Here comes the tipping point: Half of PCs shipped will be tablets

Here comes the tipping point: Half of PCs shipped will be tablets

Summary: Tablets will soon outnumber traditional PC form factors. That means it's time for a rethink by the big PC vendors.

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Next year almost half of all personal computers shipped will be tablets, signalling the latest milestone in the apparently inexorable rise of slates and the decline of old-school PCs.

According to a report by researcher Canalys, the worldwide PC market (which it defines as covering desktops, laptops, and tablets) grew 18 percent quarter-on-quarter in third quarter of this year, despite desktop and notebook shipments continuing to decline.

Tablets accounted for 40 percent of all PC shipments in the third quarter, less than half a million units behind global laptop shipments.

The researchers forecast overall tablet shipments will hit 285 million units in 2014 and 396 million units in 2017. Apple has maintained its position as top tablet vendor throughout 2013, and the launch of the iPad Air and new iPad mini will strengthen that in the fourth quarter, according to Canalys.

It also notes that Apple's desktop and notebook business has also remained stable while other vendors have seen their shipments deteriorate (recent figures from Gartner show that Apple — once considered to be niche player — is now among the top five PC vendors in Europe).

However, Apple's focus on protecting its margins will see its PC market share begin to erode, the analysts predict, as it continues to focus on selling high-end, high-price machines rather than mass-market devices. Nonetheless, it remains one of the few companies actually making money out of the tablet boom right now.

The tablet phenomenon has hit planet PC like a runaway comet: many vendors are still scrambling to work out how to deal with the damage and avoid it becoming an extinction level event.

Canalys said 2014 could bring a flurry of acquisitions, mergers, and failures as PC hardware vendors of all sizes struggle to maintain their desktop and notebook business while attempting to succeed in a tablet market that is characterised by large volumes and low margins.

"The idea of the traditional PC has really gone away," Canalys senior analyst Tim Coulling told ZDNet.

Established PC companies have struggled to come up with rivals to either cheap Android devices or Apple's pricier iPads. To date, Windows-based tablets have met with little success, while the limited margin on low-end Android devices leaves PC makers with very little room to manoeuvre (plus the rise of Chromebooks is giving them pricing headaches in the laptop market too).

The analyst group forecasts that Windows 8.1 and Windows RT devices will take five percent of the tablet PC market in 2014, up from two percent last year. Microsoft has been making a major push with its Surface tablet PCs and is in the process of acquiring Nokia's device business to give it more momentum in smartphones and tablets, but Canalys said it needs to prove to channel partners and consumers that it is in the market for the long haul.

"How we see it playing out over the next few years is very much like what we're seeing in the smartphone space. We see Android taking up a larger percentage of total shipment volumes if you are looking at tablets, notebooks, desktops. We see Apple continue to have a shrinking market share, but stable shipments in the premium end of the market and we see Windows getting squeezed in the middle," Coulling said.

Canalys research analyst Pin Chen Tang said Microsoft needs to balance the competition with its vendor partners and embrace a 'challenger' rather than an 'incumbent' mentality when it comes to tablets.

"To improve its position it must drive app development and better utilise other relevant parts of its business to round out its mobile device ecosystem," he said in a statement, noting that addressing the confusion around Windows Phone and Windows RT is the first step. "Having three different operating systems to address the smart device landscape is confusing to both developers and consumers alike."

But it is Android-powered devices that will really drive growth in the market and are forecast to take a 65 percent  share in 2014 with 185 million units.

A new wave of "small-to-micro" device manufacturers are using the cost and time-to-market advantages of their Chinese supply chains and are "eating up tablet market share", the analyst warns.

And while the big vendors such as Acer, Asus, HP, and Lenovo have all entered the tablet price war, with entry-level products at less than $150, Canalys notes: "With vastly different cost structures these vendors will continue to find it extremely challenging to keep pace with local competitors, especially in APAC and Latin America."

Nonetheless, Samsung, Android's best known cheerleader, continues to lead in tablets, showing strong year-on-year growth thanks to its broad portfolio. The company notched up 27 percent share of all Android tablet shipments for the third quarter.

So where does this end up? Expect even more variation and experimentation in tablets and form factors as the market fragments. The market will be characterised by ultra-cheap Androids, reassuringly expensive iPads and Windows machines trying to mostly plot a path in between: expect to see, for example, much more aggressively priced Windows tablets now that Windows 8.1 has given manufacturers the option of smaller screens.

