Photo: Eddie Codel/Flickr
The walloping the PC industry received in the first quarter of this year, down 14 percent according to IDC and the biggest decline since the research firm began tracking PC sales in 1994, was no fluke. IDC is now forecasting 2013 to be the second year in a row that overall PC sales will decline, by about 8 percent versus the 4 percent slide posted in 2012.
So the PC is doomed, but classic PC companies may not be.
In the place of the notebook in particular has arrived the tablet, which for the first time since Apple (or Microsoft if you are stickler for these things) launched the computing device to the masses will overtake the notebook computer in units shipped this year. IDC pegs the number of tablets that will ship in 2013 at just over 229 million. That compares to the 201 million “portable PCs” the firm expects to see ship this year. By 2015 IDC forecasts tablet shipments to outpace the entire PC market (portables and desktops combined), so somewhere north of 330 million machines shipped. “What started as a sign of tough economic times has quickly shifted to a change in the global computing paradigm with mobile being the primary benefactor,” says Ryan Reith, Program Manager for IDC’s Mobility Trackers.
Oh the horror, if you are Hewlett Packard, Dell, or Intel, those PC-reliant former tech stars, right?
Wrong. The decline of the PC is no different than the sun setting on mainframe computers when the microcomputer came along, or the end of the microcomputer when the PC ate its lunch. Yes, some companies like Burroughs, Univac, DEC and Wang failed to make their generation’s computing transition. But on the day that the death of the PC was all but declared, the share price of HP was up 2 percent. Intel was up 1 percent. Dell was basically flat.
The reason Wall Street is unimpressed by the end of the PC era is that the smart companies that ruled the PC-era have already moved on. HP and Dell don’t get much credit from Wall Street for their PC businesses already, it’s all about software and services in the cloud. Intel is running as fast as it can toward mobile (AMD too). So is Microsoft. Certainly all the companies mentioned have suffered mightily from their longstanding attachment to the PC, and there is plenty of work to be done if they are to regain any of their former stature, but they are already moving where computing is headed. The only pure-play PC companies left, like Acer, Asus and Lenovo, are either playing the commodity game or hiring software engineers as fast as they can to get into other parts of the food chain.
“We should look at tablets as part of the continuum of compute,” says Patrick Moorehead, a consultant and longtime industry analyst who runs Moor Insights & Strategy. “Compute is going on your wrist, in your phone, in your tablets, on your wall, in your car and in some cases inside your body,” Moorehead says. “It has been slowly spreading out and decentralizing for the last 50 years.”
As processors keep the computing muscle of smartphones and tablets alike growing, even as the battery power they require shrinks, so-called tablets connected to cloud-based services will blur the line between a high-powered PC and a dumbed-down touchscreen. If the next generation of tablets can connect to a keyboard and act like a laptop, snap into a dock and act like a desktop, or link up with a massive screen, and perform all the tasks a PC can, are they still just tablets? It sounds a lot like a PC, what’s different is that the value in these machines (Apple’s products an exception for now) has moved increasingly away from hardware into software and services.
“The way I look at this shift to tablets isn’t so much what companies control the form-factor,” Moorehead says. “What’s most important is whether or not you are racing to attach yourself to two ends of the compute spectrum: a thinner client (like Android and iOS) or the cloud that powers it. If you aren’t, you are in a very, very bad spot right now.”
From Moorehead’s perspective, it’s not classic PC companies like HP and Dell who are missing the boat, but Wi-Fi and Bluetooth chip makers like Marvell and Broadcom that could be in trouble without a broader mobile portfolio. He also points to IBM and Oracle as vulnerable to the shift that the tablet embodies. “IBM is as far behind in the shift to cloud as one can be in the enterprise,” Moorehead says, “Oracle just found religion on cloud last year.”
So what company is best positioned to ride herd on the next phase of computing? Google, Moorehead says. “It could end up being the big winner here,” Moorehead says. “They own 75 percent of the smartphone platform, and they have the most experience in the cloud with consumers. Put an enterprise frame around the Google cloud offerings and they would do some serious damage.”