PC sales: how low will they go?

PC sales: how low will they go?

Summary: The longest PC sales decline in history has the industry in shock. We are in a new era with smart phones and tablets. But the bottom is deeper than many expect. Here's why.

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PCs – desktops and notebooks – have been key to productivity and entertainment for the last 20 years. 350 million were sold in 2011.

But now we've seen several quarterly declines in PC sales. How deep will the decline go?

Bounding the problem
This is NOT a one-for-one replacement of PCs with smart phones and tablets. There are hundreds of millions of people who can afford a smart phone or tablet but never a PC.

There is also a large population that requires the functionality – multitasking, large screens, exceptional compute and storage, and applications – that are only available on PCs.

But the battle lines are shifting: smartphones and tablets are getting more powerful, and new applications that enable new ways of working are being developed for them. Pilots replace 20kg of documentation and charts with an iPad.

But that's not all. Powerful server-side – cloud – applications, such as IBM's Watson, are also threatening the traditional PC platform. Imagine a physician dictating into his smart phone and a Watson-type service translating his dictation into finished and legible prescriptions, referrals and patient records. Why would that physician need a PC?

The grid
One of the early metaphors for personal computers was the idea of the fractional horsepower motor that put computer power where needed. But our electrical system uses centralized power plants provide electricity that we tap into when we need it.

Now imagine you are trying to sell generators. What is your market?

That is the problem facing analysts of the PCs future. There are substitute technologies, many new applications, a rapidly changing technology base and a growing global market. Plus the fact that PCs overshot the requirements of most folks 10 years ago.

The Storage Bits take
PC sales will continue to decline as more people understand that they don't need a PC to surf and email. HDTV screens will do double duty as monitors for people working - or playing - on their phones and tablets.

The long-term market for PCs are for the people who need the storage, computes and peripherals that only PCs support. Creatives. Corporate desk jockeys. Scientists and engineers.

Not grandmas, teenagers and mobile pros. Or most people.

Five years from now PC sales will bottom out at 185 million units - an almost 50% decline from 2011 - about the same  as 2003. Tablets and smartphones will be more than 4/5ths of all computers sold.

That's bad news for PC vendors. But the remaining buyers will be willing to spend more, so average sale prices will rise.

But for the rest of us mobile computers with all-day battery life and high-speed wireless networks will enable us to weave cyberspace seamlessly into our everyday lives. It's a brave new world.

Comments welcome, as always.  Tell me why you don't agree - or what I missed.

Topics: PCs, Mobility, Networking, Servers

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83 comments
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  • Concept is changing

    The tablet is still a personal computer and I believe our perception of this computing device has changed. Because of the cloud and Touch panels we do not need heavy, large and powerful devices.

    Take the Windows tablets, they do everything you would expect a PC to do, but in a tablet form. The iPad is basically a Netbook without the book.

    Pretty soon you will be able to access your Windows desktop in the cloud without even having a PC. Your device will run the bare minimum hardware and probably have 24 hour battery life.

    The PC is changing, the world stayed the same. We're adapting to it.
    Dreyer Smit
    • you could do that for years now

      >> ...Pretty soon you will be able to access your Windows desktop in the cloud .

      m$ has, through onerous licensing restrictions and requirements, killed that business. Our organization explored that concept and realized it would cost a lot more.

      office 365 is a failure for many of the same reasons- m$ wants to perpetrate the same business model with added licensing costs for 'web enabling' your data - basically skydrive.
      GrabBoyd
    • there is plenty of 'power' in these devices.

      don't believe intel sponsored benchmarks. The smart phones and tablets today that do not have intel chips run some very cpu intensive s/w ( mostly games though).
      GrabBoyd
      • The non-Intel devices are less sluggish

        This isn't because they contain more powerful CPUs than Intel. It's because they aren't saddled with a bloated desktop operating system. Android and iOS devices open apps instantly. You get a similar delay to desktops on Windows tablets. Frankly, if MS had written a super lean tablet/phone OS for those devices without all of the Windows bloat, their devices would be MUCH more responsive since they're running on those Intel chips. As it is, they can't compete with iOS and Android devices, despite the faster processors. They're just bogged down by unnecessary garbage code. A faster CPU is useless if the OS sucks all of the speed.
        BillDem
        • Windows Phone OS

          The Windows core NT is used on all Windows systems (ALL) now. That core was developed back before 2000 and has time test use. I think apps opening quickly isn't true it is more of the developed side of the app (bloated code) that makes it speedy or not. All the applications I have developed open within a second or two no matter the OS they ride on, so it isn't a OS issue it is a developer issue. As for the move to cloud sure things will move there but DESKTOP is business and frankly what ever the OS the Desktop will remain - maybe a little different but remain.
          step2000
        • SSD makes the speed difference

          Since I upgraded my laptop with an SSD, it opens applications as fast or faster than my iPad. The underlying OS in both devices is OS X. Tablet devices seem faster mostly because they all use solid-state storage instead of a slow mechanical disc.
          arminw
        • Delphi (self contained apps) are very fast in Windows

