The PC is dead. Long live the PC

PC shipments are expected to decline for the first time in over a decade. Is it the economy, or a post-PC evolution?
Written by Andrew Nusca, Contributor

For the calendar year 2012, PC shipments are expected to decline for the first time in 11 years, according to a new study.

Not since 2001 has the worldwide industry suffered such a decline, raising questions about whether we're weathering an economic slump -- or watching an evolutionary change.

The study, by research firm IHS, predicts that the total PC market for 2012 will contract by 1.2 percent, to 348.7 million units shipped. Last year, manufacturers shipped 352.8 million units.

IHS analyst Craig Stice had this to say:

There was great hope through the first half that 2012 would prove to be a rebound year for the PC market. Now three quarters through the year, the usual boost from the back-to-school season appears to be a bust, and both AMD and Intel's third-quarter outlooks appear to be flat to down. Optimism has vanished and turned to doubt, and the industry is now training its sights on 2013 to deliver the hoped-for rebound. All this is setting the PC market up for its first annual decline since the dot-com bust year of 2001.

How's that for a feel good hit of the summer?

The reversed outlook blames false hope in ultrabooks, convertible tablets and Windows 8 -- marketing bunk, niche form factor and not-yet-shipped, respectively -- but the question is whether we're seeing tight-fisted spending in an unstable economic environment or the beginning of the post-PC era, where mobile is king.

To answer the economic question, we can look to 2001 for guidance. 

We wrote then, in 2000:

IDC predicts that 38.8 million PCs will be sold in Europe, the Middle East and Asia in 2000 -- a growth of 16.4 percent, down from 16.7 percent in 1999. However, it does not believe the small drop is the start of a slide in PC sales: Internet access is still driving consumer sales, and the free calls model being adopted by AltaVista, ntl and Freeserve will help keep PC demand high in 2000, according to IDC analyst Andy Brown. "This is not the beginning of a slide, sales will continue to be strong in 2000," he said.

But although Brown predicts another healthy 12 months, by 2001 PC technology will start to loose its appeal. He predicts PC sales will drop "in 2001 to around 15 percent".

Brown foresees that alternative technologies such as WAP phones, Bluetooth and interactive TV are already beginning to effect PC sales. "There certainly is a greater focus on wireless technology. Consumer devices and interactive TV are starting to impact the low end of the market," he said. 

Once you pick up your slackened jaw from the time warp, you'll note a few things:

  1. There were drivers that helped keep PCs relevant, namely the Internet.
  2. There were fears that other technologies would render PCs irrelevant.
  3. Many of those fears pertain to technologies still sitting on the sidelines today.
  4. With the benefit of hindsight, we know that the 2001 slowdown preceded a decade of unfettered growth -- both for PCs and the "alternative technologies" then-thought to compete with them.

In other words, a similar situation to what we have today. Except now, most of our discretionary computing -- uploading family photos, sending e-mail for personal reasons, getting driving directions, looking up information -- has moved to mobile devices.

We may not be seeing the end of the PC -- after all, we all have a lot of work to do at the office -- but we may be seeing the beginning of the end of the consumer PC, or at least the prevalence for homes to have second, third and fourth PCs scattered about the house.

In today's report, IHS generally concerns itself with the outlook for 4Q12 -- the crucial, technology-friendly, profit-generating holiday season we're now in -- but I'm much more interested in what comes after that. Because it appears that while there are more individuals with more access to connected computing devices than ever before, few of those fall under the old category of "PC."

IHS believes that a "strong rebound" could occur for the PC market in 2013, but unless there's some lucrative market somewhere on Earth that still hasn't been tapped by multinational PC makers, I think that's unlikely. The boom days for the PC are over, and my hunch is that PC shipments will continue to rise in a linear fashion -- after all, more people working need more computers which need to be replaced more frequently because we're making technological leaps more rapidly -- but that growth rate will pale in comparison to the rise of other connected computing devices, which I believe will replace their disconnected counterparts quickly and easily. 

The traditional PC and mobile device never addressed the same needs, but the mobile device addresses some needs better. And that's where we'll see some shifting.

In the post-PC era, the PC remains viable and more vital than ever, but as a workstation -- at least until someone invents an input method that is superior in accuracy, speed and privacy to the lowly keyboard. But for the discretionary computing in which we engage every day, a mobile device will more than suffice.

"Whether a newly configured PC space could ... stand up to the powerful smartphone and tablet markets, however, remains to be seen," IHS says. I think they're looking at it all wrong: without question, personal computing devices are proliferating at a rate never before seen in history. But "PCs"? Well, it all depends on how you categorize things.

The PC is dead. Long live the PC.

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