PC Sales Slump Continues - InformationWeek

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PC Sales Slump Continues

Desktop and laptop shipments are even worse than expected, according to IDC, and they haven't yet hit rock bottom. Still, don't count PCs out.

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For the PC market, it's been a long drop from the top. Shipments of PCs and laptops have been in free fall for more than a year, and according to the newest data from research firm IDC, they're still a long way from rock bottom.

On Thursday, IDC revised its 2013 projections, downgrading an expected 7.8% slide to 9.7%. The firm expects the market to continue declining through at least the end of next year, and to return to no more than single-digit growth in 2015. IDC said PC shipments will never rebound to the peak levels seen in 2011.

In a statement, IDC attributed the PC market's ongoing woes to not only cannibalization from tablets and other mobile devices, but also declining demands in emerging markets, which had, until recently, been keeping sales afloat. The firm noted that shipments in emerging markets are expected to fall faster than those in mature markets -- a dynamic that's never occurred before. This year's shipments to China, arguably the most important developing region, are expected to decrease by more than 10% relative to 2012. IDC also reported "stubbornly depressed consumer" interest in new PCs

[ Tablets have eaten into PC sales, but they can't rest on their laurels. See Tablet Sales Face Growing Threat From Smartwatches, Phablets. ]

IDC found that desktop shipments have eroded more quickly than shipments of laptops, netbooks and two-in-one Ultrabooks. By 2017, the firm anticipates increased demand for these portable devices in emerging markets such as China, Latin America, Africa, the Middle East, and Central and Eastern Europe. The demand for desktops is projected to continue declining around the globe, however, and both laptop and desktop shipments are expected to continue declining in mature markets, which include the United States, Western Europe, Japan and Canada.

It's worth noting that analysts' PC projections have been consistently inaccurate over the last year. Unfortunately for PC makers, the mistakes have involved overestimating the market's ability to rebound. In March, for example, IDC projected shipments would retreat by only 1.3%.

Though the market has continued to unravel for longer than expected, PCs are not becoming obsolete. Even in this year's depressed market, manufacturers will ship around 315 million units -- a huge volume by any standard. Traditional computers aren't hurtling toward extinction so much as taking a place in a new multi-device hierarchy.

According to recent data from Forrester Research, many people are interested in using tablets with keyboards, but most users do not consider tablets to be laptop replacements. Specifically, the firm found that 80% of users prefer to use mobile devices and traditional PCs in combination. The implication is that, just as society continued to use trains and boats after the introduction of airplanes, companies and individuals will continue to need PCs despite the popularity of tablets. Desktops and laptops once had the computing universe to themselves, but now they have to share duties with other devices. Traditional PCs haven't been obviated; they've simply shifted to a smaller role.

A July study from Gartner offers similar conclusions. "iPads complement -- and don't displace -- desktops, laptops and smartphones," Gartner research director Mark Cotner said in the study, "How to Succeed with iPads in the Enterprise and Avoid the Pitfalls." He noted that tablets can be more productive than IT managers sometimes appreciate, but that other devices remain essential. Users employ "a combination of all of them, at different times and in different situations, depending on the task at hand and which device is closest," Cotner wrote.

The PC market was already mature by the time the iPad created the modern tablet market, which means that many of the people who bought tablets already had PCs at home. These PCs ceded some of their duties to tablets while continuing to capably complete their remaining tasks, such as heavy word processing. At the same time, new computers haven't improved over previous models at the rate that new tablets have. Given tablets' lower costs, many have chosen to delay PC upgrades.

In IDC's statement, senior analyst Jay Chou said consumer interest might increase slightly in the short term thanks to Intel's new processors. The chips are more energy efficient than previous versions, meaning OEMs will be able to produce laptops with tablet-like battery life and ultra-slim form factors. Chou countered, however, that "the current PC usage experience falls short of meeting changing usage patterns that are spreading through all regions, especially as tablet price and performance become ever more attractive." In other words, the PC market could benefit from new devices with new chips, and from new operating systems such as Apple's OS X Mavericks and Microsoft's Windows 8.1, but nothing coming down the pipe will revitalize the industry.

IDC sees consumer demand increasing modestly beyond 2014, as aging PCs finally begin to break down. The firm noted that businesses are also pushing PCs into longer lifecycles, but many may start buying new hardware soon. IDC analyst Rajani Singh noted that many companies are currently migrating off of Windows XP, which loses service in April. He said this should drive shipments in the commercial segment. IDC foresees additional commercial activity beyond 2014, when companies begin looking beyond Windows 7.