Further reading

Topics: PCs, Emerging Tech, Hardware, Tablets, Windows 8

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32 comments
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  • Dell Venue 8 Pro is a tablet

    But it can be used as a full desktop computer. It runs all Windows programs. It does more than iPad will ever be able to. Costs about the same as Samsung 10" tablet. This video shows this little thing connected to four monitors. http://www.youtube.com/watch?v=jPPY4m8iY0k

    Nobody buys big PC boxes now? First, this is not true. Gamers still building huge rigs with multiple video cards and water cooling to get the highest performance. For the rest of us, Personal computers have just shrunk once again, thanks to Moore's law. They will continue to shrink. In a couple of years almost nobody will buy heavy laptops. So what? The work will need to be done anyway, and games will need to be played.
    Earthling2
    • Nobody cares about tablets running as full computers

      None of the successful vendors has made a desktop play with their tablets... not Apple, not Amazon, not Google. Sorry, but there's just no consumer appetite for it, even if the tech that enables it is impressive. People have computers (though they are not replacing them quickly.) Tablets are there for pure simple "pick it up and use it" computing. A tablet with cool capabilities to be able to be wired with a hundred USB cables to various peripherals just doesn't appeal to that many.

      Nobody has ever said that "nobody buys big computers" - however what is without question going to happen is that a smaller percentage of the computing devices sold will be computers of this type. I know I can't get by without a full computer; but much less of my time is spent on one.
      Mac_PC_FenceSitter
      • I care

        And I am hardly alone.
        x I'm tc
        • Actually, you are very close to alone

          on this.
          baggins_z
        • Alone? Perhaps not.

          But don't mistake that for this type of buyer being numerous. There aren't that many people going for tablets that act as full computer replacements. We know by what's selling that it just isn't so.
          Mac_PC_FenceSitter
    • I think what these numbers illustrate

      is that many many people don't need "a full desktop computer." They don't need the things a desktop is for. The idea that if a tablet can do everything a desktop can do then that would be perfect is just wrong. You wouldn't use a 30 foot motor home to commute to work everyday.

      I do agree that the desktop is essential for lots of tasks. It's just that folks that don't do those things no longer have to buy a desktop. They now have available the right device for their needs.
      CowLauncher
      • Counter point

        I don't believe that it has anything to do with people not needing a full desktop (or at least a traditional laptop). The issue is just that everyone who needs one already has one. And about the time that Windows 7 came out, PC's were fast enough and capable enough for most people. Lack of desire to adopt Windows 8 also contributes to people sticking with what they already have. So not only do they already have one, they have no need to buy a new one.

        Desktop PC's became a "mature" market quite a while ago and laptops have joined them. A mature market means that people aren't going out and buying the latest and greatest every year like a lot of them do with phones and tablets. But sooner or later tablets will also reach the "good enough" stage where the tablet I already have does everything I need it to do and I'm not buying another one until it dies.
        cornpie
        • Communal vs personal

          Here's a snippet I didn't include in the story; the analysts argue that most people do have access to a Windows desktop somewhere - as you say it's a mature market so they're everywhere. So what people are doing is using that communal device - the PC in the study - in the rare cases they need Word or to look at a spreadsheet, and then are using their personal tablets and smartphones for everything else. Leads to very different model, not one PC per person but one per family in some cases.
          Steve Ranger
          • Continue to evolve

            The one thing I've noticed related to the analysts is that they continue to get a lot of the projections wrong. They see the world as it is today and project into the future as if nothing changes. The problem is that the tablets will continue to evolve in power/usability and will eventually replace all of what can be done on the desktop today. MS is doing that now and puts them in a good position. However, the continuing story being told today by the tech press regarding MS and the death of the PC tying that directly to MS is a problem -- I think they tell a story that is factually wrong. Windows 8, regardless of the feelings of the desktop lovers, is a UI built for tablets/small and large screens/touch/keyboard/voice and has all of the power needed for powerful apps/applications going beyond the current usability of apps today. I've had several iPADs since inception and the Windows 8 UI is better as a tablet related to UI. You add a keyboard and it works fantastic increasing productivity. Add a big screen(s) and it really comes to life. After using Windows 8 on a tablet, then going back to and iPAD feels old and very limiting. I wonder if many of you can get past the desktop story to tell this.
            The biggest problem I feel that faces MS as you stated is the story of their partners. They do not know how to compete and create devices in this new era of computing. The fact that many of them will be going out of business has very little to do with MS. I don't think it's wise to create "one" device to rule them all--at least today. It's better to have complimentary devices. Android is great for phone and ok for tablet, but not very good to replace the power user--the loudest complainers. Instead, Google provides Chrome. To me, that is a more problematic and disjointed future: UI is not really built for tablet and touch--it's a desktop replacement type UI best suited for keyboard and mouse. And...haven't you all stated that the future for desktop is over?
            Giovib
      • Nor can you use a clown bike to pull a trailer.

