By Yin Xin

Fighting the PC Recession Why are Huawei and Xiaomi making laptops despite a declining PC market?

By Yin Xin

Both Gartner and International Data Corporation reports show that worldwide PC shipments dropped in the second quarter of 2016, a decline which has persisted for seven straight quarters. Lenovo, the world’s largest PC maker, saw a 7.2 percent drop in the first quarter of this year, and HP and Dell saw a 9 percent and 0.4 percent drop, respectively. In its annual report of the 2015 fiscal year, Lenovo attributed its unsatisfying market performance to the shrinking global PC market.

Despite such market conditions, Chinese smartphone giants Huawei and Xiaomi recently launched laptop products, the MateBook and Mi Notebook Air, even though all data indicate a PC market decline.

Reversed Transplantation from Smartphone to PC

“This isn’t strange,” said Xiang Ligang, a telecommunications industry observer.“Despite the declining PC market and dropping global PC shipments, there are still opportunities in the market.”

Xiang added that although a return to annual shipments of 200 million units, which the industry enjoyed in its prime, is not likely, the market remains a considerable opportunity for technology firms as long as shipments remain at around 180 million units. Moreover, people have developed a particular idea of the form of laptop computers: portable PCs in a“clamshell” form, with a keyboard on its lower part or an external keyboard.

“This means an opportunity for newcomers, especially smartphone manufacturers,” Xiang added. “They may bring fresh innovation to notebook computers.”

Several years ago, when Xiaomi entered the mobile phone market, it proved to be an industry disruptor. Will it disrupt the PC market by launching its notebook products? Some industry insiders doubt this, arguing that the PC market is in a state of relative stagnation and won’t see the disruptive changes that the mobile phone market underwent a few years ago. Therefore, Xiaomi’s road ahead in the PC market appears rugged.

Compared to laptops produced by traditional PC manufacturers, the Mi Notebook Air contains many features more commonly attributed to smartphones – ultra-long battery life, ultra-responsive functionality and face-recognition login technology. Dion Weisler, CEO of HP, the world’s second largest PC maker, stated in HP’s annual fiscal report that the PC market is like a seafood market packed with too many stale but pricy fish, and only vendors providing fresh fish will see sales rise. Perhaps “freshness” is the key feature for PC products that consumers want most.

“It’s time for the PC market to introduce newcomers to something new,” Xiang said. “It is more accurate to say that those smartphone makers will inject vitality into the PC market, rather than to say they need to adapt to the market that is new to them.”

Apple, the world’s most valuable technology company, redefined the concept of smartphone by “transplanting” the features of PCs to smartphones, which have seen smartphones turned into portable personal computing hubs.

“Through replacing the mouse with human fingers and the keyboard with the touch screen, smartphones became‘notebook computers’ that are thinner and more portable,” Xiang added. “Now, it’s time for PCs to learn from smartphones. The more innovative features of smartphones provide a reference point for PC manufacturers to make improvements.”

As increasing numbers of smartphones incorporate functions similar to those in PCs, their producers make PCs more like smartphones. For instance, one technological breakthrough that the Huawei MateBook made is the introduction of the silent, fanless CPU, which helps solve problems that previous PCs suffered from, such as CPU overheating and noise from computer fans. Display resolution is another major improvement. Unlike PCs, currently most smartphones support high or ultra-high resolution displays.

Visitors take pictures of a Matebook during a presentation by the Chinese multinational networking and telecommunications equipment and services company Huawei on the eve of the official opening of the Mobile World Congress in Barcelona, Spain, on Feb. 21, 2016.

A Complete Product Line

Multinational electronics giants like Samsung and Apple have developed complete product ranges covering smartphones, tablets, PCs and even TV devices. Xiaomi and Huawei have joined the ranks of Samsung and Apple, now offering a more complete range of products since entering the PC market.

“Smart devices are entering the era of a full-scenario experience,” explained Wan Biao, president of Huawei’s Consumer Service, Mobile Broadband and Household Product lines. “Traditional portable computers have lagged behind in the tide of intelligence, becoming an isolated island in the new era.”

According to Wan, consumers now need their smart devices to adapt to various real-life scenarios and achieve seamless shifts between life, work and entertainment, which today’s PCs are not capable of.

“Changes in work and lifestyles make business users’ needs for laptops alter accordingly,” Wan added. “With the increase of fragmented time, professional workers find their lives and work mingled together and have to frequently shift between different scenarios. They need mobile devices that can integrate work and entertainment efficiently and seamlessly, and boast fashionable designs, so as to satisfy their new business-oriented lifestyles in which they can produce or consume content anytime and anywhere.”

Wan pointed out that PCs have entered the 3.0 era, which means they have achieved interconnectivity with other intelligent devices, compared to the desktop computers of the 1.0 era and the notebook computers of the 2.0 era.

Notably, apart from its ultra-slim design that is comparable to that of smartphones, the Huawei Matebook uses the same charger as that of Huawei smartphones and in a non-Wi-Fi environment it can access the internet via the personal hotspot provided by Huawei smartphones in a single click. Moreover, users can easily transfer data between the Matebook and their Huawei smartphone. All of these features indicate that smartphone manufacturers hope to transform PCs to make them able to adapt to various types of environments.

Huawei had never set foot in the PC industry before. When asked whether Huawei had considered the great challenges it might face in the future, Wan replied: “Any industry can remain unchanged. In the era of the full scenario experience, smart device consumers require products made by companies with experience in multiple areas. This will definitely accelerate the mingling and integration of different industries.”

Because the PC market is shrinking, some wonder if there are still opportunities. Wan believes in the promising future of the market because portable computers should not miss the era of fully integrated smart devices.

“Smart devices are expanding from smartphones to multi-use devices, which requires the adaption of different devices and services and the collaboration of various usage scenarios, thus achieving a seamless, concerted experience,” Wan said.