Apple CEO Steve Jobs, sitting on stage at a conference in 2007 with Microsoft’s Bill Gates, first raised the idea of a “post-PC” era, a time when the traditional PC would no longer be the center of a user’s universe. Instead, more mobile, function-specific devices would come into play, and would make computers much more personal than the PC.
The proposal of a post-PC era certainly was a self-serving one for Jobs, whose company that year released its first iPhone, which would kick off a smartphone revolution that would include such vendors as Samsung, HTC and Motorola, and bring Google’s Android operating system to the forefront. Just three years later, Apple would follow the iPhone with the iPad, which jump-started a moribund tablet market.
There is no question that the introduction of smartphones and tablets—and soon, wearable devices—have had a significant impact on the PC market, where shipments worldwide have continued to tumble in the past several quarters as business users and consumers alike turn their attention and technology dollars to these more mobile and more personal devices.
The ripple effect has been felt strongly by any major tech vendor that has had historically close ties with the PC market, from chip makers Intel and Advanced Micro Devices to PC makers Hewlett-Packard and Dell. Even Microsoft, whose Windows OS has dominated the PC space since the 1990s, has yet to win significant mobile market share. Microsoft is still fighting for traction against Google’s Android and Apple’s iOS.
All these companies are scrambling to reduce their reliance on the established PC market by finding new growth areas, from enterprise IT solutions and the embedded market to game consoles and the mobile space. However, officials with all these companies believe that the PC market will continue to be an important one for them; they note that despite the shipment declines, they will cumulatively sell more than 300 million PCs worldwide in 2013.
They also believe that a new generation of PCs—more portable, more energy-efficient and more tablet-like in a range of new form factors—will give users the necessary incentives to begin buying systems again.
They also expect that Microsoft’s upcoming Windows 8.1—and the ending of support next year for the creaky Windows XP—will further fuel interest.
“The PC market will remain an important business for AMD for years to come,” AMD CEO Rory Read told analysts and journalists during an April 18 conference call. “The PC is far from dead.”
Changes are quickly coming to the tech industry, and the PC segment is not being spared. Tablets, smartphones, the cloud and other trends are having lasting impacts on what devices users want and how they use them. But whether we’re moving into a post-PC world is debatable.
“It’s a moving target,” Charles King, principal analyst at Pund-IT Research, told eWEEK, adding that PCs mean different things to different regions of the world. “There are places in Asia where I think there never was a PC era.”
It’s a ‘PC-Plus,’ Rather Than a ‘Post-PC,’ World, Analysts Say
To be fair, Jobs’ idea in 2007 of a post-PC world didn’t mean one where PCs didn’t exist, but one where PCs would “continue to be with us and morph with us, whether it’s a tablet or a notebook or … a big curved desktop that you have at your house or whatever it might be.”
Bob O’Donnell, IDC’s program vice president of clients and displays, said what the industry is entering is a “PC-plus” era, where tablets and smartphones are used alongside PCs. Very few people use only their PCs for work these days, but neither are there many who can use only a tablet or smartphone for work.
“When you think about what’s going on in the market, you’re seeing a high surge in tablets, you’re seeing a high surge in smartphones, and the PC market is tanking, and it makes sense to see a post-PC world,” O’Donnell told eWEEK. “The reality is that the PC is a still a very important device. The problem is, when you get these other devices, [users’] spending on a PC goes down 25 to 30 percent typically.”
The result is that the traditional lifetime of a PC goes from four years to five, essentially shaving 20 percent off yearly sales. (Most PCs sold are replacements for older ones, O’Donnell said, noting that few people now are buying their first PCs.) In 2010, the market saw 365 million PCs sold globally. This year, that will be more like 315 million, O’Donnell said. If the 20 percent mark holds, that would mean PC sales will hit the floor as they dip under 300 million, which means the industry can expect a few more years of declining numbers before they stabilize.
But they’re not going away, he said. Citing a joint study with Intel of 4,000 U.S. consumers, O’Donnell said that 97 percent of respondents said their primary computing device was a PC, with the other 3 percent saying a tablet.
“Tablets are taking on a more complementary role,” he said, noting that while people use a tablet for certain tasks—from social media to email to Web surfing—the heavy-duty work is still done on PCs.
Actually, the more interesting looming battle will be between smartphones and tablets, O’Donnell predicted. The trend in tablets is toward smaller screens, away from the 10-inch models and toward 7 to 9 inches. At the same time, the screens on smartphones are getting larger, growing beyond five inches and creating what some are calling “phablets.”
As the screen sizes of the devices come closer to each other, users will begin questioning the need for both, he said. Throw in the fact that smartphones already come with 4G capabilities—while many tablets are still WiFi-only—and the trend could spell trouble for low-end tablets.
“If I’ve got a five-and-a-half-inch smartphone, why the hell would I buy a tablet?” O’Donnell asked.
