Market Guide for Enterprise Desktops and

Notebooks
Published: 11 April 2017 ID: G00303126

Analyst(s): Stephen Kleynhans, Federica Troni

The PC market is undergoing a restructuring that impacts everything, from

what devices look like to how they are used and who is supplying them.
This research offers guidance for I&O leaders responsible for endpoint
computing procurement to make effective PC purchasing decisions in 2017
and beyond.

Key Findings
■ The enterprise-grade vendor market is undergoing significant rationalization with the top-three
vendors (Dell, HP Inc. and Lenovo) now commanding nearly 60% of the worldwide professional
market, and most smaller vendors pulling back from broad enterprise capabilities and products
for large organizations.
■ Current market conditions (volatile exchange rates and component supply shortages, for
example) are impacting sourcing strategies, including qualification and number of suppliers,
pricing mechanisms and negotiation levers.
■ While overall PC components are commoditizing quickly, innovation in design and form factor is
accelerating in certain areas, especially around mobile hybrid two-in-one designs.

Recommendations
I&O leaders responsible for mobile and endpoint strategies:

■ Select one of the top three suppliers (Dell, HP Inc., Lenovo) for global enterprise PC
procurement unless you have special requirements (ruggedized, custom form factors, regional
support).
■ Determine whether a single-vendor strategy is still appropriate for your organization by
examining the level of engagement with vendor services, and the need for homogeneity for
support.
■ Evaluate a move to PC leasing or emerging PC as a service (PCaaS) offerings (if your
organization wants to shift toward an operating expenditure [opex] model), but only after fully
 determining the advantages and disadvantages they offer compared with traditional purchasing
and the potential impacts to corporate procurement, operations and finances.
■ Negotiate, with your vendor, a pricing methodology appropriate to your buying patterns and, in
multiyear agreements, establish a follow-on pricing method and handling of currency exchange
rate changes.

Market Definition
This Market Guide is written primarily for PC buyers in large enterprises with formal procurement
and operations processes. Many smaller organizations may find the information valuable as well,
although some of the discussion may not apply.

The enterprise PC market is a subset of the overall PC market targeted specifically at businesses,
governments and other organizations buying PCs in quantity to equip workers. It includes notebook
PCs and desktop PCs:

■ Notebook PCs — Product screen size is more than 11 inches in various form factors (including
two-in-ones, hybrids, detachable and convertible) and configurations. Mobile thin-client
terminals, Chromebooks and Windows-based slates are not discussed in this Market Guide,
although some of the same buying criteria and trends may apply.
■ Desktop PCs — Desk-based systems of various form factors (including towers, small form
factors and all-in-ones) and configurations. We do not address thin-client terminals or technical
workstations in this Market Guide. However, the primary providers of these classes of products
are typically similar, and many of the same criteria may apply when specifying and procuring
those devices.

For a more granular definition of the device types, see Note 1. This market does not include mobile
phones or smartphones, although some of the same concerns about enterprise service and support
do carry into those product markets as well.

All organizations, whether they support tens of thousands of users distributed globally or a few
hundred users in a single country, share fundamental requirements that pose challenges to PC
suppliers. Price is an important consideration, but not usually the only purchase criterion. The
purchase decision process considers factors such as the ability to provide appropriate services and
to support global deployments. Working with desktop and notebook vendors that can meet these
requirements helps reduce the total cost of PC ownership. Enterprise PC buyer requirements
beyond price include platform stability, global account management, support, service capabilities,
predictable delivery times and fast turnaround on warranty repairs. Consequently, PC manufacturers
that supply enterprises have made significant investments in their product and distribution
channels. Complicating the purchase decision is the accelerating rate of change that is hitting the
endpoint market in general and for PCs specifically. New form factors, new and sometimes
unproven technologies, and consumer-targeted features broaden the choices available.

Multinational enterprise PC buyers look for international vendors that can provide consistent
products and services across multiple regions, with predictable terms and conditions. Some PC

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 vendors are global, but don't provide coordinated enterprise account management capabilities
and/or explicit global stable platform programs. Although smaller vendors can also play effectively
in the enterprise PC market, the lack of global capabilities for delivery and/or support makes them
less suited to the larger enterprise, although a focus on specific vertical markets or features can
make them a good niche choice.

We continue to see instances where the attributes that qualify a PC as a business-class model —
including long image stability, long product life cycles and a three-year standard warranty — are
eroding as vendors attempt to maintain even meager profitability (see Figure 1). For detailed
discussion on the characteristics of enterprise-class vendors, products and services, see Appendix
1.

Figure 1. Value of Enterprise Vendors and Products

Source: Gartner (April 2017)

Market Direction
The PC market is mature, but that doesn't mean it is static. The market is undergoing a restructuring
that impacts everything from how PCs are used to who is building and selling the devices, and even
what the devices themselves look like. After decades of growth, the past six years have seen the PC
market stall and, since 2013, actually contract. In 2016, the worldwide PC market had a year-over-

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 year shipment decline of 6.1%. The rise of mobile devices in the form of smartphones and tablets
has not supplanted PCs, but has reduced overall strategic importance. PCs have become more
reliable over time and have longer replacement cycles (see "Recommended Life Spans for Mobile,
PC and Other Endpoint-Computing Devices"). Today, PCs are often considered a legacy technology
— one that is essential to performing many tasks, but not necessarily the first stop for new
applications and users.

