Analyst makes brash call for PC maker shake-up

Calling his report a PC industry "manifesto," Neff insisted changes are needed to fend off years of disappointing financial results. He proposed a radical set of buyouts and mergers among the PC world's biggest players.

"The PC industry is at a critical juncture," he wrote in the report. "Managements and investors need to recognise that the problem is not the end of the PC but slower growth and overcapacity... It is time for bold moves. It is time to do it before it is done to you."

First up, Neff suggested that Dell Computer should buy both IBM's PC business and all of Gateway.

"We do not see a compelling rationale for IBM to be in the PC business," he wrote. "It (does) not seem to fit within its focus on services, software and technology."

By buying IBM's business, Dell could gain a fair share of markets in Europe and Asia, pushing it past Compaq Computer in the global rankings. With Gateway under its arm, Dell could also strengthen its position in the consumer markets, Neff said.

Equally brash, Neff suggested that Hewlett-Packard should go on the offensive and snatch up Compaq.

"Hewlett has the luxury of having a printer business that is highly profitable," Neff wrote in his report. "It is time for Hewlett to make offensive moves that will force its competitors to respond."

By taking on Compaq, HP would increase its ability to offer the whole IT package with printers, computers, storage, servers and consulting services, the analyst noted. The move additionally could block against moves by Dell and strengthen HP's consumer businesses.

Neff added that the move makes sense given his dismal outlook on Compaq's road ahead. Compaq should "design the best exit strategy" given what he called its lack of direction, comparatively lagging growth rate and "inferior" business economics compared with the direct PC vendors.

Perhaps most interesting, Neff tried to talk Apple into switching its chip architecture from PowerPC to Intel processors.

"Apple risks ending up like Silicon Graphics -- great technology but shrinking markets and increasing competition," he wrote. "This may seem like heresy, but Apple's best option is to play to its strength in industrial design and design the best computers for the Wintel market. Abandon the PowerPC architecture and port the Mac OS X over to the Intel architecture."

Neff goes on to claim that it shouldn't be difficult to switch Apple's new OS over due to its close ties with Unix. Although this might not be as easy as Neff suggests, Apple is in need of a boost after posting its first quarterly loss in three years on Wednesday. Apple still has plenty of cash and could use the money to support a technology change, Neff said.

The analyst did hedge his bets, saying the PC woes might not be so grim a few months from now. Industry pundits often point to the highly cyclical nature of the PC industry, and some have said it could regain strength in the not-too-distant future.

"If demand trends, for any reason, come back stronger than expected, it is possible that the business prospects for PC vendors may not be as bleak as they look now -- but that does not change the fundamental issue of industry overcapacity," Neff said in his report.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Ashlee Vance

PC World
Show Comments


Cygnett 2500 ChargeUp Pocket Lightning Portable Power Bank

Learn more >




TerraCycle Zero Waste Box Pens and Markers Small

Learn more >

Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?