Waiting for PC sales to recover? Don't hold your breath

Waiting for PC sales to recover? Don't hold your breath

Summary: PC shipments have had a terrible quarter, and it seems that there's nothing that can be done to save the desktop and notebook from further erosion by post-PC devices such as tablets and smartphones. And things are not going to get any better.

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TOPICS: PCs
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The PC industry has suffered its worst decline in shipments since IDC started collecting data back in 1994, nose-diving 14 percent during the first three months of 2013 compared to the same quarter a year ago. IDC had attempted to prepare us for bad news by issuing a warning earlier this year that sales were likely to fall by about 7.7 percent, but the actual decline makes those initial pessimistic predictions seem utterly desirable compared to the truth.

IDC doesn’t pull any punches when it comes to dishing out the blame for the decline, pointing fingers at Microsoft and the hardware OEMs, the very company at the heart of the PC industry.

"PC industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8," the report claims. "The PC industry is struggling to identify innovations that differentiate PCs from other products and inspire consumers to buy, and instead is meeting significant resistance to changes perceived as cumbersome or costly."

Ouch. Not only is the industry in trouble, but it doesn't have a clue what to do in response to the mess it has found itself in.

And, as if we didn't know already, IDC tells us where the money is going instead. "Fading Mini Notebook shipments have taken a big chunk out of the low-end market while tablets and smartphones continue to divert consumer spending."

(Source: IDC)

For the PC industry to have its worst quarter following the releaser of a new version of Windows is bad news for Microsoft.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said Bob O'Donnell, IDC Program Vice President, Clients and Displays.

Analysts have taken a look at the data and concluded that this decline is going to have a negative effect on companies that are closely tied to the PC industry, especially Intel, AMD, and HP.

Are you holding your breath, waiting for things to get better? Don't. It's probably never going to happen.

I'm basing these most negative predictions on a number of factors.

  • The PC industry spent too long first ridiculing, then in denial over the effect that the iPad was having on the industry, and they failed to respond in a timely fashion, allowing the iPad — along with a handful of Android-powered hardware — to first get a foothold, and then gain traction.
  • Windows is no longer the driver of sales that it once was. Windows used to be seen as a core component of a PC, and people would upgrade in order to stay ahead of the curve, but over the past few years it has been seen as little more than a platform for other applications. Twitter, Facebook, Word, Excel, Photoshop, and almost every other app looks and runs the same whether you're using XP or Windows 8.
  • Free and low-cost operating system updates — such as OS X, iOS, and Android — have devalued the operating system. Consumers don't feel that Windows offers value for money.
  • PCs last longer than they used to, which extends the upgrade cycle.
  • Another factor that has extended the upgrade cycle is Moore's law. Over the past few years, PCs have grown so fast and powerful that consumers and businesses no longer feel the pressure to buy new systems every two to three years.
  • Tablets and smartphones are going to get faster and more powerful, and will become capable of taking on tasks that currently require a PC.
  • A contraction in PC shipments will undoubtedly result in casualties, which in turn will mean less competition and less innovation.  
  • PC prices continue to be too high, especially compared to tablets and smartphones. One of the factors keeping PC prices up is the cost of Windows, and Microsoft doesn't seem to be willing to cut prices.

This isn't to say that PCs are going to vanish overnight — they're not. People are going to need PCs for the foreseeable future, but the difference is that they're not going to pay top dollar for them, and it won't be desktops and notebooks that drive the industry from here on in. That baton has been passed irrevocably to the post-PC devices.

I would expect PC shipments to stabilize over the next couple of years, and for there to be a small recovery as people replace their Windows 7 PCs — possibly when the next version of Windows is released. Beyond that, barring some huge push by the big PC players, I don't see PC shipments making any long-term significant recovery.

Topic: PCs

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94 comments
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  • PC is evolving into new form factors

    Surface class devices are the new PC. There is nothing like POST-PC, just because somebody's mother-in-law bought an iPAD or smart phone doesn't mean PC is dead, get over that non-sense.
    Owllll1net
    • In denial

      You are in more denial than Steve Ballmer. Those numbers tell a different story than the fantasy conjured up in your head.
      m1cr0hard
      • there are lot of facts on the article behind those numbers

        consumers are spending more money in tablets and smartphones which support some commonly used consumer apps. This is what they can carry around with them and after already having a working desktop/laptop this is what comes naturally. With Windows 8 and surface coming out and doing well so far, this dynamics and numbers are going to change again. this article only talks about PCs and those are valid facts. don't just use every other article in your way to spit your hatred for a company. I'm using windows 8 and it's great. there just need to be some better hardware supplied with it.
        dugbug11
      • In denial?