New Form Factors and Capabilities Expand the Usage Models for the PC
As a response to changing market conditions, PC makers have branched out with new designs for
both notebooks and desktops. Enterprise buyers will find a range of new device types and options
available to match the needs of different types of work styles and users.

Notebooks
■ Notebooks have evolved toward much thinner and lighter designs. Even low-cost
notebooks today are under one-inch thick and weigh less than four pounds. Mid- to high-end
systems often weigh less than three pounds and are even thinner. At the same time, vendors
have not traded off battery life, and, indeed, current devices typically show at least 40% longer
battery life than systems from five years ago. This is due to a combination of processor
improvements, better drivers and new battery technology. Although we aren't quite at the point
where all users can feel comfortable leaving their power adapter in the office while they head
out for a day of external appointments, the majority no longer have to be concerned about
bringing them to internal meetings. The downside of this shift has been that many legacy
connectors and options (e.g., VGA connectors, Ethernet ports and optical drives) are no longer
supported natively in the device, and carrying dongles has become commonplace. We expect
this trend will continue as PCs shift toward the USB Type-C connector, but peripherals lag
behind.
■ Emergence of hybrid form factors. Since the release of Windows 8, PC OEMs have delivered
a select group of hybrid notebook devices that could switch operation between a traditional
clamshell laptop and a tablet. These have come in two primary models:
■ Convertible systems are thin and light notebooks that can be switched into slate/tablet
mode via a flexible hinge that hides the keyboard and presents the screen faceup.
■ Detachable systems can be transformed from a notebook clamshell form factor into a slate
tablet.

In 2016, as companies prepared for Windows 10 deployments, two-in-one devices gained

significant traction. The level of refinement with these devices makes the latest round of
systems more acceptable to a broader range of users. Bolstering this trend in 2017, each of the
major vendors has introduced a second-generation detachable device that emulates Microsoft's
successful Surface Pro 4.
■ Improved and expanded display options. Roughly a decade ago, notebooks and external
monitors both shifted toward a widescreen 16:9 aspect ratio. Recently, we have noted a shift
toward slightly squarer screens again, most notably 16:10 and 3:2 aspect ratios. At the same

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 time, higher-end devices are moving toward much higher resolutions, including 4K displays, all
enabled by better UI scaling in Windows 10. The cost of adding touch to a display has also
significantly declined, and most buyers planning for Windows 10 deployments should opt for
touch displays on traditional clamshell notebooks.
■ Changing communications options. All notebooks support wireless Wi-Fi connectivity. Wired
Ethernet is disappearing, instead supported by docks or USB adapters. LTE is an option on
many corporate notebooks, although few customers actually enable the service.
■ Embedded microphones and web cameras to enable conferencing. Notebook computers
are increasingly being used as communication devices for desktop conferencing using tools like
Skype for Business or Cisco WebEx. This has driven the inclusion of better noise-cancelling
array microphones and HD web cameras.
■ USB Type-C and WiGig are enabling new capabilities. High-speed connectivity options are
being introduced in both wired and wireless formats. USB Type-C provides an all-purpose
connector coupled with a significant performance bump. USB Type-C is enabling the creation of
universal docking stations that support multiple monitors, networking, peripherals and even
charging, across a single compact connector. While initial units suffered from some
unpredictable performance and features, these issues have now been resolved with new
devices. The result is that proprietary docking stations are being phased out and, with them, the
associated vendor and model lock-in. While pricing for these new docking stations is initially
higher than some of the older models, we expect competition will drive this down rapidly. It
should be noted that while these new docking stations provide all the functionality and more of
the older proprietary units, they do lack the physical security locking mechanisms. Those
requiring such a lock will still need to implement another method such as a Kensington lock
cable. Furthermore, USB Type-C connectors are eliminating all other connectors on end-user
devices and will change the way IT procurement specifies PCs. On the wireless front, WiGig, a
relatively new addition to the Wi-Fi standard, provides a high-speed, short-distance networking
technology at 60GHz using standard Wi-Fi protocols, but supporting much higher speed (up to
7 Gbps) connections. The underlying specification, 802.11ad, is backward-compatible with
existing Wi-Fi standards. The ability of WiGig to support connectivity with displays creates the
opportunity for a wireless universal docking station, although it doesn't provide power. This
capability is proving useful in conference rooms or huddle environments. In 2H17, as part of the
Intel Kaby Lake product family, we expect wireless power options to emerge that could enable
full-function wireless docking, although they are unlikely to become mainstream until 2018 at
the earliest.

