What Does Q1 Sales Drop Mean for PCs?
Personal computer sales are headed in the wrong direction. According to International Data Corp. (IDC), U.S. sales of PCs fell 12.7 percent during the first quarter of 2013, the worst quarterly performance in nearly two decades. What’s behind the plummeting PC numbers? IDC put the cause on tablets (no surprise) and consumer unhappiness with Microsoft’s Windows 8.
"While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices," said Bob O’Donnell, IDC program vice president, clients and displays, in a statement. "Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."
HP, which saw PC sales in the U.S. drop nearly 23 percent during the period, remains the market leader, according to IDC. Dell (-14.4 percent), Apple (-7.5 percent) and Toshiba (-5.2 percent) all experienced declines. Lenovo with sales up 13 percent was the only major manufacturer not in negative territory.
Gartner, which publishes its own report, reported total PC vendor shipments in the U.S. were down 9.6 percent during the first quarter. It had HP (-23.3 percent), Dell (-14.5 percent) and Toshiba (-5.3 percent) all down during the first quarter. Lenovo (+13.8 percent) and Apple (+7.4 percent) were said to be gaining.
Gartner said the drag on PC sales was in the consumer, not the professional market.
"Consumers are migrating content consumption from PCs to other connected devices, such as tablets and smartphones," said Mikako Kitagawa, principal analyst at Gartner, in a statement. "Unlike the consumer PC segment, the professional PC market, which accounts for about half of overall PC shipments, has seen growth, driven by continuing PC refreshes."
- PC Shipments Post the Steepest Decline Ever in a Single Quarter, According to IDC – International Data Corp.
- Gartner Says Worldwide PC Shipments in the First Quarter of 2013 Drop to Lowest Levels Since Second Quarter of 2009 – Gartner
- Apple’s Mac U.S. sales grew 7.4% (Gartner) or fell 7.5% (IDC) – Fortune
- PC industry sees worst sales quarter in nearly 20 years – San Jose Mercury News
Discussion Questions
What is your prognosis for the future of PCs in both the consumer and professional markets? Is the migration from PC usage to mobile devices a good or bad thing for the overall consumer electronics market?
First came the movement from desktop to laptop PCs. Next came the wave of mobile devices (especially tablets) that displaced a large portion of the laptop market. Next time you’re at a meeting, count the number of tablet users (especially connected to Bluetooth keyboards) versus laptop users.
But the biggest issue speeding this change is the negative reaction to Windows 8. Existing owners of PCs do not want to risk an upgrade since the software seems designed for touch screens rather than the “old school” technology that is much more widespread. No kudos to Microsoft for a poor design to start with, followed by poor marketing.
PC sales have been declining and will for some time to come—no news there. The PC market has peaked and new forms of computing have taken hold and won’t go away. Yet, PCs will continue to exist and sell.
This is sort of a “market correction” meaning that for some people (consumers mostly) a PC is not the correct computer platform. Over at least the next 5 years there will be a bunch of positional changes as people find the best form factor for their needs and go with that. For some PCs will still be the mainstay, for others, Ultrabooks, others Chromebooks, and for many, some form of mobile device—including wearables.
Ultimately, users will have the opportunity to choose the best experience for them, unlike the days of a market almost entirely made up of beige boxes and 15″ CRT monitors. It’s all good!
Mobile devices are definitely impacting the PC market. In talking with several individuals at a recent industry meeting, they all indicated that they can avoid carrying a laptop because they can handle emails on their smart phones or tablets.
That being said I don’t foresee desktops going away. Laptops are far more likely to go. However, it’s still faster and easier to type on a keyboard than a screen. Can’t imagine being on the road and working with spreadsheets on a tablet.
In addition, PCs have long relied on new operating systems to help drive sales. In some instances it was easier to by a new PC rather than trying to upgrade the operating system.
The issue for PC manufacturers is Windows 7 is a stable operating system and only coming up on four years old. Windows 8 is designed to allow MS to offer one system on tablets and PCs. To take advantage of its full capabilities means also having to move to touch screens which on a tablet are ideal but not on a desktop. We are looking to replace some PCs but when we do, we will be looking to buy them with Windows 7.
The statistics quoted in this article can’t be a surprise. It just takes a little kitchen table (maybe tablet) research.
I believe that consumers can satisfy their computing needs with a tablet and that PCs provide more usefulness than they have use for. Tablets are a simplification of the PC and all that many consumers need. In fact, they probably are still more powerful with unused capacity.
Tablets have widespread appeal and uses as they migrate to businesses, especially retail. Often we can see restaurants and stores share tablets for their staff to use to enhance customer service, i.e. immediate source of information and ordering.
Perhaps there is a parallel enlightenment in other business segments. When companies realize their staff’s work can be effectively conducted on a tablet or something other than a PC, that’s the direction they will take.
When PC’s became popular in the office, the intent was for everyone to have the identical hardware/software configuration. This was done to realize economies of scale. Saving money without sacrificing is still the goal, but tablets and other smaller than PC devices offer more options. Hence, PC sales will continue to drop.
Consumers are moving towards mobility and PC sales will suffer. As software allows tablets and smart phones to handle more and more of consumers’ personal computing needs, they will purchase fewer PCs.
Businesses, large and small, will still gravitate towards PCs as they need the computer power and functionality.
The computing marketplace has become fractionalized, a trend that is not going away.
I’ve been giving this a lot of thought since I read the numbers. I’ve also been trying to figure out if I could actually use my tablet to create spreadsheets and presentations.
