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The PC industry is betting big on gamers

The PC industry is betting big on gamers


When all else fails, put LED racing stripes on it

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Acer, Asus, and Lenovo are on a charm offensive at IFA this year, and their target demographic is that reliably spendthrift group we know as gamers. Collectively, these three companies account for a third of global PC shipments, and they represent an industry-wide trend toward promoting more gaming gear. The hope is that slumping PC sales can be rejuvenated by appealing to the class of users who upgrade their hardware most often and spend most lavishly.

The PC gaming market produced $21.5 billion in hardware sales last year, according to data from Jon Peddie Research, which is more than double the revenues derived from console sales. More notably, unlike the broader PC market, which continues shrinking, gaming PC sales are projected to increase over the next couple of years. The JPR analysis suggests the biggest chunk of gaming PC revenue — somewhere in the vicinity of 44 percent — comes from the so-called enthusiast segment, which the researchers identify as "very performance and style oriented, much like sports car owners."

Sports car PCs are exactly what we saw from the big manufacturers at IFA. Acer’s Predators, whether it be on the desktop or in the form of pseudo-portable laptops, ape Lamborghini’s angular shapes and aggressive motifs throughout. Asus, with its Republic of Gamers sub-brand, does the very same. From overclocked monitors to otherworldly arachnid routers, both of these Taiwanese companies are pushing as hard as they can to give conventional, commoditized products the veneer of a fresh attitude and personality. Even the software on their computers features sharp, aggressive edges, superfluous illumination, and promises of unbelievable speed. Just like sports cars.

PC gaming is big business, but are gaming PCs?

But there’s one important distinction that Acer, Asus, and Lenovo seem to be overlooking: even very wealthy people can’t easily build their own sports car, whereas most gamers are fully capable of constructing their own gaming rig. Sports cars are sold as discrete luxury items with no immediate alternative. Gaming PCs put on the same airs, but can be replaced by far cheaper and more personal custom builds. Their only advantage is more immediate convenience. And so, even though the flashing LED lights on a gaming laptop might suggest the opportunity for improving profit margins through smarter styling and marketing, it remains highly unlikely that any of these companies will find the gamer salvation that they’re desperately hoping for.

Make no mistake about it, the situation for Taiwan's once-flourishing hardware makers is indeed desperate. Unlike US competitors Dell and HP, who have the insulation of strong enterprise businesses, Acer and Asus produce gear primarily for the consumer, with no diversification strategy to offset slumps in their core business. The blame for their present plight, though, can be found in their own, recklessly aggressive actions.


The two Taiwanese manufacturers struck gold with the netbook craze of a decade ago, selling no-frills laptops at rock-bottom prices and making their profit through sheer volume of sales. They then looked to move up the food chain with the same strategy of undercutting the competition, and the result has been an erosion of profit margins throughout the PC industry. Every time that Asus chairman Jonney Shih takes the stage to announce the price of a new product, it's always that extra bit lower than the rest, raising eyebrows and stirring hype. The latest example is the ZenWatch 2, which at €149 is among the cheapest, yet also prettiest Android Wear options around.

Constantly undercutting the competition only works in a constantly growing market

Operating at just a sliver above breaking even, and sometimes below, is hardly a sustainable long-term strategy, though it's been effective in undermining and sometimes even ousting the competition entirely. Samsung no longer sells laptops in Europe. LG never really tried. Sony no longer sells laptops or desktops anywhere, having sold off the VAIO brand to focus on mobile devices. And now Acer is joining the ranks of endangered PC species with word that founder Stan Shih is open to a takeover.


The problem with the Taiwanese strategy is that it's reliant on unabated growth. It's designed to capture the biggest share of a constantly expanding pie, but it fails when that expansion stagnates. And stagnation is exactly where the PC market finds itself today, with too many PCs already out there and competently doing the things people need them to do. Intel has spent this year talking up the billion PCs out in the world that haven't been upgraded in more than three years, as if it's some vast untapped opportunity, but those PCs might remain un-upgraded for another year or two.

What PC makers need is a spark to prompt people to buy new stuff and gaming has reliably proven itself to be that catalyst. After all, gaming is helping keep Sony's bottom line steady, courtesy of the PlayStation 4, and it's also sustaining companies like Nvidia and AMD, whose efforts to design something other than excellent graphics chips have almost uniformly failed. Because of the great draw of gaming, even Lenovo is diving into the black-and-red and angry-all-over super-stylized PC business.

A billion ageing PCs: huge opportunity, or just evidence of a stagnant market?

Whether gaming provides a shot in the arm for these companies or not, it promises to only ever be a temporary solution. As Anssi Vanjoki, Nokia's one-time mobile chief, once said of building Android phones, the action is akin to boys "peeing in their pants" for warmth in the winter. He's been proven accurate by the passage of time, and there's now an analogous situation for PC makers, who live and die by selling increasingly large volumes of devices, but are facing a consumer preference shift toward mobile devices. Even if the present push for gamers' attention triggers a full, global upgrade cycle, what will Acer and Asus do in a year's time when everyone's got a still-perfectly-capable GeForce GTX plus Intel Skylake combo in their machine? That water-cooled ROG GX700 laptop isn't the answer, it's just a sign of growing desperation.

asus gx700 (embargo)

The situation didn't need to be quite so dire. Sure, Acer and Asus wrought this fate upon themselves, but other companies, whose fortunes are strongly intertwined with that of the PC industry, could have done more to avert it. AMD, which hasn’t been on an even competitive keel with Intel this decade, hasn’t helped. It's been practically anonymous for years. Intel clashed with repeated delays of its Broadwell processor line, and eventually introduced a distinctly underpowered Core M variant. For PC companies looking to assert themselves more strongly in the mobile space, Core M was supposed to be the deus ex machina, the thing that would bring all the positives of a larger x86 computer to the impossibly compact dimensions of an ultra-slim, fanless tablet.

Microsoft has exacerbated price pressures with the excellent Surface Pro line

Then Microsoft came along with the Surface Pro, quickly establishing that as the premier 2-in-1 Windows PC and taking the wind out of its partners' sails. And now Windows 10 has arrived and it doesn't require any extra power to run, making it unnecessary for casual PC users to upgrade. Every single company selling PCs today is conscious of the need to reform and start selling devices that rival and outdo the more portable varieties of personal computers like smartphones, phablets, and keyboard-equipped slates. They know. They just can't help it when their biggest partners either fail to deliver parts or dive into the same market with a superior product.

So now it's time for gamer heroes. Intel and Microsoft can keep talking up touchscreens and RealSense cameras, but those aren't the things that will drive people to spend four figures on the latest high-spec machine. For gamers, Windows 10 is an incentive to buy new hardware because it introduces DirectX 12 for more advanced graphics processing. The same is true of Intel's Skylake, which isn't offering huge or immediately obvious benefits for casual use, but promises higher overclocking ceilings and the sort of performance boost that obsessive gamers care about.

That will be comforting to Acer, Asus, and Lenovo in the near term, but eventually they'll all need to make the transition to having mobile PC lineups at least as strong as their desktop and laptop ranges — either that or they too might be swallowed up by the same profit black hole that already consumed Sony's PC division.