The PC upgrade cycle later this year---consumer and corporate---is going to be very interesting to watch given the evolution of the tablet market and Apple's next-generation iPad.
Apple unveiled its next-gen iPad, which features a high definition display, 4G and other goodies. In addition, the iPad 2 will now run $399 to start.
The more interesting data point about the latest iPad is that it rivals the laptop to some degree. If folks could get by with the iPad 2 as a laptop replacement---something I see more of in the field every day---a more powerful version can have an impact.
How does this impact the PC buying cycle as Windows 8 launches?
The PC has some serious competition. If you're a corporate IT buyer the equation goes like this:
What workers need laptops?
What workers can get by with an iPad?
How many employees are bringing their devices to work?
And can those bring your own device efforts allow you to scrimp on PCs?
When Windows 7 launched the tablet market was a mere blip. Today, tablets are everywhere and Apple controls the market as a bevy of rivals have fallen short. Microsoft is betting Windows 8 tablets can bridge with the PC, but the burden of proof is on the software giant.
In other words, this won't be your standard PC upgrade cycle. Apple made the case that the tablet market will be larger than the PC industry. Apple also wasn't shy about its bet that the tablet replaces the PC in many cases.
Now if you add in two versions of the iPad the PC upgrade cycle becomes even more tricky. The enterprise could go with the iPad 2 that starts at $399 as a utilitarian device. The iPad 3 would be toted by workers as a personal unit. In other words, the iPad 2 could become the corporate worker be device.
Piper Jaffray analyst Gene Munster noted:
Similar to the company's strategy with iPhone, Apple will continue to offer the 16GB iPad 2 at $399 for the Wi-Fi only version and $529 for the 3G version. Given the Kindle Fire ($199) and several lower-priced 10" Android Tablets, we see the price reduction of the iPad 2, and the lower entry-level price for the iPad family, as a strong defensive move from Apple. Moreover, we do not see it cannibalizing iPad HD sales; rather, it expands Apple's addressable market in the rapidly growing tablet space.
Munster's punch line: Apple could deliver iPad unit growth of 40 percent over the next four years. If the overall tablet market was 450 million units in 2016, Apple could have half the market.
A lot of that growth could come from corporate users.
It's still too early to proclaim that the tablet and PC markets are converging, but it certainly looks that way. That reality means this PC upgrade cycle is going to get interesting in a hurry. For Microsoft and Intel, the PC stakes have never been higher.