Desktops
■ Smaller form factors replace full-size mini towers. Desktop form factors have been getting
smaller on average each year for the past decade. Small form factor desktops now constitute
the majority of enterprise purchases, and tiny ultra-small form factors are increasingly common.
These micro form factors, which are similar in size to traditional thin-client devices and can
easily be hidden behind a monitor, consume very little power and generate almost no noise or
heat. They can be easily shipped and installed, potentially even by the user, and they no longer

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 command a significant price premium when compared with large mini-tower devices. PC
makers are also packaging them with specific hardware extensions and software for use as
turnkey devices in conference rooms and other collaborative settings. Even smaller than the
micro form factor are the so-called "compute stick" PCs, which are full PCs packaged into a
USB or HDMI dongle. These are being used to power digital signage and kiosks, but are not yet
part of our mainstream coverage.
■ Less expandability. A result of the shift toward smaller form factors is a move away from
internal expandability and customization. While desktops once boasted about the number of
slots (for expansion cards) and bays (for storage devices) they had, current systems typically
offer little in the way of internal expandability, opting for the bare minimum and leveraging USB
for adding components or network-based services for expansion. This in turn is creating a
mentality where devices are replaced rather than repaired in the field. Broken devices are then
refurbished for redeployment or resale. The result is reduced downtime for the user and less
need for technical expertise in the field.
■ Growth in all-in-ones. Another alternative desktop form factor gaining traction is the all-in-one
desktop, where the desktop is built into the screen. These are increasingly used in public areas,
digital signage, kiosks and space-constrained environments. The biggest advantages are cable
management and easier setup.
■ Better industrial design. Interesting variations, with touchscreens, articulating mounts and
reclining designs, are making the systems fit in a broad range of environments and work
patterns. Microsoft has released the Surface Studio, a desktop all-in-one system that shifts
from vertical to horizontal operation to enable more natural interaction within creative
applications. Dell has also shown a horizontal display called Canvas for use by creative
professionals. Another area of innovation has been meeting room technology, where large
touchscreens with integrated conferencing and content-sharing capabilities are emerging. Again
Microsoft has led the charge with the Surface Hub, but competitive offerings are coming to
market from Dell, Cisco and Google.
■ Wi-Fi networking, even in desktops. Long considered a technology for only mobile devices,
we now see more organizations moving desktop systems to Wi-Fi as well. This can dramatically
simplify moves/adds/changes for desktops and increase the organization's agility.

Life Cycles Are Extending as Enterprises Hold Machines for Longer

While there is some stability returning to the market, it remains a challenging space for all vendors.

The enterprise PC market has fared somewhat better than the PC market at large. This is due in
large part to the enormous investment that organizations have made in applications and processes
over the past two decades, which has driven continued investment in new OSs and PCs. However,
the PC also remains important to enterprises because it is a broadly flexible device that can be
applied to a wide range of user types, applications and work styles.

PC life cycles were traditionally timed to match those of key pieces of software, including the
Windows OS. These were typically updated every three years and this was mirrored in enterprise PC
replacement programs. Since 2010, there has been a gradual lengthening of the life cycles, and

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 today we see four years as common for many notebook users (although three years remains the
standard for true road warriors) and five years for desktop users (see "Recommended Life Spans for
Mobile, PC and Other Endpoint-Computing Devices").

During 2016, our enterprise customers expressed a new interest in leasing PCs rather than
purchasing them. The reasons for the upsurge in interest are complex, but revolve around a general
desire by many CIOs to move from capital expenditure (capex) to operating expenditure (opex), and
is part of the broader trends toward cloud services, outsourcing, and a general shift to an "as a
service" model. As enterprise IT groups continue to struggle with continued pressure to lower the
costs of their PC fleet, many have extended PC life cycles to the point where reliability is becoming
a concern. Leasing enables IT organizations to return to a three-year life cycle without having to
budget for a massive capital outlay every few years.

Nevertheless, PC leasing is not without issues. For large organizations, leasing can be more
expensive on a monthly basis than just borrowing money. Leasing for more than a three-year term is
almost always a poor financial deal; but for many companies, a life cycle of four or five years,
especially for desktop PCs, is more than adequate. Leasing companies tend to have a number of
strict conditions they impose on customers. This can include restrictions on how warranty is
provided, when and how machines are to be returned, and what happens in the event of breakage
or loss. All of these items can be points of negotiation, and many leasing companies can be quite
flexible on some or all of them when pressed. Often, managing the fine points of a lease can be a
considerable effort and expense for organizations, and requires a mature approach to asset
management.

Another emerging alternative is PC as a service. PCaaS offerings are being designed to alleviate the
primary concerns that customers have with PC leasing by wrapping life cycle services around the
delivery of the PCs and assuming more of the operational risk from the customer. The initial market
offerings are still immature, with pricing and conditions being quite fluid as providers work to
understand how to best make these programs work. While these programs are currently in the
piloting phase, we expect that all the major PC OEMs and large enterprise resellers will offer some
sort of PCaaS option by 2018.

