Throwing In the Towel: The PC Biz Is in a Box

The report from Bear Stearns that circulated on the Street on Friday brought more gloom and doom to the PC hardware and software front. Added to retail's experience in the Christmas quarter, it looks bad for the PC industry ... and bad looking ahead, not just looking back.

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Let me tell you about some figures I've seen lately on computer retail sales. They cover October, November and December ... and they are really grim. This is that fat quarter, of course, where consumer purchases of personal computers, leading up to Christmas Day, have exploded for a decade and a half. It is when many computer companies focused on retail make as much as half their annual profit.

In October, PC retail sales were not only not up in double digits; they were -- heresy! -- down 16% year over year. In November, they were down 17%. And for the first three weeks of December, they were down more than 20% -- all year over year. That's catastrophic for PC makers. Retail has been driving the business for six years now, and for it to sag this sharply forecasts big trouble ahead.

Worse, even the rumored post-Christmas round of price cuts, to move all that remaining inventory, are unlikely to help much. There is limited price elasticity in consumer PC sales -- and PCs are already cheaper than ever.

People didn't buy PCs because:

• More than half of U.S. homes already have one or more.

• There is nothing new in the market that makes those existing machines obsolete, ready for replacement.

• People without PCs today in many cases have no interest in them.

• Many PC users' attention has moved on to other devices, such as personal digital assistants.

• There was no "software imperative" to move up to a new PC -- and there's unlikely to be any in the next year.

Pow, zowie, bang. Don't look for much help for PC makers from retail in 2001.

On the commercial PC side, companies are holding onto their PCs much longer, buying more midrange and lower machines when they do buy, focusing IT spending on servers and storage and faster access, and reducing IT spending overall.

So don't look for much help there, either.

The boxmakers can try hard to find new revenue -- such as Gateway's (GTW:NYSE - news - boards) much heralded-push for "beyond the box" revenue from services. But I have come around to the view that no PC maker is safe to hold today. And I don't expect to see that change for some time to come.

The market has moved on. Beware.

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Every year at Christmas time, I've asked RealMoney.com and TheStreet.com readers to step back, think about how well they've done over the year, and find a way to give back to their communities.

This year, when so many of us have been brutalized in the market, the idea of giving back some of your "gains" may seem a stretch. But I believe you give back, in the broadest sense, every year, not as a measure of how much money you made the previous year.

Anyone reading these words is almost certainly among those who have been treated well by chance, time and our society ... and so yes, it's that time again.

Even worse, in a sense, this year I'm not only after your money, but also a chunk of your life.

I don't just want you to send some charitable outfit a check -- I do want that, but I want more. I like the notion of giving back from our store of our time, our treasure and our talent. This time I'm after you, not just your money. Your soul, maybe.

Two months ago, an old friend called me and asked me to lunch ... on a park bench. Turned out he was too embarrassed to talk in a restaurant. Over sandwiches, he asked for an unusual favor: Would I please accompany him to a Narcotics Anonymous meeting the next night?

He'd faced up, he said, to the notion that he had become an addict. He knew he needed to do this -- to save his life, he said. He had not been to one of these meetings before. He had not acknowledged his addiction to another person before. And he could not do it alone.

Of course I said yes.

The next night I sat for an hour and a half with 30 of the most extraordinary men and women I've ever met. All were, in their own words, addicts. They included straight business people, multiple-pierced punks, people who'd done serious time in the pen, people on parole, people who sold their bodies and people who bought others' bodies.

They had just one thing in common: They were addicts.

No, two things: They had the courage to say that, to open up about their lives and problems, with a candor and directness than sometimes scared me.

About an hour into the meeting, my friend spoke up. "My name is Xxxxx ... and I'm an addict." The words were scary to hear. I knew him well, and had for 23 years. An addict? I'd never noticed anything. What did he use? When? Where?

To make a long story short, I've been back to NA meetings with him a dozen times since then. He goes almost every night. I couldn't take that intensity; a couple of times a week is about it for me. He's tougher, more courageous than I am. Heck, all those men and women in those NA meetings are more courageous than I am.

I've been blessed in that I've never had a problem with alcohol or drugs. Not virtue at work, I've come to realize, so much as simple chance. As a visitor at these meetings I'm not allowed to speak, but just to sit there and take in what I see and hear.

And it has been a life-changing experience, a transformational experience, for me. You think you've been fortunate in life? You don't know the half of it.

A couple of nights ago -- my friend now has 57 consecutive days "clean," longer, he tells me, than he has gone without drugs in more than three years -- we got a cup of coffee after a meeting, and he said, quietly, "Thank you. You know, you saved my life."

I think he got it backward. He saved mine. By shaking me up, by giving me the privilege of meeting and being with such an extraordinary group. By watching a guy I never knew used drugs confront what he had done and dig down inside himself to find what it takes to change.

My God, I realized in that moment, how jealous I was of his strength and utterly new sense of purpose.

I told him that I appreciated the compliment, and took it at face value. "But," I said, "I've come to realize I don't go to those meetings just for you. I go for me. Because I listen to brave people talk about my life, about all our lives, about the stresses and fears and anxiety we all have. "I'm the one who owes you thanks."

Do that. Reach out. Help someone. Hurt with them. Grow with them.

What I want to ask you to do this year is not just to give some change, so to speak, but to get some change: Give a chunk of yourself, your time, your spirit. Call the Salvation Army and ask if they need help. Or Goodwill Industries. Or a battered-women's center. Or Reading for the Blind. Or teach CPR. Or join Big Brothers or Big Sisters. Or join a local group that goes out on cold nights with warm clothes for the homeless.

I don't care what you do, but rather that you do something. Give of yourself. Not just your money, but also that costlier, scarier stuff: your time, your life.

Money-back guarantee: I promise you will be glad you did.

And that you won't stop.

Best wishes for the holidays and a joyous new year ahead, good friends.

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Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are, or have been recently, consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites you to send your feedback to Jim Seymour .