niche. PC OEMs will need to position the benefits of both the 2-in-1 PCs and their unique approach to these devices, while attempting to avoid the confusion that has hampered progress in the SMB market to date.

When we sift through the data on different perspectives on 2-in-1 PCs’ positives and negatives, we see that there are some core strengths to build upon, but that some design changes will be needed before these products can make a serious run at the endpoint device (PCs, Tablets, Smartphones) market’s middle ground. The moving parts needed to enable a 2-in-1 are also viewed as a drawback/potential point of failure for these products. And the overall diversity of approaches to enabling 2-in-1 functionality – ranging from detachable displays to Ferris wheel, flip/fold, swivel/twist and slider-based approaches – has confused the market. Too many options in the marketplace provide choice but also cause purchase inertia. This is a high-stakes issue for 2-in-1 PC OEMs and those with successful designs stand a much better chance of growing with the market than those whose designs are marginalized.

The aggregate opportunity for 2-in-1 PCs is compelling but there is no aggregate marketing strategy that will capture this opportunity. PC OEM marketers will need to align with the market opportunity segment that they can best develop, and ensure that their message and activity content is consistent with the conditions that govern the target area.

The 2-in-1 market is an attempt to fill a ‘middle ground’ that has been created by the trend towards multi-screen endpoint device strategies. Techaisle’s research shows a usage continuum of endpoints. On one side, there are desktop devices capable of creating content. At the other end of the spectrum, there are smartphones that lack the tools needed for content creation, but provide a lightweight, mobile option for content consumption. On this continuum, tablets are also primarily consumption devices, but can be used for light content creation, while laptops are capable of creating content, and can be used as a mobile consumption port. 2-in-1 devices are targeting the space between tablets and laptops. They are attempting to provide better creation options than are found with tablets, while offering a form factor better suited to consumption than is found with traditional laptop.

Techaisle believes that the key to 2-in-1 PC success within the SMB market will be the ability to articulate the benefits of the “middle ground” – the combination of consumption and creation that 2-in-1 PCs can address better than either tablets or traditional laptops.

More detailed data is available in Techaisle’s report titled “SMB End-Point Device Adoption Trends: Tablets, PCs, Smartphones” which covers:

• Current and Planned purchase Intentions of client devices: Tablets, PCs, Smartphones
• Current and Planned Tablet OS & Application adoption trends
• BYOD trends within SMBs
• XP, Windows 8 refresh intentions
• New OS PCs: Chromebook, Android adoption trends
• Converged Mobility PCs trends: 2-in-1 PCs
• Purchase Channel and Sources of Information

A study conducted by Techaisle with 736 small businesses in six countries – US, Brazil, China, Germany, Russia and India exposes the true costs of maintaining older PCs, frequency of repairs, hours lost due to system performance issues that unbeknownst to many small businesses are chipping away at their cash flows and productive work hours.

Maintaining Older PCs Negatively Affects Operating Cost

The study reveals that small businesses are spending an average of US$427 per PC that is 4 years or older on repair cost. Cost implications vary widely for small businesses of different sizes. For example, among small businesses with 50-99 employees, the average cost of repairing PCs 4 years old or older is US$521 per year. The repair cost therefore either equals or even exceeds the purchase price of some new PCs.

Older PCs Diminish Employee Productivity

As the system performance of older PCs begin to degrade and the number of applications running simultaneously increase to an average of eight for small businesses, it is not surprising to see that 25 percent of older PCs are upgraded each year by small businesses. The upgrades add another US$134 per older PC.  The average per PC cost to upgrade an older PC is highest within the 1-49 employee size small businesses. Combining the average upgrade cost across all small businesses with the average repair cost the total cost of maintenance equals US$561 per older PC. This is a “stealth” cost that drains cash flow and adds to the operating cost of a small business which they can hardly afford.

The study also reveals that an average of 42 hours is lost due to an older PC being repaired by either internal IT staff or reseller or even friends & family. Slightly over 36 percent of small businesses have 4+ years’ old PCs which create many different types of problems for the both the owner and the employees.

Newer PCs Positively Impact Productivity and Reduce Operating Cost

Small businesses using newer PCs have felt several positive impacts; among the top are improved application performance, improved productivity, and reduced operating cost. Small business owners mentioned that newer PCs allowed them to run 60 percent more number of applications simultaneously without any degradation in system or application performance as compared to PCs that are 4 years or older. This is a significant improvement as small businesses are increasingly using several different types of applications simultaneously including business productivity applications, Email and web, online chat and video, line of business applications, social media interactions, finance and accounting as well as music and games.

Improved performance directly leads to improved productivity and efficiency. Along with better manageability and reduced overall maintenance expenses, newer PCs directly impact the bottom-line of small businesses by reducing operating costs.

Financial Impact to Small Businesses

More than two-thirds of small businesses have moved away from a PC replacement policy and many others are keeping their PCs in use longer than in previous years. 47 percent of small businesses cited lack of budget as a key reason for not replacing older PCs in spite of frequent issues and lost productivity. However, these small businesses should re-evaluate their decision given the higher cost of maintaining older PCs which has a larger cumulative effect on the budget. They should consider both direct and indirect costs resulting from PC downtime, that is, both the “visible” and “hidden” costs. Replacing, rather than repairing and upgrading will reduce cost of operations and free up budgets.

For a typical small business that has six PCs - three PCs more than 4 years old and three less than 4 years old the study finds that the direct maintenance and lost productivity costs yields a total of $4,203 per year. To put it in perspective – that is equivalent to buying two to four new notebooks (depending upon specific purchase price).