        I would argue that many here are in denial. Surface Pro, Envy X2, Dell XPS 12, ect are all PC's.

        Just because they don't come with a separate CPU and monitor doesn't mean they aren't PC's.
        William Farrel
        • And don't forget..

          So is an i(Any Device) and Mac (any Device) Pro. The PC is not gone. Remember what PC stands for (Personal Computing). What are you doing on an iPhone?.... Personal Computing. Ha!
          jgoode@...
          • The word has evolved

            "PCs" have been a traditional label for desktops and laptops since their beginnings.

            The iPad and iPhone have changed the goal posts to evolve into their own niche of tablets and smartphones.

            My flat-panel OLED TV has computer components built into it, but I would never call it a PC let alone a computer.

            Only dinosaurs like wilie like to define everything by the old standard. The kind of people who haven't evolved much since 1998.
            CaviarGreen
        • Uh, think again...

          A Surface, Envy X2, etc... Do not run PC games well if at all. Comparing Apples to Oranges.

          Why are PC sales declining? It is inevitable. I may post again with more detail on this.
          ryanstrassburg
          • Silly comparison!

            Cheap basic desktops and laptops don't play games very well either!
            martin_js
      • m1cr0hard....did Owllll1net actually say the word "SURFACE" with a straight

        face or did he have a big wide toothie grin from ear to ear ?????????

        Maybe he getting ready to do a stand up act, but instead of doing it on Saturday Night live, he's starting out here on Zdnet..........Owllll1net always has something funny to say here anyway.........
        Over and Out
      • Ha. Steve Jobs said...

        he didnt want to go to a smaller form factor tablet.

        It dosnt take a brainwave to understand why. Mr. Jobs wanted to shove Microsoft and Windows out the side door by way of a tablet takeover that could only ever be accomplished by a large enough form factor that real work could hope to eventually be done on.

        The brillient Mr. Jobs knew full well that the first tablets wouldn’t be able to pack the full punch of a desktop PC, but if it could be sold in large enough numbers for what it could do, it would open the door and improved hardware over the next 5-10 years would mean a tablet may be able to reasonably run a full on OS with full applications and reasonable work like storage capacity. They just needed the foothold and to be able to keep up the interest and hang on log enough.

        Brilliently enough, Mr. Jobs knew obviously you will always need a reasonable size screen to do real work on and an iPad is just, just barely large enough to do quite a number of working tasks. Mr. Jobs also knew that if the day came where smaller tablets became the popular size it would create serious problems for an iPad take over because smaller screens, even with much better internals and operating systems were always going to be hobbled due to lack of screen real estate for far too many tasks. And he was right of course.

        Mr . Jobs didn’t have to detail his vision of how such a thing as the post PC era would finally arrive, but he sure made it obvious with his actions and words. But now, alas, the very thing he needed not to happen was to have people decide an even smaller screen than a 10 or 11 inch has more mobile advantages than the size advantages of a standard iPad, and it is starting to happen right before our eyes.

        People do like mobile. And they like mobile because its mobile, not because the hardware is so damn much fun and easy to do a days work on. The fact is, its not. Now, as the world seems too be slipping slowly into a more and more mobile world and a whole lot less about the imagined magical capabilities of a 10 or 11 inch tablet, Mr. obs post PC world is moving farther away than it was a mere year ago.
        Cayble
    • What the Surface class device does

      is it removes the need for more than one desktop per household in most situations. You still need that one desktop for heavy lifting and mass file storage, but most lighter and common tasks can be moved to the so called Post-PC devices.

      I have a Samsung ATIV 500 (Atom based), which I can use as a netbook or as a tablet, whichever form factor suits my needs at the time. It runs Windows 8 so my application selection is the same as what I use on my laptop, which is a 17" monster and really only suited to move around the house and not be taken outside of it. I also have two media PCs attached to the two TVs in my house, one of which has a Ceton M-Card reader, so I can watch cable TV through Windows Media Center not only on that PC but on all my Windows devices that have WMC.

