Total Potential PC Market - reaching maturity?

How many personal computers can the U.S. market absorb? To put it another way, how many seats are there that could potentially have a computer in front of them? This is a measure of the total potential market for PCs ó if every possible seat has a PC in front of it, every new computer sold will have to displace or upgrade an existing PC.
This is not an idle question; unless new ways are developed to use computers, at some point every one of these seats will have a computer that is sufficiently powerful for its intended function. When this happens, the PC market will become mature, requiring different paradigms in marketing and sales.
In this report, I attempt to quantify the number of potential seats for personal computers in the United States domestic market and the point at which the market will become saturated 1. To conduct this analysis, I divided the market into three segments: home, education, and business. I then estimated the range of possible seats in each segment as well as a ìmost likelyî number.

Potential Market

Forty five percent of the 130 million jobs in the U.S. are office jobs. I will assume that every one of these could constitute a seat for a PC, for a total of 60 million units. (This is about 20% higher than the US government estimate of 51 million computers in the workplace in 1993.) If one in four of the remaining cowboys, truckers, farmers, waitresses and assembly workers also used a computer, there would be a maximum of 75 million possible seats at this time
Range: 60-75 million. Best Guess: 70 million.
Schools from kindergarten through 12th grade average about 1 PC for every 11 students, for a total of some 5 million PCs. For reasons given below, it is impossible to determine the ideal ratio of PCs to students. For now I will take the 5 million as the maximum likely number of PCs institutionally.
There are about 10 million college students in the US. Potentially, every one could have a PC although some of them will use the household computer. Range: 10-15 million. Best Guess: 13 million.
PC penetration for wealthy households (over $100,000 per year) is around 60%. If this ratio held up for all 100 million households in the U.S. regardless of income, there would be a maximum of 60 million households with PCs .
Slightly under 30% of households with PCs have multiple units. Assuming a geometric decline for additional units, I estimate that the number of PC seats is approximately equal to one and a third times the number of households. That is to say that, for every 100 households with PCs, there are 100 primary, 30 secondary and 3 tertiary+ PCs for 133 total PCs.
If this holds true for all households with PCs, there is a maximum of (11/3 x 60 million) 80 million potential PC seats in the home. However, lower income households are likely to have lower PC ownership, so the likely figure is much less
About 45% of the 100 million households in the U.S. currently have PCs. From the same argument above, there are some (45 million + 15 million) 60 million PCs in the home market now.
Range: 60-80 million. Best Guess: 70 million.
Total Market.
The total domestic potential market for PCs ranges from 130 million to 170 million seats. My best estimate is 153 million seats.

Current Market

Personal Computers already in the Market
I would estimate the number of PCs currently in the market to be approximately equal to the lower bound of the range given above - 130 million units. This is assuming 60 million units in business, another 60 million units in the home, and 10 million combined in education.
With some 35 million computers due to ship this year, the total number of PCs will exceed my best estimate of the market saturation point by about 10 million units: 165 million vs. 153 million.
Obviously, this does not take into consideration machines that are discarded because they are antiquated, underpowered or otherwise rendered inoperable. The rate of egress from the market is difficult to determine
4, particularly as we donít know how computers are being used. However, since 1994, some 95 million modern 5 computers have entered the market. With the addition of the 35 million expected to ship this year, I would expect that most of the PCs will have sufficient power for the work they are doing.

- - Notes - -

Since laptops can be used both at home and at work, they will tend to reduce the total potential market. The size of this effect is difficult to estimate and is likely to change over time as computer usage changes.
Computers in Schools
The potential for computer use in school is difficult to determine. Cheap, widespread computers may cause a paradigm shift in methods of teaching, leading to vastly increased numbers of computers and possibly a corresponding decline in the number of teachers. However, for now computers seem to be used as adjuncts to the traditional teaching methods and are a tool incorporated into existing classrooms.

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  • I originally started this report as background for some analysis I was doing at Adaptec. Unfortunately, I left my bibliography there when we parted company, so I am unable to reference most of the numbers.
  • To cross check this number, I also analyzed different job categories by SIC codes and estimated the number of computers likely to be required in each category. This calculation also yielded an estimate of 70 million computers in the workplace.
  • In a recent survey, some 36% of all households stated that they would never own a PC.
  • One well-known research firm repeatedly told me that PCs have a lifespan of 3 to 4 years before being discarded or junked. If this were true, there would only be about 95 million PCs in the U.S.
  • These are PCs that have shipped with high-end 486, Pentium style or PowerPC chips that are capable of handling Windows 95 or the equivalent.

© Drew McCormick 1998