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Sluggish Sales Hint at End of PC Era

Sluggish Sales Hint at End of PC Era

The PC may have reached the autumn of its life span. Shipments were down in the last quarter of 2012, suggesting that consumers are beginning substitute tablets for laptops. On the other hand, it may just be that consumers and businesses are not rushing to replace their perfectly fine Windows 7-running units. That may change if the faltering global economy improves.

By Peter Suciu E-Commerce Times ECT News Network
01/14/13 2:35 PM PT

PC sales sank in the fourth quarter of 2012 due to increased competition from smartphones and tablet devices, Gartner said in a report released Monday.

Shipments totaled some 90.3 million units -- a 4.9 percent decline from the fourth quarter a year earlier, the firm found. In the U.S. market, PC shipments fell 2.1 percent from the year prior to 17.5 million units.

The decline was attributable largely to consumers purchasing tablets and smartphones rather than replacing older computers, Gartner said, which could suggest that consumers are starting to see the tablet as suitable for content creation as well as consumption.

"It is depending on how you define content creation," said Mikako Kitagawa, principal research analyst at Gartner. "If you think posting photos and comments on Facebook is content creation, then yes, a tablet can do some content creation."

However, the PC will still remain the de facto device for content creation, she added.

"When it comes to more complex activities such as working on a spreadsheet or updating a personal website -- not just a microblog or simple blog -- then PCs offer higher productivity compared to tablets," Kitagawa told the E-Commerce Times.

Tablet Market

The slowdown in PC sales could be attributable to a number of factors, including the fact that many machines running Windows 7 aren't all that old -- the operating system was introduced in 2009. Many users tried to remain on the Windows XP OS for as long as possible.

The fact that there has been little pressure to upgrade is one factor, but the surge in mobile device use can't be ruled out either.

"The Gartner and IDC Q4 PC sales numbers are an obvious disappointment, but the falloff is the result of a combination of factors, including users migrating to mobile devices and stagnant economies -- especially in Europe and parts of Asia," said Charles King, principal analyst at Pund-IT.

"Those factors also work in concert -- that is, for a relatively modest investment, a consumer can purchase a low-end laptop PC, a good quality tablet or a high-end smartphone," he observed.

"The bottom line is that smartphones and tablets, either separately or in concert, can deliver a literally better bang for the buck than many PCs," said King.

Broken Windows

It wasn't supposed to be this way. Microsoft had pegged its strategy on its new Windows 8 OS, which would mimic the tablet experience on a laptop -- and potentially even a desktop.

"The lack of Win 8 uptake suggests that even while most users continue to use conventional PCs, they're not upgrading them. The fact is that without touch-enablement, Win8 is not a compelling product," King told the E-Commerce Times.

"That's lousy news for PC makers," King noted, "but things could pick up during the coming year as larger numbers of touch-enabled Win8 laptops, tablets and all-in-one PCs become available, along with next-gen Intel CPUs -- by Q4 -- which will deliver significantly better battery life and system performance."

The window thus isn't closed for Windows 8, and in the long run the OS could gain steam and traction. Still, it hasn't been the breakaway hit that Microsoft no doubt wanted it to be.

"Not many PCs had fully taken advantage of Windows 8 yet. There was still lots of confusion around W8 from the vendor perspective; thus, consumers did not get the right messaging," said Kitagawa.

"The industry needs to develop more intuitive touch-based PCs in order to take advantage of Windows 8 and have better communication with consumers," she said, but noted that it's too early to call it a success or a disappointment.

In some quarters, though, it is never too early to cast blame.

"Windows 8 had a nasty problem. Most of the hardware that was to have launched with 8 was delayed until this quarter because of a severe shortage of touchscreen displays," said Rob Enderle, principal analyst at the Enderle Group.

There's been "a lot of finger pointing as to who screwed this up," he told the E-Commerce Times, "but given that Sinofsky had to step down, my guess is that most pointed to him."

Mac Picks Up

An interesting twist on this is that Apple's Mac has seen a surge while Windows-powered machines have slid. Are people actually "thinking differently," or is something else at play?

"The Apple Store draw helps sales, and Apple had decent store draw in the fourth quarter," said Enderle.

However, closer examination must be paid to these reports, he added.

"PC shipments from Gartner come from the vendors, and Apple really doesn't share these things officially," Enderle added. "With all the pressure downward on their stock price, the likelihood that they may overinflate this number goes up."

This could explain why the numbers from competing analyst firms don't exactly show the same thing. While Gartner noted that Mac sales increased, IDC's numbers suggest otherwise and actually indicate a drop in sales. If Apple did see a bump, could it have resulted from iPad owners looking differently at the Mac?

"The news for Apple was a bit confusing, since while Gartner showed a dramatic surge in Mac sales, IDC showed a slight decline," noted King. "There does seem to be a connection between Apple's iPhone/iPad leadership and Mac sales."

It is also worth noting that Apple has experienced wild success in smartphones and tablets but only mild improvements, at best, in Mac sales.

"It simply demonstrates that the company is not immune to economic factors," King pointed out. "That is, tens of millions of consumers who have adopted the iPhone and iPad aren't willing to pay the premium to become Mac owners."


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