puter industry show no significant change in the number of engineers since 2002. There are no comparable data for the PC industry, per se. However, although the PC industry continues to grow in scale and PCs increase in complexity, thus increasing the need for engineering work, there appears to be little or no increase in engineering jobs in the United States. This can be explained partly by the increasing productivity of engineers, but mostly by a large increase in engineering jobs in CMs and ODMs, especially in Taiwan and China.
Engineering work that remains in the United States is being tailored to the needs of newer, smaller personal computing products, such as wireless notebooks, tablet notebooks, PDAs, MP3 players, and smart phones. This work requires not only knowledge of engineering design for small form factor, but also new engineering specialties related to communications, networking, embedded software, and particularly the interfaces between these and hardware engineering.
Interviewees in PC companies said that generally there was a good balance between the supply and demand for engineers in the United States, but noted shortages in experienced managers (product managers, engineering-discipline managers, project managers, high-level design mangers) and, particularly, in the engineering subdisciplines mentioned in the body of this report. A few firms carefully develop engineers by hiring graduates of elite engineering schools, but most PC firms prefer to hire experienced engineers from other firms.
All of the firms we interviewed hire at least some engineers outside of the United States, some primarily to reduce cost, others for their specialized knowledge. In some cases, companies hire engineers working in offshore facilities, but more often they hire foreign-born engineers to work in the United States, often from U.S. universities. All of the executives considered U.S. immigration policies flawed for failing to consider industry needs, treating all engineering jobs/levels alike, and making it difficult for graduates to stay in the United States. They also faulted limits on the number of visas. At the same time, most executives believe that the offshoring of lower skilled engineering jobs was inevitable and that the United States should concentrate on maximizing its strengths in the dynamic and analytical skills necessary to retain its leadership in the development and commercialization of innovation.
The personal computing (PC) industry includes desktop and notebook PCs, PC-based servers, and various handheld computing devices, such as PDAs, personal music players, and smart phones. Worldwide revenues for the industry totaled $235 billion in 2005, including $191 billion in desktop and portable PCs, $28 billion in PC servers, and $16 billion in smart handheld devices. In addition, PC software accounts for a large share of the packaged-software industry, which had sales of $225 billion, and PC use drives sales of information technology (IT) services and other hardware, such as storage, peripherals, and networking equipment (IDC, 2006a).
In 2005, more than 200 million PCs were shipped worldwide, including 135 million desktops and 65 million notebooks (IDC, 2006b). The United States has the largest PC market (61 million units shipped), followed by Western Europe (47 million units), Asia-Pacific (40 million units), Japan (14 million), and the rest of the world (38 million). The United States is not only the leading market but is also home to the top two PC vendors, HP and Dell, as well as Microsoft and Intel, which continue to set the key technology standards for the global industry. However, competition is becoming increasingly global, with non-U.S. firms holding the next five spots (Table 1) since IBM’s PC division was acquired by China’s Lenovo in 2004.
As the cost of displays and other key technologies has fallen and as customer demand for mobile products has increased, notebooks and various handheld devices have become the fastest growing product categories. These products are less standardized than desktop PCs and require more engineering in the new-product development phase. In addition, PC models and form factors have proliferated as vendors try to provide customers with more choices, which also increases the engineering requirements of the industry. Finally, PC-based servers account for the largest and fastest growing share of the server market, also requiring more engineering effort to develop cheaper hardware that can handle the work formerly done by expensive proprietary systems.
Unlike the mainframe computer industry, which consisted of vertically integrated firms, the structure of the PC industry is based on specialization, with most firms concentrating on one segment, such as components, systems, software, distribution, or services. Most PC makers today have focused their efforts even further by outsourcing manufacturing, logistics, and other functions and concentrating their own efforts on high-level design, marketing, and branding. Subassembly and final assembly have been outsourced to CMs since the