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Connected: Emerging dominance of laptops just part of changing technology
Sunday, January 04, 2009

Thirty-eight million of anything is a large number, but when a product with a price tag in the thousands, or even hundreds of dollars sells 38.5 million units, it would seem to be important.

When it comes to the sales of desktop computers, 38.5 looks comparatively small -- because for the first time in history, fewer desktop computers were sold during a single quarter than laptop computers. According to iSuppli, a company that analyzes PC and other markets, between July and September 2008, 38.6 million laptop PCs were purchased, 100,000 more than desktop systems. Laptop sales are growing, while desktop sales have sunk.

Perhaps we can blame the unforgiving economy for the decrease in desktop sales; but I suspect there are structural changes happening in the market too. Have you noticed that the price differential between laptops and desktop systems has decreased substantially? Look at the ad supplements in the Sunday paper and you'll see dozens of laptop computers in the $400 to $800 range. A few years ago, you could find some bare-bones desktop systems in that range, but not laptops.

Laptops always sold for a premium. They were harder to engineer and more expensive to produce, and the powers that be at the computer companies felt they could command a premium price. Apparently not so anymore. Most of my business associates are opting for laptops -- many not even considering desktop computers.

While we used to think the portability of laptop computers was the extra value, now it might be the opposite. Perhaps it's the lack of portability of a desktop that makes it more suitable to a business environment, where you want to keep your sensitive data from walking out the door. (Of course, there are still a bunch of other ways for data to make it to the outside world.)

Similarly, there seems to be a structural change happening to the music industry. We're no longer worrying about the impending encroachment on music sales by digital downloads. Now, we're seeing the music game industry growing tremendously -- offering an extra value over ordinary music tracks or even music videos. Now we can play a push-button guitar while our favorite tunes are playing on screen. "Guitar Hero" on the PS/2 is the music game of choice in our house; but "Rock Band" is selling briskly, too. And these games are available on Xbox, Wii or PS/2 platforms. According to NPD, music games reached $1.9 billion in sales in 2008 doubling previous year totals.

You don't have to be a guitar player, either. You can play bass or drum, or can even sing. The songs on these two leading music game platforms tend to be recent vintage rock with a smattering of older rock classics -- Lynyrd Skynyrd's "Freebird," Steve Miller's "The Joker" and a catalog of Aerosmith tunes. The Beatles are even rumored to be ready to jump in -- even though it's still impossible to get a legal download of Beatles classics. They're following the money, I guess.

In times like these, we're so focused on the cycles of the economy and of the markets for various types of products that we tend to miss the structural changes. Yet technology often has created disruptive products -- those that change the dynamics of the way products are sold. PCs disrupted mainframes; downloads disrupted CD sales; and Internet disrupted print.

That will continue, and not just the big disruptions. There will be more subtle disruptions, such as those movements to portable computing and gaming-related popular music. While it's happening, you can find me playing "Hotel California" on plastic guitar along with my kids because it's fun.

David Radin is a business consultant and freelance writer. You can contact him at www.megabyteminute.com.
First published on January 2, 2009 at 5:50 pm