The value of the AIB market
Posted by Jon Peddie on December 12th 2012 |
Too bad about that PC dying and all that—I guess it just outlived its usefulness or maybe lost its sex appeal, or maybe—the emperor isn’t wearing any clothes.
But with the PC being dead and all (I still use one, but I was always a slow learner), I’m curious as to where in the world all those add-in boards (AIBs) are going. I know, I know, to China, but what are they being used for, if the PC is dead?
Maybe they’re being used as doorstops, or they’re being sunk in the sea to rebuild the great barrier reef.
However they’re being used, a lot of them have been sold—we reckon about 66 million of them will have been sold in 2012, and that someone paid $9.8 billion U.S. for them. That’s a lot of money just for some coral.
AIBs and their disguised cousins, GPU-compute boards (not included in the above numbers, BTW), hold a market niche, and also represent an aspirational product for many. Sadly, the software companies haven’t exploited all the power of the AIBs (or CPUs either for that matter), and when they do the results are stunning.
The most recent example was Call of Duty Black Ops II, which grossed $1 billion U.S. in 15 days—making more money than the Star Wars and Harry Potter films put together. And its predecessor made the same amount in 16 days when it came out.
Others like Skyrim, Far Cry, and Grand Turismo that take all an AIB has to offer, also do very well, and exceed billions of dollars. But they’re hard to develop, and even if they’re successful and can be milked for years as sequels, there is risk, and time and investment needed to produce the first hit, and generally speaking, the lazy software industry is very risk-averse.
AIBs, however, aren’t just used to play games. The high-end brethren of AIBs, the workstation boards, are used to design everything in your life, power the simulators that the airplanes you fly in and cars you drive are proven in, and are used to design the drugs you take, or hope to never have to take.
They are also used to create and edit the movies and TV shows we watch on our tablets, and on a more personal level, the videos and photographs we edit and post on Facebook.
All those things are considered valuable, and so are the AIBs that are used to generate them. And those valuable AIBs are nestled in an aluminum box called a PC, a desktop PC—how archaic is that?
However, as critical and important as PCs with AIBs are, as a market segment there is little to no growth. Tablets are replacing a lot of the non-essential PCs that were used for simple web browsing or email. And the loss of those low-performance, five-year-replacement-cycle, low-cost PCs has impacted the overall PC market growth. About five years ago, the talk in PC land was about the next billion (as in next billion customers, meaning how do we get them). The solution at the time was price elasticity—drop the price and they will come. That led to the birth of the netbook and other oddities like the tweeners—heavier, but less expensive notebooks, for instance. While the industry was busying itself trying to take the value out of PCs and make them cheaper (and underperforming), mobile devices got better (but not cheaper). Surprise! People will pay for performance and utility. Surprise number two: consumers aren’t stupid. So it’s non-stupid consumers who will pay for performance who are buying all those AIBs—imagine that.
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