IT and Business Insights for SMB Solution Providers

PC Sticks: Threat or Opportunity?

Do PC sticks represent a new market for system builders or yet another potential menace to their already slim margins? By James E. Gaskin
Reader ROI: 
There’s a way to leverage PC sticks into some real business projects.

Call them compute sticks like Intel does, or PC sticks like other vendors do, and you describe a complete Windows PC in the form factor of a large thumb drive or pack of gum. They plug into an HDMI port and turn any HDMI-enabled display into a full Windows PC with the addition of a keyboard and mouse. They’re inexpensive, but will they provide value to your customers? In many cases, yes.

“With a PC stick and $100 give or take, suddenly you have a new platform that runs Windows 10 and can turn any flat-screen TV into an effective computer," says Nathan Brockwood, research fellow at Insight 64. "That has the potential to spark growth in low-cost segments and get developers interested. For instance, look at digital signage. A PC stick, a $200 TV, and you’re done."

Since PC sticks support Wi-Fi, networking is simple. Adding a Bluetooth keyboard and mouse, or using the USB port, provides the input. Power can come from a USB port or wall wart (wall adapter power supply). "Even at $200 or $300, PCs are seen as expensive," adds Brockwood. "But $100 is almost a throwaway easy decision."

Of course, performance fans won’t fall for this. Even the new Intel Cherry Trail Atom processors in the latest unit are still Atom processors.

Ron Enderle, lead analyst at The Enderle Group, worries about their visibility. "Given that these exist at the low end of the market, no one is really motivated to fund a marketing campaign."

True, marketing often ignores the low end, leaving it to resellers to tell the product story. And there’s a good story in many cases, says Jeff Orr, research director at ABI Research. “Think of these as low-cost displays, or almost terminals," he says. "A library can put 20 PCs out that are good for basic access at a low cost. Where retailers can’t spend tens of thousands of dollars for big, proprietary digital signage systems on window and street-level displays, PC sticks can do it for hundreds. Service providers already offering turnkey solutions for retailers could include PC stick–powered displays as an option."

That said, Orr doesn’t see huge numbers in the future for PC sticks. "In 2016, you’ll see a volume of less than 1 million units globally. Maybe there will be 5 million in 2020, but that compares to 150 million tablets and another 150 million laptops, so this is a drop in the bucket."

PC Stick Limitations
Brockwood believes some of the marketing hype serves PC sticks poorly. "Some pitch the idea of carrying all your files on your PC stick while traveling, rather than carrying a laptop. That ignores a couple of big problems. You still need a mouse and keyboard as well as a screen. And lots of hotel room TVs are locked down, so you can’t even change the input selections."

At such a low price point and thin margins, can IT pros afford to sell PC sticks? Brockwood says yes. "Many resellers long ago gave up the idea of making lots of money on hardware and now focus on services. These could actually give them more room for adding value by lowering the cost of hardware. After all, resellers don’t make much on selling a $400 PC, either. And these won’t put much stress on your working capital."

Orr agrees there’s a way to leverage PC sticks into some real business projects. For instance, look for projects that aren’t primarily PCs. "These are good for places with existing displays, like conference rooms and schools. And saving several hundred dollars per unit on digital signage or kiosks with touchscreens to avoid keyboards could make it feasible to roll out hundreds or thousands of installations that aren’t affordable some other way."

Will you make money selling PC sticks? Probably not. But our analysts all agree that leveraging PC sticks can lead to new types of service revenues.

 

About the Author

James E. Gaskin's picture

JAMES E. GASKIN is a ChannelPro contributing editor and former reseller based in Dallas.

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