The Shrinking Role of the PC
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
We all know that most companies in the PC industry make a lot of money, but are PCs the main source of revenue? The answer may surprise you. A lot of companies seem to be focusing on a more broad scale of products and services. Most of us know that Apple's (NASDAQ: AAPL) main source of revenue actually comes from the iPhone, and not their PC's. In fact, only an estimated 18% of Apple's revenue comes from PCs. So I ask the question: How large of a role do PCs actually play in companies who were traditionally known as a PC company?
Apple seems to be in a category of its own. They market a huge variety of products, and are known for all of them. We all know about iPhones, iPads, iPods, PCs, iTunes, AppleTVs, etc., but the other traditional PC companies derive the majority of their revenue from services or software - not PCs.
Hewlett Packard (NYSE: HPQ) may not be known exclusively for their PC sales, but most people know them as a PC company. 20% of HP's revenue is derived from printers and ink cartridges. PCs on the other hand, account for 29% of revenue. Printers are ink cartridges are, however, a far more profitable to HP than PC's. Surprisingly HP's services have caught up to PC's revenue which is now at 29%.
When researching Dell (NASDAQ: DELL), I realized they are still more of a PC company than anything else, but is that changing? When I think of Dell, I don't normally think of much else. A significant portion of Dell's revenue comes from different avenues. Services represent 15%, while servers and networking represents another 16%. Dell's desktops only represent 23%, and Notebooks and Netbooks represent a significant portion at 26%. So, yes, their PC's represent about 49% of their revenue, but Dell is starting to head in a new direction.
The interesting part about Dell is how much the numbers have changed in recent years. In 2012 the revenue generated by services has increased by more than 6% from 2008. The same is true for Dell's servers and networking. There has been more than a 3% rise in revenue from servers and networking in the last four years. This is almost 10% more revenue generated from services, servers, and networking than just four short years ago.
Microsoft (NASDAQ: MSFT), has taken a slightly different approach than everyone else. Microsoft focuses more on building programs for PC's than actual PC's. As a lot of people would suspect, Microsoft Office brings in more revenue than any other aspect of their business, at 31%. For all the hype that Xbox receives among some people, it only generates about 14% of Microsoft's revenue.
The Bottom Line...
While PC's play an important role in all of these companies, their role is less important today than ever before. It seems that companies are spreading themselves out into a variety of different areas in order to optimize their profits. iPhones, services, and Microsoft Office are all starting to provide larger percentages of revenue than anything else – and they were all traditionally based around the PC. Oh how times have changed.
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