How the Tablet Came to Disrupt the PC Industry

The PC industry is observing one of the most significant times of change it has ever seen. I do not believe every company will survive this disruption, or at least continue in their current form.

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Lucas Jackson / Reuters

Microsoft tablet PC Surface is shown at the launch event of Windows 8 operating system in New York, October 25, 2012.

Personally, I believe change is good. If I look at the history of the computing industry, I can point to countless changes and paradigm shifts that led us to where we are today. However, most of the change we can point to have been more evolutionary than revolutionary. Most of the change we’ve seen hasn’t been disruptive—until now.

The PC industry is observing one of the most significant times of change it has ever seen. If I am being entirely honest with myself, I do not believe every company will survive this disruption, or at least continue in their current form.

The State of the PC Industry

For years, the PC industry, which we would classify to include desktop and notebook sales at a worldwide level, was growing. It was growing anywhere from 5-12% percent annually over the last 5 years, and in its early days it grew over 30% each year. I think many believed that someday every person on the planet would own one of these types of computers. For a point of reference, the PC industry was sustaining growth and for a brief time sold between 380  million and 400 million units worldwide for a couple of years. A good chunk of this was thanks to netbooks — low cost, highly portable computers. At one point in time, netbooks hit just over 30 million in unit sales. For most companies in the PC industry, things were good.

Then the iPad happened.

For the past two years, the emergence of the iPad has caused PC industry growth to slow and even decline. Last year, sales of desktops and notebooks were off between 5-7% depending whose numbers you look at. But perhaps the most telling was the 4th quarter, which traditionally is a strong quarter for PCs. Holiday 2012 PC sales were off over 10% worldwide according to our estimates. The story is not better for 2013, as our firm and many other analyst firms predict the PC industry to be in negative numbers again. To be honest, I believe the best growth years for desktops and notebooks are behind us.

(MORE: Why Tablets, Hybrids and Convertibles Are Important to the PC Industry)

Why the Tablet Destroyed the PC

The tablet is the culprit, plain and simple. The tablet accomplished something many in the PC industry did not see coming. Its form, function, and touch user interface adequately served the mass market needs uniquely. In fact, Steve Jobs said it best at the launch of the iPad: “The iPad is more intimate than a notebook, and more capable than a smartphone.”

Believe it or not, this is exactly what the mass market needed. The fact of the matter is that the PC as we knew it — whether a notebook or a desktop — had gotten to a point where it vastly over-served the mass market’s needs. The capabilities had outgrown the most common use cases of the mass market. Tablets, as it turns out, serve the most common use cases and needs of the mass market more than adequately.

It was consumers themselves who led us to this observation. Many consumers we observed and studied continually told us how the iPad had become their go-to device for most of the daily tasks they used to do on the PC. Often times this is simply browsing the web, checking email, and using a few key apps like Facebook. The bottom line is that hundreds upon hundreds of millions of consumers are finding exactly what they need in a tablet and using the desktop or notebook less and less — and only for a few specific things.

This emphasizes the point that the PC as we knew it is not going away; it is simply assuming a new role. One where it’s not needed on a daily basis by many and only exists to serve a few key tasks. One quick note on this point: Keep in mind that I am talking about the mass market. There are certainly segments of the market that need desktops or notebooks for work, or for pure heavy lifting tasks on a daily basis. My point is that this is a much smaller group compared to the vast majority of mass market consumers who have very simple needs for technology. The PC as we knew it, the one that was growing annually, needed the mass market to continue growing. That ship has sailed. Tablets have taken over the growth, role, and the relationship with consumers from the PC and I don’t see that changing any time soon.

(MORE: 10 Tech-Industry Predictions for 2013)

So Where Do We Go From Here?

This does not mean that all hope for the PC is lost — quite the contrary. We are already seeing quite a bit of innovation in form and function from the industry. Many companies are attempting to steal attention back from the tablet by making their PCs more like tablets. This is creating both challenges and opportunities, but at the very least, PC vendors are being forced to think in new ways about their products. I think there is a role for many of these new PC form factors like hybrids and convertibles. I just don’t think they are enough to add growth to the traditional PC market. Even with these devices, the PC industry will still shrink, largely because people will hold on to PCs longer. The refresh rates needed for industry growth will shift to tablets, where consumers will refresh their purchases more often.

Where we go from here is the multi-screen world. In the age of the PC, it was all about one primary computing screen. Now it’s about many. Consumers will have two or three or four screens in their lives and they will want to use all of them as a part of their computing solution. The future is not about one screen; it is about many, and the sooner the industry embraces this reality, the sooner companies can stop worrying about the shrinking growth of one segment and begin thinking about the growth of another.