It’s a ‘PC-Plus,’ Rather Than a ‘Post-PC,’ World, Analysts Say
That said, PCs still face their own set of problems, with Microsoft’s Windows 8 being among them. Windows 8, with its extreme changes to the interface, the ditching of the Start button and the increased costs that come with touch-enabled systems, has probably hurt the PC market more than it’s helped, he said.
In addition, confusion around the OS is abundant. For example, few people understood that they could get Windows 8 systems that weren’t touch-enabled, he said. Officials with Microsoft and other tech vendors are expecting Windows 8.1 to clear up much of those problems, including adding the Start button back in.
In addition, some of the new PC form factors still need work before they will be embraced by large numbers of users. For example, Intel’s Ultrabook initiative—offering ultra-thin and light notebooks that include such tablet-like features as long battery life and instant-on capabilities—are attractive but are still too pricey, and need to come down to $600 or less, O’Donnell said.
Despite the challenges, tech vendors—while looking to extend their reach into new growth areas—are not abandoning PCs. Hewlett-Packard CEO Meg Whitman has consistently resisted pressure to spin out or sell off the PC and printer businesses a la IBM, insisting that the company—which is now the world’s second-largest PC vendor after Lenovo—is “better together,” and that PCs give HP necessary scale. In addition, HP is still smarting from the seismic reaction in 2011 to then-CEO Leo Apotheker’s announcement that the company would get rid of its PC business, a decision that hastened his exit.
Michael Dell, who is buying his namesake company and taking it private to accelerate its transformation away from being primarily a PC maker to more of an enterprise IT solutions provider, said a private Dell will continue to invest in PCs as well as tablets.
“While Dell’s strategy in the PC business has been to maximize gross margins, following the transaction, we expect to focus instead on maximizing revenue and cash flow growth with the goal of improving long-term sales and competitive positioning,” the CEO said in a memo to employees in April.
At the Intel Developer Forum 2013 in September, on display among the various Intel-powered tablets and smartphones were new PC designs that company executives believe will drive innovation and sales into the coming year. CEO Brian Krzanich, in his keynote address, said that the “PC is in the process of reinventing itself. There’s more innovation going on in the PC than ever before.”
Krzanich at the show announced the launch of the low-power Atom Z3000 Bay Trail system-on-a-chip (SoC) family, which in combination with Windows 8.1 will help fuel a spate of new PC forms, he said. The most prominent of these, according to Krzanich, are the upcoming two-in-ones, convertible systems that can be used as either a traditional notebook or as a tablet. The CEO said that by year’s end, there will be 60 new convertibles on the market and that number will jump to 75 by early 2014.
It’s a ‘PC Plus,’ Rather Than a ‘Post-PC,’ World, Analysts Say
Such systems offer “the best of both worlds,” Krzanich said. “This is where the PC is heading.”
Include Nathan Brookwood, principal analyst with Insight 64, among those who agree with the Intel CEO. Brookwood told eWEEK that he has been using Windows tablets for years because the devices give him all the features of tablets as well as the backward-compatible Windows applications. He has never believed that tablets can do as good a job with such workloads as PCs. Being able to have the best of both tablets and PCs together is attractive.
“I’d rather have one device that can do both than have a PC and a discrete tablet,” Brookwood said.
He said that PCs needed to adapt to meet new consumer demands and that Intel and Microsoft are showing that they can.
However, IDC’s O’Donnell is less sure that two-in-ones will be embraced by consumers, saying they offered “the worst of both worlds.” Most users are looking for 10-inch screens in their PCs, but screens in the 7-inch range for their tablets. Two-in-ones are looking to offer displays that are smaller than what people want in their PCs and larger than what they’re looking for in tablets. In addition, the price points for convertibles now tend to be higher than what a separate PC and tablet go for now, he said.
However, even as new form factors come out from a wide range of PC makers, the next few years will be difficult for those in the market. IDC analysts in September forecast that tablet shipments in the fourth quarter will surpass those of PCs—both desktop and mobile—though for the year, PCs will still outsell tablets. However, by 2015, tablets shipments will outstrip PCs for the year, the analysts said.
Between 2013 and 2017, tablet shipments will grow 78.9 percent—and smartphone shipments by 71.1 percent—while notebook shipments will jump 8.7 percent and desktops will decline 8.4 percent.
In a September interview with BusinessWeek, current Apple CEO Tim Cook summed up what PC makers face. Cook noted that smartphones sales will continue to grow rapidly and that the tablet market will continue to see an influx of vendors—including the PC makers themselves—into an increasingly crowded space. He noted the numbers from IDC show tablets shipments overtaking those of PCs.
“I have always said that the tablet market was going to surpass the PC market,” Cook said. “I was saying that well before it was viewed to be sane to say that. It’s clear that we’re 24 months away from that. So that probably has accelerated even more than I would have thought over the last year. And so to do well in the PC market, you have even more differentiation. There has to be a different reason for buying a PC. Of course, we think about that a lot with the Mac and believe that we’re doing that with the Mac. But if you’re a PC player, it’s not a great world to be in right now.”