The prognosis is not encouraging for Windows 8's enterprise prospects. Microsoft hopes that Windows 8.1 will change that, as it includes several enhancements aimed directly at PC users, including a boot-to-desktop mode. Microsoft will begin trying to defy analyst expectations when it releases the update on October 18.

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User Rank: Ninja
8/31/2013 | 6:36:45 PM
re: PC Sales Slump Continues
That is the problem with a mature market. For what 90% of people do, a Pentium 4 PC is good enough (web browsing, email, word processing). Who needs to upgrade to an i7 processor, 16 GB of RAM, and an inane (insane?) in your face tablet operating system that most desktop people who have tried it have come to hate? People now buy new PCs when they break, not to get "new and improved" features, as they do with phones or tablets. The old routine of upgrading your PC every three years has become more like 5 to 8 years. And that makes economic sense to most consumers. Unix/Linux has been touted as a Windows replacement for 15 years now and it hasn't happened. All the Linux fans have a chance come next April when Windows XP goes off into the sunset. Help your friends and neighbors get several more years use out of their existing PCs by putting Ubuntu or your favorite flavor on them and showing them how to do the basics. Microsoft and the PC makers are undoubtedly expecting a new wave of PC purchases (or upgrades to Windows 7 or 8) when XP goes belly up. The adoption of Ubuntu could put a monkey wrench into that forecast, but like I said, it is really up to the fans of Linux to make it happen. Your average person out here will not put Ubuntu on their own PCs because it is above their level of technical expertise.
Bob Gill
Bob Gill,
User Rank: Apprentice
8/31/2013 | 4:53:30 PM
re: PC Sales Slump Continues
Linux/Unix has been the next big thing in PCs for over 15 years. Give it up, they're done. Macs are no better than Windows PCs, both have their trade-offs and Linux is going nowhere.
In 2013, 100 million more PCs will be sold than tablets. I do agree with the analysts that in a couple years, tablets sales will beat out PC sales, but that's like saying bicycle sales beat out car sales - 2 different animals of the same species.
Windows 8 is a whole new way forward, certainly doesn't seem to be the best way at this point. By the end of this year though, Windows 8 computers will outnumber all Macs - in July it was 5.5% to 7.5%.
I have an Android tablet, but once Windows 8 Pro tablet devices get out there more, I'll likely buy one.
User Rank: Strategist
8/31/2013 | 2:55:28 PM
re: PC Sales Slump Continues
Very accurate editorial Michael.

Indeed Computer tasks have been relegated to numerous CPU devices now, so PC's and laptops just have a smaller share.

What will be interesting to see, since the mobile business is 97% dominated by Unix and Linux now, is how fast will PC & Laptop Users switch to Apple's Free BSD Unix and the plethora of Linux operating systems?

My bet is that since the World has learned how to live without Microsoft virus traps and lock down Office software on mobile devices, we are going to see an avalanche of Linux and Apple Free BSD adopters. Since Linux works on all existing & future PC's and laptops, Linux will have a larger market share than Apple.

The proof will be obvious when we see Balmer's famous 3rd party Developers! Developers! Developers! shipping Linux versions of their current Windows software.

I am seeing more and more of this every day. Even Microsoft provides a 32 bit version of Skype for Linux. Office for iPads and Android's are on the way too. You can bet the MFST Board is all over that cash cow.

The biggest problem is that Microsoft aka Mafiasoft has caused so much pain to its user base for over 3 decades, that the World has proved they not only can live without them, but they don't want to buy anything made by Microsoft anymore. If I were wrong then why was there a 900 million dollar Microsoft shablet write down on the books last quarter?

I predict the Consumer will jump the MicroKlunk Titanic first and the Enterprise will follow several years later, due to Redmond's lockdowns being more pervasive in Companies versus with Consumers. The mobile market has proved this already.

Keep in mind though that the Microsoft Enterprise sales attrition rate cancer will ultimately come from the new IT young guns who have not yet been hired. These people know better than the gray haired IT Management still in charge today.

Afterall, Consumers work in businesses so the momentum shift away from Microsoft has already happened.

BTW: I predicted Windows 8 and its mobile devices would fail miserably1 year before they shipped them.
Drew Conry-Murray
Drew Conry-Murray,
User Rank: Ninja
8/30/2013 | 9:08:36 PM
re: PC Sales Slump Continues
I'm not worried about the PC market. Constriction is inevitable as the smartphone market explodes, but it's not like there won't be PCs five years from now.
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