IDC recently released its forecast of PC sales for the last quarter and said PC shipments were down 13.9 per cent. It laid much of the blame on Windows 8, but I am not sure this analysis is completely correct. While others have also mentioned Windows 8 as a key factor in the steep decline of the PC, there are other layers to this onion and Windows 8 is just one of them.
Windows 8 being a transitional OS certainly played a role, but I think factors such as refresh cycles are also culprits. The PC industry would still face these challenges even if the tablet had not been invented – these days consumers simply hold on to their PCs as long as they possibly can. It is not just that consumers don't feel inspired to upgrade, it's that the notebook they have been using is good enough.
The same has been true of enterprise accounts to an extent, and if Windows 8 is to blame at all, it would be with regard to IT purchasing. Large enterprise buying activity often leaned towards the first half of the year. With many IT customers not being early adopters of new operating systems, we never saw large quantity buys in this period of time for traditional PC form factors.
The days where we look to the PC as a benchmark for the health of the technology industry are over. Many PC buyers simply don't value the PC as much as they used to. Instead, in the buyers' eyes the value has shifted to mobile by way of smartphones and tablets. This is true of both consumers and enterprises. PCs continue to play a role in many people's lives, but they are not as central as they once were. Tablets and smartphones have encroached on their turf.
If anything, the future of the PC will be defined by one factor – a low price. We buy them because we need them, but not necessarily because they are highly valued. Of course high-end market segments will still value the traditional PC form factor, but that is a much smaller niche compared to the mass market. This does not mean consumers are ready to toss PCs out of their digital mix altogether. We just see them holding on to current models longer, or if they do need to buy a PC, it will be the cheapest they can find to meet their basic PC needs. Current lower priced PCs are "good enough" to meet any needs that can’t be handled by tablets or smartphones.
The revenge of Steve Jobs
Last week, I wrote about Steve Jobs and the way he had hoped his Apple II, and then the Mac, would be the market leader in PCs. But IBM clones and Microsoft stole Jobs' thunder and dominated the PC space for decades.
If you peel back another layer of the onion you see another key reason for the PC’s decline in demand. In one sense, Jobs finally did deliver a PC that gave Apple a weapon against Microsoft and the dominant IBM PC clones – you could argue Jobs finally got the dominant platform of the future with the iPad. With this tablet Apple has reversed the fortunes of PC vendors. All Things D published both the IDC and Gartner numbers for Q1 2013, and wrote about both companies' guidance for PC sales for the rest of the year.
"At this time," wrote Arik Hesseldahl of All Things D, "it has to be said that much of the blame for the damage being done to the PC businesses of all the companies around the world can be laid at Apple's feet: Sales of the iPad, the world's leading tablet brand, have a lot to do with the collapse in PC sales."
When Jobs introduced the iPad he said this product would drive the post-PC era. I think he knew his tablet was the reinvention of the PC he had long sought to bring to market, and that it would actually cause the decline of PCs, even if it meant cannibalising Mac market share. And by the time he introduced the iPad he had all of the hardware, software, and services needed to connect the iPad to his ecosystem in place. Even with a decline in Macs he was insulated from the impact of a Mac sales downturn on his business.
On the other hand, HP, Dell, Acer, and other PC OEMs who were totally PC-driven are feeling the shock of the PC decline; unlike Apple they are not insulated from the impact of these sharp declines in PC demand. Their only hope is that Microsoft can deliver key software and services they can use on tablets and convertibles of their own. It may be too late however, given Apple's strong lead in tablets, not to mention competitors like Samsung, Amazon and others who are in many ways better insulated through their own ecosystem of products and services.
While Jobs is no longer with us, I think he knew this would happen. Perhaps his last major act was to give us the iPad – the final revenge for his years of toil in the PC market where he was always number two, despite being there early with many of the innovations that actually took PCs to the masses. If Jobs were with us today I suspect he would not shed a tear to see the decline of the PC market. Rather he would revel in the role the iPad has played in bringing his PC competitors to their knees.
While we could see an uptick in PC demand later this year when low cost touch-based clamshell-style laptops emerge, I fear the heyday of strong demand for PCs is over. The PC is about to take a back seat to the tablets and smartphones of the future.