        CowLauncher has it right. PC sales used to be driven by true obsolescence. For example, software went from being released on floppy discs to CD-Rom to DVD-Rom. B&W monitors were replaced by colour, then by higher and higher resolution. New games driven by these improvements, and incompatible with older models, helped drive sales of this new techology. Media downloads from the internet pushed sales of computers with larger storage capacity. Etc. Sales of pads, on the other hand, are largely being driven by marketing campaigns extolling the virtues of less pertinent, more trivial factors such as new case colours, etc., and improvements like resolution are being made in a measured manner, leaving a bit for next year's model. Sales that were once driven by changes in need are now being driven by fashion and planned obsolescence. We're also still seeing people buying their first pad, or passing on their first pad to their kids while they buy their second. I think pads will go through some real improvements for a while, but unless the public continues to let itself be snowed under by marketing, we'll eventually see a decrease in yearly sales of tablets as more people hold onto what they have for as long as possible. Maybe by then they'll find some new bases on which to push PC sales.
        hmmm,
    • A touch-screen netbook...

      Yup, the Dell Venue 8 Pro makes a beautiful netbook without a keyboard. Dell will sell millions of them... NOT. I thought most consumers gave up on Windows netbooks a long time ago. I guess there are always the Windows diehards who never give up. The Atom processor is still at the bottom of the food chain where it belongs.
      Steffen Jobbs
  • Since when did PCs include tablets?

    I am guessing since the time when it would not have shown Apple to be the largest PC maker on the planet since 2010. Can you imagine the trouble the "analysts" would have sitting in the WC trying to get that load out if they had to admit Apple was a larger PC maker than HP, Dell, Lenovo...

    No, better to wait...
    Bruizer
    • Some tablets are PCs.

      We call them Tablet PCs.

      The name's been mint and coined for a while now.

      They're middle-line machines for people who want a pen-enabled screen, but don't need an Intuos and/or want mobility.

      While it's usually reserved for convertible-esque PCs, modern tablets like the Surface Pro and the Ativ 700T are considered Tablet PCs, or PCs with a Tablet form-factor.

      If it runs a non-mobile (meaning not Android, BBOS, or iOS) operating system and it has pen and/or touch input, it's a Tablet PC.
      ForeverCookie
      • If Dell sells a tablet with Windows 8.1 on it

        or a box with Windows 8.1 on it, does it count as a PC, or a tablet?
        William.Farrel
        • PC.

          A Tablet is a Tablet, a PC is a PC.

          A Tablet PC is a PC with Tablet form-factor, so therefore, it's a PC.
          ForeverCookie
          • inadvertently flagged via touch screen, sorry

            ctkoz@...
      • Re: If it runs a non-mobile OS .. it's a Tablet PC.

        Let's test your claim.

        So, we get a non-tablet OS, such as FreeBSD and put it on an iPad. Voila, it becomes an tablet PC?

        Or does the OS have to be specifically Windows? ;-)
        danbi
  • Here comes the tipping point: Half of PCs shipped will be tablets

    These tablet makers are going to be disappointed when their wares are sitting on the store shelf collecting dust. They are only shipping and not selling. I'm expecting the tablet bubble to pop at any time now.
    Loverock.Davidson
    • Ask the Intel chairman

      if he thinks mobile computing is a fad

      http://www.zdnet.com/intel-chairman-embarrassed-that-company-had-lost-its-way-7000023494/
      SunFire23
    • Didn't you see that already?

      Windows RT is already being killed by Microsoft.

      900 million writeoff/loss in Surface...

      I guess that means Microsoft is toast when that bubble actually pops...
      jessepollard