Bajarin is a principal at Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week.

22 comments
official2unofficials
official2unofficials

I don't think current tablets are a total replacement to the PC/home computer as of yet. The Surface Pro is supposed to be the first fruits of that true traditional computer replacement, so I am interested to experience the difference. I wasn't too crazy about Windows 8 on my laptop but I think the software is better suited for a touch device instead of a point & click device.

JennyJones1
JennyJones1

I prefer the Kindle Fire HD. The interface is great and it's very easy to use. Check out its Amazon page(http://amzn.to/11SRHbE) if you want to compare what they bring to the table.

mobilecasedirect
mobilecasedirect

I would say that smartphones destroyed the PC and the tablet nailed the coffin shut. Apple gets a lot of kuddos but let's be honest the hardware manufacturers & MS killed the PC. Their lack of innovation and fight to offer the cheapest PC really bored consumers. 

Today's consumer wants innovation & mobility. Today's device & software companies need to innovate or die...

oceanspear
oceanspear

First of alL Mr. Chia,  I am entitle to my own opinion as you are as well, I would love to see if you had the guts to tell me that to my face.

Mr Bajarin has a point regarding the commerzialition aspect of the industry, Cupertino is top dog, bar none. My point is and was that apple is NOT the innovator that the fanboys claim it to be.  I am no apple hater by no means.  I own a macbook, and Ipod, A carbon X1 lenovo and a blackberry playbook, oh and a windows NOkia phone....

In most of his columns mr  Bajarin seems to overtly favor apple, which makes great way overpriced products.

the original Iphone was a blatant copy of the LG Prada, the UI was a copy of Xerox,  the "Think" different part came from IBM.... and so the PAD.... THINKPAD!

The first phone with a touchscreen was a Nokia... not an Iphone.

ZainiChia
ZainiChia

Great article, as always Ben. I too have expressed the same opinion as yours to others before, and after reading your argument, i'm even more convinced. Thanks, great read :)

Oh and oceanspear, go away. You're just being annoying.

oceanspear
oceanspear

This columnist is always giving kudos  in all his articles to Apple, like if cupertino has invented anything, but rather copy pretty much everything from everyone else!.   If you go back to every one of his columns is always gah gah about Apple.... give us a break please!... don't be so freaking obvious with yor bias towards Apple products.

benbajarin
benbajarin like.author.displayName 1 Like

@oceanspear Also every one of my columns?  Better check your facts and not use logical fallacies. 

benbajarin
benbajarin

@oceanspear And Microsoft copied, and Samsung copied, study the industry and you will see how commercialization is the genius and innovation is not defined as invention.    

stefn
stefn

Tablets? Tablets are what Microsoft sold ten years ago. The computer that collapsed the PC market was Apple's iPad. Today all tablets are faux iPads. Just as PCs were faux Macs.

Jillxz
Jillxz

@stefn that is just too funny.

stefn
stefn

And here I forgot to mention that smartphones are all faux iPhones.

MarioJesusPabon
MarioJesusPabon

Why was the iPad seen as "revolutionary"? Tablets have existed before (not so great tablets, but still tablets), and the iPad has the same exact operating system as the iPhone.

und34dcow
und34dcow

@MarioJesusPabon

This is exactly why Apple is so brilliant - not because they actually do anything that is technologically revolutionary, but because they make people think they are the most innovative company ever. For the last ~ten years they've been basically offering ONE product in different sizes which is slightly updated every 1-2 years. It's a great product(s), but to think Apple = innovation, one must be ignorant about technology.

I guess we should also call Canon the great innovators for making a better camera every year...

mtngoatjoe
mtngoatjoe

@MarioJesusPabon I think you answered your own question. The iPad wasn't the first tablet, but it was the first to combine great software with great hardware and deliver it to the masses.

ggSolutions123
ggSolutions123 like.author.displayName like.author.displayName 2 Like

i agree with the part about where we go from this point is multi-screen. that was the case in my old wall street job. 3 screens (because fewer than that mean less productivity)

websquad
websquad

@ggSolutions123 My workhorse is a 4-screen rig; however, at night and in casual situations, the iPad 2 is just a reach away. I use it much more than I thought I would; alas, but never for creative purposes, but just for reference (FaceBook, Wikipedia, Google).

mtngoatjoe
mtngoatjoe

@ggSolutions123 I think the author is refering to multiple screens in that you work on a project on your computer at home, then on your tablet on the bus, then on your computer at work, and then on your phone while you're in line at the grocery store, and then on your computer at home again. All this should be seemless and just work.