One issue that some of the initial PCaaS customers have had is they assume an "as a service"
offering provides the flexibility to scale up and down as needs change. While these programs offer
some limited flexibility to add, or more importantly remove, machines from the deal, they are not
rental offerings, and that confuses and disappoints some customers.

Going forward, we expect to see some increase in both leasing and PCaaS offerings, although we
expect that together they will never compose more than 50% of the enterprise market. Changes
coming to tax accounting in the next couple of years in the U.S. could make the value of PC leasing
much less attractive from a tax perspective.

Endpoint Security Becomes a Greater Focus in Hardware Procurement

PCs remain vulnerable to customized attacks that sneak past firewalls and antivirus scanners.
Botnets and ransomware can impact even well-managed organizations. Windows 10 brings new

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 security initiatives, based on a secure hypervisor partition that isolates critical security functions
from the OS. Microsoft is using this technology to harden the PC environment, based on behavioral
scanning and cloud management and analysis. Although early in the life cycle, these security
techniques, which have dependencies on new hardware technologies, should be under
consideration as part of a Windows 10 deployment strategy. Enterprise PC vendors are also
focusing on securing the environment below the PC — that is, the firmware that controls the
hardware. More exploits are targeting firmware, requiring PC vendors to use encryption or
certificates for validation and updating processes. Anti-tampering techniques for system firmware
should be a requirement for enterprise PCs by 2018.

Consumerization of Devices Is Driving BYOD and CYOD Initiatives

Although enterprise PCs are well-engineered and highly reliable systems, they have long suffered
from lackluster industrial design, particularly when compared to consumer equivalents. As noted
above, the situation is improving as PC makers put a greater focus on adding consumer-like
features (new finishes, better sound, improved graphics) to enterprise devices. Still, as users
become increasingly familiar with technology options, they are driving an interest in a broader range
of PC options, often pointing to the attractive thin and light consumer notebooks they have
purchased for themselves, and demanding that IT provide them some level of support. Furthermore,
some users desire a particular device such as an Apple MacBook or Microsoft Surface Pro, which
may not be provided by the enterprise. Given that bring your own device (BYOD) with PCs is still
very difficult and costly to implement, enterprises are expanding the range of company-provided
options through choose your own device (CYOD) programs in an attempt to assuage user demands
while maintaining a predictable and consistent set of endpoint hardware.

Enterprise-class PCs, notebooks and hybrids remain the best options to meet business and
technology needs. Although consumer-grade products may offer the same (or even superior)
performance features as enterprise products for a lower price, the savings come with significant
trade-offs.

The shortcomings of consumer-grade products in the enterprise include:

■ Limited/no life cycle services

■ No global product or service availability
■ Limited/no manageability or security features
■ Short window of parts availability
■ Component changes that do not change model number
■ Shorter warranty
■ Problems handled through third parties or customer call centers with limited/no problem
escalation process
■ Potentially high failure rates due to:
■ Lower levels of testing

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 ■ Lower-grade components
■ Less durable casing materials

In addition to providing many, if not all, of the above elements, enterprise-class product attributes
also include:

■ Platform stability
■ System image consistency
■ System image and peripherals working across product family
■ Eighteen-month product life cycle: (for example, the Intel Stable Image Platform Program [SIPP])
provides 12 months of mainstream availability plus six months for transition to the next model
■ Peripherals spanning two product generations

Fierce Competition in a Shrinking Market Will Challenge All PC Vendors

Since the end of the Windows 7-driven PC refresh cycle in 2014, the enterprise PC market has been
flat. While we are seeing some modest improvement associated with Windows 10, it will remain a
challenging market for PC vendors and, as a result, we have seen fierce competition between the
players. During 2017, PC vendors continue to face tough financial challenges, and we expect further
consolidation is possible. As it stands, the top-three vendors (Lenovo, HP Inc. and Dell) have
increased their combined worldwide market share from 47% in 2015 to 58.4% in 2016, and are
even stronger in the enterprise market. While smaller vendors may choose to consolidate, merge or
shift market focus, even the large vendors have performed some restructuring of operations as a
response to the challenging market. At this point, enterprise buyers should only consider the top-
three suppliers (Dell, HP Inc., Lenovo) for global enterprise PC procurement, unless there are special
requirements (for example, ruggedized, special form factors, regional support, unique application
needs).

Although there continues to be fierce competition across the market, PC prices seem to have
stabilized, as PC makers have struggled to maintain the discount levels offered in previous years.
The rise of the U.S. dollar and, more recently, Brexit have forced PC prices up by as much as 25%
in major buying regions, including Europe, Japan, the U.K., Canada and Australia. Most of the direct
impact of these changes began to hit enterprise customers in 2015 and early 2016, and will
continue through 2017. In 2017, PC prices are fluctuating due to shortages of some key
components.