          Use Delphi to create self contained apps that have no dependencies on any DLLs or VMs/.NET. These apps usually are around 500k in size, and they open blazing fast in Windows, much more faster than any iOS or Android app.
          GoForTheBest
      • PC gamers would disagree

        A reasonably well constructed PC has about 10 times the CPU and GPU power of a typical tablet (and uses about 20 times as much electricity). It's just not possible to do the same amount of computing, with 4 watts as it is with 200 watts. That's not to say you can't have a fun game on a phone, or a tablet, but it doesn't compare to what can be done on a PC. And there are a lot of people who appreciate the difference. PC game sales have actually been increasing.
        MarvinDouma@...
    • I dunno

      I want a big pc to be able to play my heavy games.
      I try to use the cloud as less as possible.
      Basically i dont want to be in the cloud at all (i have my home cloud).

      A lot of ppl i know feel the same.
      So i think there will be pc buyers for a long time.

      What if your desktop and all is "from the cloud" and your internet connection is gone.
      Or your router/modem?
      Then you are not able to use your lean machine at all....

      I am willing to pay more for a good pc (always did).
      But sales will drop, that's for sure.
      abbos@...
  • By All Means, Count Post-PC Devices As PCs

    Then you notice the next thing: most of these new devices are not running Microsoft Windows.

    So it may not be a post-PC world, but it is a post-Windows one.
    ldo17
    • Re: it is a post-Windows one

      Or a post-Microsoft one.
      danbi
      • Re: Or a post-Microsoft one.

        It doesn't have to be. If they liberate themselves from the shackles of the Windows OS, and say start working with Linux, think how much their bright programmers could achieve. See what Google has been able to do: couldn't they do that and then some?
        ldo17
  • It's just technology advance

    I think Microsoft were almost right with Windows8 (they just presented it poorly).
    As the "mobile" devices gain power many people will want two layers to their devices. The quick consumption layer we currently have in phones and tablets and the creative layer which allows them to work like they do with a "PC".

    Seems to me the next logical step with advancing power of mobile devices is to allow them to "dock" with larger (folding?) screens and external devices and even corporate services. We also don't want multiple and competing "docking" standards from Google, Microsoft, Apple, etc.

    With the 5 year window you have set, I'd also expect to see tablet sales in decline.
    dcarmi
    • Docks are available now

      About a year ago I bought a refurbed Asus tablet for just over $300 including shipping and a 32GB microSD card. Although available, I didn't buy the docking station, which was an additional $100. That allows adding a full-sized keyboard and access to standard USB peripherals. The tablet has a micro-HDMI slot, so I could add a full-size monitor even without the dock if I wanted to.

      I did buy a Bluetooth mini keyboard that I just about never use, but I assume I could find a full-size keyboard if I searched a bit.
      Rick_R
  • PC Decline due to the dead of the Small screen PC, the Netbook category

    as Windows 8 didn't support small scree (Windows RT is)

    that will change with Windows 8.1 as it do support small screen,

    also new mini Ultrabooks with new Intel Atom processors "bay trail" in 4th Qtr will revive the small screen affordable PC for both consumption and productivity that will put off tablets growth
    swisslakes
    • Re: Windows 8.1 as it do support small screen

      But the apps won't.
      ldo17
    • why is it that "change" coming from ms

      is the only change you will accept, while in denial about all the changes taking place that doesn't involve m$ ? Is it because a post m$ world scares you much as a world without a certain villian scares his minions ?
      GrabBoyd
    • Agreed

      I think ultrabooks have yet to hit their stride. The few people who are using Surface Pro would have been better served by buying an ultrabook anyway. It's even debatable whether the Surface Pro should be classified as a less powerful ultrabook. Personally, I think some of the people who bought tablets may decide to upgrade to ultrabooks once they run into a few of the limitations of tablets. Either way, the desktop PC will continue to decline, because most people just don't need a desktop for what they do.
      BillDem
  • Windows Vista

    I have a Windows Vista PC of 7 years, and I don't feel I have to change it. Why? Just so that programs starts 5 seconds earlier? And then have to spend one week trying to install newly all the programs? It makes me feel lazy. I have Windows 8 at work, and wish I could have the old Vista or whatever, it is tiring to be constantly changing between Start and Desktop, when I only want Desktop.
    aviamquepasa
    • agree and a point

      At some point, CPU's got so fast, that many people, even "creatives", have no particular need to get a faster CPU. My fastest machine was manufactured in 2007, and there's really only two tasks it is unsuitable for (video editing and high end games) and I'm interested in neither. Couple that with on-demand cloud windows/linux cpus to augment when needed, and I'm just not feeling the need. Given a couple grand of upgrade budget, the latest i7 bajillion core cpu just doesn't give me the same return as more drives, more cloud, bigger UPSs, bigger monitors, more memory, faster wwan, brighter remote terminal (aka tablet/ultracompact), and more software (open source & commercial).

      On Win8 start vs desktop; someone heard you, I think you're supposed to be able to boot to desktop in 8.1. I don't really see the point myself, but different folks have different preferences and all...
      rwwff