      The laptop and media PCs are at least 3 years old apiece and I have no plan on updating any hardware save perhaps adding more HD space. But the Samsung ATIV I may upgrade in two years if something cheap and better comes along. The reason I am going into all this detail is that it demonstrates the power of an integrated system, which Windows is capable of providing with its combined offerings. I also have an Android tablet which does have a couple applications I really need that Windows does not (one is a custom made app), but that does not integrate well with everything else. That is the real power of Windows 8/RT, the fact that it integrates with your existing hardware without the need to replace it.
      Michael Kelly
    • its dead

      Its "evolving" into impractical, experimental form factors out of desparation (like throwing sh*t at the wall). The windows PC is dead. In terms if being in decline until some stable leveling off at some point still being used by people who truly need a full blown PC. Who knows where that will be. Of course there will never be 'no PCs' anywhere. I love my PC, because I am a software developer. If I wasn't, I would not use a PC practically ever. My phone and HDMI android stick take care of all my personal computing needs.
      drwong
      • Most people do not want to use their 60" TV

        as their primary computer. There is a place for Android devices and iDevices, don't get me wrong, but the need for legacy applications on Windows still exists for most people.
        Michael Kelly
        • Unless they're 60 years old maybe?

          My dad uses his flat panel TV as a computer monitor ... helps with his degrading eyesight. :)

          But I would argue about what defines "most people" in terms of computers ... if all anyone uses a computer for is web browsing, email, messaging, and maybe light gaming -- which defines a great deal of both older and younger generation of non-technical users -- then just about any of the myriad of powerful smartphones / tablets out there ARE, in fact, enough. We need some new statistics on what makes up the "average" home user.
          Robert Showalter
          • TVs make great monitors!

            My 86 year old uncle loves his 42" TV as a monitor and speakers. My sister-in-law loves her 27" TV as a monitor and speakers. I don't think I would like to work on a computer from the couch, but big monitors can be really nice.
            Keltypack
          • Indeed, those people you speak of

            will be satisfied with a cheaper device. However, going back to my post above this thread, I can see individuals within a household making good use of these cheaper devices for most of their computing needs, but the household itself would probably still need that one good and solid PC that is utilized for heavier work loads. The cheaper devices will just mean there will be less fighting over who gets to use the PC at any given moment.

            And that is household usage. The workplace will need the PC even more, although as I've mentioned in other threads in other articles there is certainly a place for the mobile device to replace the PC in the workplace as well.
            Michael Kelly
        • legacy apps

          Except the average joe will slowly move away from "time consuming, complicated" (as they see it) legacy windows software. Really, how many people truly need full blown photoshop? Its actually a bad way to do it and costs a fortune (although they probably got it for free)

          1 Take a picture.
          2 connect the camera to the computer
          3 transfer it
          4 open it in photoshop
          5 figure out how to remove red eye through several steps buried in layers of menus
          6 save it in the proper quality, size format etc
          7 open some app to upload to the cloud

          Phone
          1 take picture
          2 press 'remove red eye'

          at some point it will be uploaded in the background
          drwong
          • Who uses Photoshop to remove red eye?

            The imaging software that ships with most operating systems can handle such a basic task.
            ye
        • most people

          old enough to own multiple PCs and TVs. Meaning few 20-30 and no teenagers. For the next 10 years Windows integration may matter. After 10 more years, not really.

          As for desktop software, demographics are even worse for Windows. Other than games, my kids use desktop software less than 1/4 the time they're using their computers.

          There are maybe a dozen Windows desktop programs with no good equivalents on Macs or Linux. Most of these cost several hundred dollars. Not an issue for Mac users, perhaps, but cost prevents most of these from being widely used. Office may be the sole exception, and for 90% (or more) of home users, Office is gross overkill.

          Windows desktops won't go away any time soon. Just like mainframes haven't gone away. But the days of multiple home desktop PCs have come to an end, and the need for Windows tablets is questionable. In my own house we had 6 Windows licenses 5 years ago. Today we have 3 (2 PCs, 1 VM), along with 2 Macs, 2 iPads, 2 iPhones and an Android phone (my wife and I pigheadedly continue to use ancient, no contract feature phones). When my youngest goes off to college, she's going to switch from a hand-me-down PC to a Mac notebook. That's MSFT's future.
          hrlngrv 
          • oops

            the 1/4 of the time: meaning they're using their web browsers 3/4 of the time.
            hrlngrv