During 2H16, the supply of both DRAM (system memory) and NAND (for solid-state drive [SSD]
storage) fell short of demand, resulting in significant cost increases for PC makers. On the memory
side, this was mostly the result of an increased demand as more devices shipped with more
memory. (Professional PCs in mature economies commonly ship with 8GB and 16GB of RAM, and
many phones and tablets are moving to 4GB and beyond.) Similarly, the rapid switch from hard-disk
drive (HDD) to SSD on notebook computers has resulted in some supply issues. As a result, in late
2016 we have seen price adjustments being introduced by PC vendors, which, in some cases, have

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 resulted in increases of $25 to $50 per PC. We expect that the effects of this change will continue
through 1H17, and only begin to ease up in 2H17 as the supply situation improves.

Single-Vendor Strategies Continue to Dominate, but Homogeneity Is Weakening as

the Channel Regains Some Strength
Most enterprise customers have moved to a single-supplier strategy for purchasing their PCs
(although we recommend qualifying a second supplier as a backup). As such, it is important to
select a vendor with a breadth of products, supported by a strong channel network. Indeed, having
a strong reseller channel has become more critical in recent years, although we still put a high value
on direct capabilities as well.

This rise of the reseller is enabling some enterprises to be a little more open to bringing in products
from multiple vendors to meet specific needs. Sourcing through a reseller channel offers
organizations some insulation from the specific processes of each vendor, reducing the overheads
and complexity of dealing with multiple vendors.

Representative Vendors
The vendors listed in this Market Guide do not imply an exhaustive list. This section is intended to
provide more understanding of the market and its offerings.

While there are a large number of PC vendors covering the consumer market, far fewer make the
investments necessary to specifically target the enterprise PC market (see Table 1). Each vendor
makes decisions about the types of industries it covers, the types of products it focuses on and the
regions it covers. While all of the vendors have developed a reseller channel to provide indirect sales
and support, some also focus heavily on direct interaction with customers, particularly larger
enterprises, to customize prices, terms and conditions for purchasing deals.

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 Table 1. Enterprise PC Vendors

Business PC Sales Market Shares

Company Worldwide Worldwide Year-Over- North Western Latin Asia/

(2016) (2015) Year America Europe America Pacific
Change and
China

Lenovo 21.2% 20.2% 0.93% 16.5% 18.5% 15.4% 28.1%

HP Inc. 20.9% 19.5% 1.34% 20.9% 29.2% 20.3% 13.2%

Dell 16.4% 15.9% 0..48% 27.3% 15.3% 16.4% 10.9%

Apple 5.1% 5.2% -0.15% 11.1% 3.3% 2.7% 3.7%

Asus 4.9% 4.9% 0.05% 1.0% 7.5% 4.9% 5.4%

Acer 4.4% 5.1% -0.71% 2.9% 4.6% 6.8% 5.0%

Fujitsu 2.1% 2.1% 0.00% 0.2% 4.9% 2.1% 2.6%

Microsoft 1.8% 1.2% 0.53% 3.9% 2.6% 0.4% 0.7%

Toshiba 0.8% 1.8% -1.01% 0.3% 0.8% 0.0% 1.3%

Missing percentages can be attributed to other regions not included in this table. Percentage discrepancies can be attributed to
rounding.

Source: Gartner (April 2017)

Acer
Headquarters: New Taipei City, Taiwan

Worldwide business PC market share: 2016 (ranking): 4.4% (6)

Channel focus: Indirect sales capability

Strengths: Aggressive pricing, leading position in Chromebooks

Analysis: Acer supplies the small or midsize business (SMB) market and smaller government
projects. Acer lacks a strong foothold in the commercial market, but has some larger-scale wins in
government and education, particularly with Chromebooks in the U.S. K-12 market. The vendor has
pursued a strategy of compelling price points for mainstream hardware configurations. Acer is a
channel-centric company, utilizing distributors, dealers and retail partners for its sales to end users.

Product lines include:

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 ■ Enterprise desktops, including the Veriton lines
■ Enterprise notebooks, including the Aspire S and TravelMate lines
■ Crossovers (bridging consumer and enterprise), including the Aspire Switch, Aspire Switch
Alpha, Swift line and Chromebook 14

Apple
Headquarters: Cupertino, California

Worldwide business PC market share: 2016 (ranking): 5.1% (4)

Channel focus: Direct and indirect sales capabilities

Strengths: Excels at product design and innovation

Analysis: While Macs have long done well in specific verticals such as media, design and
publishing, in recent years, the vendor has also made slow, steady inroads into enterprises. For
organizations that have a strong dependence on Windows applications, the decision to adopt Macs
can be a complex undertaking, as they are not directly interchangeable with PCs from other
vendors. Apple has introduced a business support solution through its AppleCare for Enterprise,
offered in partnership with IBM Global Business Services. Service includes the ability to deliver
break/fix services to enterprises for Apple iOS devices and Macs, as well as AppleCare OS Support.
Businesses without an IBM relationship in place rely on Apple's in-store business associates and
Genius Bar, or join its Joint Venture program that supports a limited number of directly purchased
devices.

