TechWeb

PC Sales Slump Continues

Aug 30, 2013 (08:08 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=240160648


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For the PC market, it's been a long drop from the top. Shipments of PCs and laptops have been in free fall for more than a year, and according to the newest data from research firm IDC, they're still a long way from rock bottom.

On Thursday, IDC revised its 2013 projections, downgrading an expected 7.8% slide to 9.7%. The firm expects the market to continue declining through at least the end of next year, and to return to no more than single-digit growth in 2015. IDC said PC shipments will never rebound to the peak levels seen in 2011.

In a statement, IDC attributed the PC market's ongoing woes to not only cannibalization from tablets and other mobile devices, but also declining demands in emerging markets, which had, until recently, been keeping sales afloat. The firm noted that shipments in emerging markets are expected to fall faster than those in mature markets -- a dynamic that's never occurred before. This year's shipments to China, arguably the most important developing region, are expected to decrease by more than 10% relative to 2012. IDC also reported "stubbornly depressed consumer" interest in new PCs

[ Tablets have eaten into PC sales, but they can't rest on their laurels. See Tablet Sales Face Growing Threat From Smartwatches, Phablets. ]

IDC found that desktop shipments have eroded more quickly than shipments of laptops, netbooks and two-in-one Ultrabooks. By 2017, the firm anticipates increased demand for these portable devices in emerging markets such as China, Latin America, Africa, the Middle East, and Central and Eastern Europe. The demand for desktops is projected to continue declining around the globe, however, and both laptop and desktop shipments are expected to continue declining in mature markets, which include the United States, Western Europe, Japan and Canada.

It's worth noting that analysts' PC projections have been consistently inaccurate over the last year. Unfortunately for PC makers, the mistakes have involved overestimating the market's ability to rebound. In March, for example, IDC projected shipments would retreat by only 1.3%.

Though the market has continued to unravel for longer than expected, PCs are not becoming obsolete. Even in this year's depressed market, manufacturers will ship around 315 million units -- a huge volume by any standard. Traditional computers aren't hurtling toward extinction so much as taking a place in a new multi-device hierarchy.

According to recent data from Forrester Research, many people are interested in using tablets with keyboards, but most users do not consider tablets to be laptop replacements. Specifically, the firm found that 80% of users prefer to use mobile devices and traditional PCs in combination. The implication is that, just as society continued to use trains and boats after the introduction of airplanes, companies and individuals will continue to need PCs despite the popularity of tablets. Desktops and laptops once had the computing universe to themselves, but now they have to share duties with other devices. Traditional PCs haven't been obviated; they've simply shifted to a smaller role.

A July study from Gartner offers similar conclusions. "iPads complement -- and don't displace -- desktops, laptops and smartphones," Gartner research director Mark Cotner said in the study, "How to Succeed with iPads in the Enterprise and Avoid the Pitfalls." He noted that tablets can be more productive than IT managers sometimes appreciate, but that other devices remain essential. Users employ "a combination of all of them, at different times and in different situations, depending on the task at hand and which device is closest," Cotner wrote.

The PC market was already mature by the time the iPad created the modern tablet market, which means that many of the people who bought tablets already had PCs at home. These PCs ceded some of their duties to tablets while continuing to capably complete their remaining tasks, such as heavy word processing. At the same time, new computers haven't improved over previous models at the rate that new tablets have. Given tablets' lower costs, many have chosen to delay PC upgrades.

In IDC's statement, senior analyst Jay Chou said consumer interest might increase slightly in the short term thanks to Intel's new processors. The chips are more energy efficient than previous versions, meaning OEMs will be able to produce laptops with tablet-like battery life and ultra-slim form factors. Chou countered, however, that "the current PC usage experience falls short of meeting changing usage patterns that are spreading through all regions, especially as tablet price and performance become ever more attractive." In other words, the PC market could benefit from new devices with new chips, and from new operating systems such as Apple's OS X Mavericks and Microsoft's Windows 8.1, but nothing coming down the pipe will revitalize the industry.

IDC sees consumer demand increasing modestly beyond 2014, as aging PCs finally begin to break down. The firm noted that businesses are also pushing PCs into longer lifecycles, but many may start buying new hardware soon. IDC analyst Rajani Singh noted that many companies are currently migrating off of Windows XP, which loses service in April. He said this should drive shipments in the commercial segment. IDC foresees additional commercial activity beyond 2014, when companies begin looking beyond Windows 7.

The prognosis is not encouraging for Windows 8's enterprise prospects. Microsoft hopes that Windows 8.1 will change that, as it includes several enhancements aimed directly at PC users, including a boot-to-desktop mode. Microsoft will begin trying to defy analyst expectations when it releases the update on October 18.