One should never say never (unless you’re Taylor Swift, I guess) but I can’t see myself ever using a tablet to do those things. But when I’m “off the clock” I rarely pick up my laptop anymore. It’s just easier to use my iPad for shopping, email, reading, social media and other consumer-type tasks.
So I think the PC is going to wind down as a consumer device, and continue on longer as a professional device. However, with the exception of large companies who have issues with Apple’s inability to “play nice with others” like security apps, I think more professionals will use Macs than PCs.
Windows 8 did nothing to change that trajectory—but I’m not quite sure if a better or more friendly OS would have made a difference. It’s just easier to play with a tablet. I’m also fascinated by the data point (not listed here) that reports Windows 97 still running 30% of personal computers (can’t remember if that was a global or US only number). That’s a SIXTEEN YEAR OLD operating system. Apparently it’s still adequate for major companies.
In other words, the PC may be returning to “niche product” status, while the tablet becomes the ubiquitous device of choice in the B2C world.
I think it is three things, first two are easy, tablets and smartphones. The third thing is that Windows 8, while really cool, was too much of a change for most users. One feature that most salespersons are selling is the way to get back to normal windows. And that pushes more users back to their smartphones and tablets.
PC sales will continue to decline as consumers spend more on alternate electronics. It is not really unexpected.
The focus on PC sales is overblown and short-sighted. The real issue is “are consumers continuing to increase their spending on devices for access to digital content?” And the answer is a resounding “yes!” Whether the traditional PC makers will be the providers of these devices is an entirely different question.
The professional market will continue to grow and companies have treated PCs the same way consumers have treated cars during the recession—use them until they quit. Replacement volume will drive the professional PC market until devices like the Windows Surface ‘hybrid’ take over.
And don’t write Windows 8 off so quickly either. Most of the professional market never adopted the Apple OS. But now an entire generation of new entrants to corporate America grew up on the Mac in school. MSFT has to adapt—and they have done a good job. Most of the outcry is from old PC users who just don’t want to change—like me.
Since this article is focusing on personal rather than professional use, I would have to say the prognosis isn’t good for the laptop in general. The smartphones and tablets are, right now, the devices we prefer to play with. They are easier, lighter, smaller and can go with us everywhere.
For the office, the PC or Mac will remain a staple. It’s all about the way the device needs to be used. I, like Paula, can not see creating spreadsheets and power points on a tablet.
As for the consumer products market, the more devices on the market, the better for them!
In the US, smartphones for mobile internet applications will dominate the landscape in the next 2 years. Portability will dictate that more people will buy new netbooks to compliment their smartphones. For the less picky buyer, more and more PCs will be offered as integrated CPU and monitor assemblies with external RAM upgrades. Probably only gamers, scientists, techies and savants will demand PCs with out of this world specs.
However in Asia, there will still be a big market for unbranded inexpensive clone PCs (even as the smartphones are taking Asia by storm) because clone prices are within the purchasing power of most working people living in Asia.
Many consumers had personal computers because they were the only thing available to access the internet. Most consumers never used many of the features and programs installed on their system. For the technology challenged group, the tablet will do all they need. Surfing the web, e-mail and entrainment are their primary applications. For most office applications, the tablet will not be sufficient, so now we have two markets, not one.
Some of the coverage this week has compared PCs today to televisions before the emergence of flat screens and I think that is an apt analogy. PCs are clearly a mature category. Tablets are exacerbating the decline by giving consumers further reason to delay their upgrade cycle.
Overall tablets and smartphones (and probably new form factors that we haven’t even thought of yet) are driving overall growth in the consumer electronics market. It’s a category that has always relied on innovation to drive growth and that’s as true today as its ever been.
We have to realize that there have been two PC markets for years. One market (the work market) will pretty much continue to use the PC format simply for the storage capacity. The second market (recreational) is moving away from the PC at lightning speed and is being replaced by smartphone and tablet.
The migration away from the PC is great if you are AT&T or Verizon. If you don’t own stock in either of these carriers you might want to take another look. Another change is occurring as iPhone and iPad users buy new computers.
Many of these folks are buying Macs instead of PCs. I really think the migration is a good thing for consumers because it breaks the Microsoft stranglehold and introduces competing systems. The more competition we have, the better products will become.
No real surprises here. Tablets are quickly replacing laptops for non-work related activities. And in some cases, are replacing them for work-related activities as well. And the increased use of computing while outside the home/office has driven a lot of people to think “mobile-first”—which means they’re looking for a more mobile platform than traditional desktops or even laptops.
Regarding smartphones, it’s an interesting financial dynamic that [almost all] people buy their phones at an apparent low price and are then tied to a 1-2 year service contract. That allows a $600 dollar mobile computer to be “sold” for $99. Of course, the phone companies make up more than the difference over the term of the contract, but classic human behavior looks at the initial out-of-pocket costs and not the total cost of ownership. T-Mobile’s recent plans buck that trend so it will be interesting to watch what happens. But it also makes one wonder what would happen if traditional PCs were “sold” at the lower price with some sort of service contract.
Mobile devices are great for consumption of data, but in the area of content creation, computers (in particular the need for keyboard, large screen and precision input) is still king. Challenge now is the majority of PC users were content consumers first, creators second, and mobile devices are “good enough” and in some cases superior (mobile video recording and location based social media comes to mind.
I think the migration from PC to mobile will generate new categories in the overall CE market (think how many chargers, adapters, accessories you bought when you upgraded your phone). Question is, how will the current large players adapt to the new environment?