Product lines include:

■ Enterprise desktops, including the Mac Pro line

■ Enterprise notebooks, including the MacBook, MacBook Air and MacBook Pro lines
■ Crossover products include the iPad Pro

Asus
Headquarters: Taipei, Taiwan

Worldwide business PC market share: 2016 (ranking): 4.9% (5)

Channel focus: Indirect sales capability

Strength: Product design

Analysis: Asus is recognized as a solid player in the consumer PC market, known for its often
unique and innovative product designs. It is increasingly focusing on attractive high-end mobile
products that enable it to protect its margins. However, Asus is not generally seen as a strong
enterprise supplier and is not focusing on selling to midsize or large enterprises outside of Greater

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 China. It has exhibited a good understanding of fundamental business needs, and has good
capability to deal with small, midsize and even some larger buyers in key regions. The vendor has
good, but basic, mechanics for dealing with regional accounts and has done well with education in
North America and Europe. Enterprise operations and sales do not appear to be a major focus, and
global enterprises are likely to see inconsistencies in products and service levels across regions.

Product lines include:

■ Enterprise desktops, including the AsusPro A, BM, BP, D, E, and VivoMini

■ Enterprise notebooks, including the AsusPro Essential and Advanced, and ZenBook lines, Asus
Transformer Book line

Dell
Headquarters: Round Rock, Texas, U.S.

Worldwide business PC market share: 2016 (ranking): 16.4% (3)

Channel focus: Direct and indirect sales capabilities

Strengths: Strong global presence and broad PC portfolio; comprehensive end-to-end services
capabilities, including global support and deployment (ProSupport and ProDeploy) offerings

Analysis: Dell has strong global presence and account management capabilities. Its product design
and competitiveness have improved over the past few years, and the vendor has worked hard to
extend its relationships with resellers and the PC delivery channel as a whole. In EMEA, 40% of
Dell's PC business is done through the channel.

Dell is a privately controlled company (following the 2013 leveraged buyout). It recently merged with
EMC to form Dell Technologies. Initial concerns that this would detract from its focus on the
enterprise PC market have so far proven unfounded, and Dell continues to perform well despite the
difficult market conditions. Dell provides a complete set of services for consulting, deployment,
support and training, along with software tools for security and management. This is coupled with
data center and cloud capabilities to solve business problems where PCs become an entry point.

Product lines include:

■ Enterprise desktops, including the OptiPlex line

■ Enterprise notebooks, including the Latitude line
■ Small businesses are served by the Vostro line
■ Crossovers, including the XPS and Inspiron lines

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 Fujitsu
Headquarters: Minato, Tokyo, Japan

Worldwide business PC market share: 2016 (ranking): 2.1% (7)

Channel focus: Direct and indirect sales capabilities

Strengths: Long history of producing high-quality notebooks and tablets, along with other
enterprise-class desktops and devices; has a wide and complete product and service portfolio

Analysis: Fujitsu offers a competitive range of high-quality, enterprise-class products with global
availability, including mobile and deskbound devices combined with integration and customization
services. The vendor has a strong reputation for two-in-one hybrid products designed for enterprise
needs, and has focused on enhanced security including biometrics. However, it is challenged to
establish its presence globally, and to gain market presence outside of Europe and Japan. Fujitsu
has announced it is exploring a partnership with Lenovo around R&D, logistics and manufacturing,
and continues to investigate further collaboration opportunities with Lenovo.

Fujitsu will be most attractive to enterprises looking to leverage its managed service capabilities, or
those in its primary European and Japanese markets.

Product lines include:

■ Enterprise desktops, including the Esprimo, Celsius

■ Enterprise notebooks, including the Lifebook, Celsius, Stylistic (a two-in-one detachable)

HP Inc.
Headquarters: Palo Alto, California

Worldwide business PC market share: 2016 (ranking): 20.9% (2)

Channel focus: Direct and indirect sales capabilities

Strengths: Strong global presence and broad PC portfolio

Analysis: HP Inc. offers a blend of direct sales capabilities for large customers and a strong global
reseller channel that services SMBs, the midmarket and a percentage of large-enterprise customers
worldwide. The PC product line is extremely broad in both the enterprise and consumer markets.
The vendor's PC industrial design has improved over the past years, with increasing attention to
high-end, higher-margin mobile endpoint products. In 2015, HP Inc. separated from Hewlett
Packard Enterprise to form a separate company focused on PCs and printers. Through the
transition, HP Inc. improved its focus on the business PC market. In 2016, HP Inc. launched a PC-
as-a-service offering that combines endpoint devices, financing and a range of related services on a
per-user per-month basis.

Page 14 of 21 Gartner, Inc. | G00303126

 Product lines include:

■ Enterprise desktops, including the EliteDesk, EliteOne and ProDesk lines

■ Enterprise notebooks, including the EliteBook and ProBook lines
■ Crossovers, including the Elite x2, Envy and Spectre Pro lines

Lenovo
Headquarters: Beijing, China and Morrisville, North Carolina

Worldwide business PC market share: 2016 (ranking): 21.2% (1)

Channel focus: Direct and indirect sales capabilities

Strengths: Strong global presence and broad PC portfolio; strong reputation with ThinkPad and
ThinkCentre product families

Analysis: Lenovo is the world's largest PC vendor in terms of unit sales since 2013, and has grown
organically and through acquisitions. It is a strong provider of enterprise-class PCs worldwide,
employing a combination of direct and indirect sales capabilities. Lenovo is continuing to grow its
partner programs as a means of acquiring new customers in targeted segments. In some markets,
Lenovo is 100% channel-based. Unlike many other PC suppliers, Lenovo's strategy is to focus its
hardware business across multiple product lines and markets for economies of scale. Lenovo leads
the charge in the hybrid and ultramobile premium market, along with its established PC presence
within the enterprise market. The vendor is still using IBM's original ThinkPad approach of creating
innovative flagship products (such as the X1 and Yoga) to maintain brand awareness.

Product lines include:

■ Enterprise desktops, including the ThinkCentre line

■ Enterprise notebooks, including the ThinkPad line
■ Crossovers, including the Thinkpad Yoga

Microsoft
Headquarters: Redmond, Washington

Worldwide business PC market share: (ranking) 2016: 1.8% (8)

Channel focus: Indirect — agreements to resell hardware through other PC vendors

Strength: Innovative high-end design

Analysis: Microsoft has historically designed hardware primarily to support its end-user computing
vision and to pioneer new device categories. In the PC space, Microsoft offers a selection of high-

Gartner, Inc. | G00303126 Page 15 of 21

 end detachable two-in-one hybrid devices, and all-in-one desktops under the Surface brand. Even
though similar two-in-one products are now available from other PC vendors, Surface continues to
gather strong interest from enterprise buyers. Although the Surface product range has expanded in
the last year, it is a premium brand and unlikely to fulfill the requirements of all user types.
Organizations considering Surface would have to be willing to deal with buying equipment from at
least two vendors. Microsoft doesn't necessarily commit to the same life cycle and accessory
longevity as that of classic business-class PC products. Geographical availability and direct service
capabilities may be limited, but partnerships with large-enterprise resellers and integrators, as well
as deals with Dell and HP Inc., mitigate those issues. Microsoft has also introduced a "Surface as a
Service" offering for enterprise purchasing that combines financing with basic life cycle services.

Product lines include:

■ Surface Pro, Surface Book, Surface Studio, Surface Hub

Toshiba
Headquarters: Minato, Tokyo, Japan

Worldwide business PC market share: 2016 (ranking): 0.8% (9)

Channel focus: Direct and indirect sales capabilities

Strength: Strong notebook offerings

Analysis: Toshiba provides a range of well-designed and -engineered notebooks targeted at

business, along with a broad selection of consumer and prosumer systems. It provides
configuration services at its company-owned manufacturing site, and relies on a network of resellers
to provide enterprise support and services.

Toshiba offers global pricing and has a dedicated global sales force (for large multinational
accounts), and it has also added service capabilities. As a result of market and financial pressures,
in 2016 Toshiba restructured its PC business and left the consumer market for a greater focus on
business customers. At this time, there are significant questions about its continued commitment to
the enterprise PC business in many regions. The vendor will be of interest to customers looking for
only a notebook supplier, or to customers with a dual-supplier strategy in place, particularly in one
of Toshiba's strong geographies.

Product lines include:

■ Enterprise notebooks, including the Tecra, Portégé lines

Page 16 of 21 Gartner, Inc. | G00303126

 Market Recommendations
While the era of the PC as the sole device for enterprise users is over, PCs still form the backbone
of most corporate end-user deployments. As such, care must be taken to select the appropriate
systems from enterprise-class suppliers:

■ Purchase from vendors with enterprise-focused sales and support, but clearly determine the
most relevant attributes of a PC supplier for your organization, including product quality,
support, services, account management and fulfillment capabilities. Each enterprise will place a
different value on aspects of the buying process and, as such, will weigh the attributes of each
supplier and product accordingly. Enterprises must think about the relevance of each attribute
in their specific environment.
■ Determine whether a single-vendor strategy is still appropriate for your organization. While
single-vendor procurement relationships are easier to manage, they may not meet all needs on
a global basis, particularly as the PC environment matures and the demand for varied form
factors grows. Carefully evaluate whether any single vendor can still meet all your corporate
needs. Determine what role resellers may play in your buying process.
■ Agree on a pricing methodology appropriate to your buying patterns and, in multiyear
agreements, establish a follow-on pricing method. If you are establishing an ongoing
procurement relationship, rather than fulfilling a one-time purchase, it is important to establish a
process with the PC vendor for ensuring that agreed-on pricing is consistently applied as
products evolve and the relationship progresses. This could include establishing guaranteed
discount percentages versus list pricing, or locking in maximum annual product price increases
linked to external factors such as the consumer price index (CPI). It is critical to monitor pricing
at least quarterly and to review model configurations on a regular basis.
■ Focus procurement on enterprise-class devices, and if consumer-grade devices are selected for
specific needs, ensure that they meet basic standards for security and manageability (Trusted
Platform Module [TPM]). It is also critical to continually monitor PC form factor trends and to
experiment with changes as part of a digital workplace initiative.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

"Recommended Configurations for Notebooks and Desktop PCs, 2016"

"The Seven Secrets of End-User Computing Deployment Success"

"A Dynamic End-User Computing Environment Demands a Zero-Capex Approach"

"Toolkit: Template RFP for PC Hardware Acquisition"

Gartner, Inc. | G00303126 Page 17 of 21

 Note 1 High-Level Definitions and Segmentation
The device definition used in this research is aimed at endpoint procurement professionals, and,
although it relates to the more rigorous and detailed "Market Definitions and Methodology: PCs,
Ultramobiles and Mobile Phones," it does not completely correspond. Below, we reproduce the
high-level definitions of desk-based devices, notebooks and ultramobiles, as per that Market
Definition research.

Desk-Based Devices

The desk-based PC is typically immobile and intended for use in a single location. PCs are either
traditional, with a separately purchased monitor and input devices, or all-in-one machines. With
high-speed data connectivity, desk-based PCs are optimized for traditional data processing tasks,
personal or corporate use, or media consumption or manipulation. These devices, with high levels
of processing power, have access to a wealth of applications, software and content for mainstream
OSs. This also includes certified workstations for high-end desk-based computing.

Stick PCs, while portable, require a large, typically nonmovable TV or monitor, which is included
with desktops. Moreover, there is a certain group of devices emerging in this category that is
partially mobile, but conceptualized for stationary usage. Such a device has a tablet form factor and
a display of 17.75 inches or more. It is an all-in-one device that falls into our desk-based category.

Notebooks

Notebooks largely replicate the experience and usage patterns of a desk-based PC, but with
reduced physical characteristics, such as screen size and a clamshell form factor, to enable
portability. Such trade-offs have minimal impact on performance. Notebooks are able to run the
same full range of software and applications as desk-based PCs, and have access to the same
content. Notebooks will be in a clamshell or convertible form factor, and are more comfortable to
use when placed on a fixed surface, rather than on the move.

For some users, notebooks can be viewed as desk-based PC replacements. This also includes
certified workstations for high-end mobile computing. (A device with a clamshell or hybrid form
factor and a display of 14 inches or more falls into our notebook category, along with units weighing
greater than 1.59 kilograms [kg].)

Ultramobiles

We identify three types of ultramobiles: premium, basic and utility. Each of these is further split by
OS and form factor. We identify three form factors:

■ Tablet — completely open, slate-style design with touchscreen, shipped without a dock or
keyboard
■ Hybrid — convertible, detachable and fold-over designs
■ Clamshell — traditional laptop design with a display folding onto a hinged fixed keyboard

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 Display size for all these form factors is typically between 7 inches and 13.9 inches, with a weight
typically under 1.6 kg.

Note 2 Characteristics of Enterprise Products, Vendors and Services

Enterprise PC products' typical characteristics include:

■ Professional build quality (fit and finishes that accommodate a corporate life cycle and do not
show excessive wear); typically reflected by longer warranties and better durability
■ Industrial design suited to business use (includes ergonomics)
■ Long-term availability of models (15- to 18-month availability, formal stability programs)
■ Longer warranties — three years is typical, with uplifts and extensions available
■ Consistent components (includes accessories)
■ Hardware-enabled management, including out-of-band management and remote firmware tools
■ Hardware-assisted security, such as virtualization extensions in processors, and trusted
platform modules
■ Balanced features that provide enterprise value, such as docking stations, connectors, etc.

Enterprise PC vendor capabilities typically include:

■ Enterprise account management (global account management capabilities and pricing)

■ Business procurement processes and services — customized web catalog, self-service, e-
procurement portals, reporting and asset management capabilities
■ Visible product roadmaps
■ Enterprise sales channels (resellers rather than retailers, direct interaction)
■ Contractual versus transactional pricing mechanism for ongoing purchasing. This might include
a discount off web-list-pricing model, or a mechanism for adjusting prices due to changing
conditions at agreed-upon intervals
■ Global coordination and programs to enable consistent international delivery of products and
services (for some customers)
■ Programs for currency fluctuations and local taxation issues

Life cycle services typically include:

■ Image creation
■ Image preloading
■ Asset tagging

Gartner, Inc. | G00303126 Page 19 of 21

 ■ Deployment and setup
■ Global coordination
■ Decommissioning and disposal
■ Warehousing

Technical and project services include:

■ Technical support (suitable for enterprise needs)

■ Automated update services (for new BIOS, drivers, etc.)
■ Professional services
■ App testing
■ OS migrations
■ Project management

Self-maintainer programs typically include:

■ Technician training and certification

■ Spare management programs

Page 20 of 21 Gartner, Inc. | G00303126

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