The iPad-Sized Nail in the PC’s Coffin

There's no question about it: the perils are deep and wide for companies whose primary business is making PCs.

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There’s no question about it: the perils are deep and wide for companies whose primary business is making PCs. There are many layers to the problem and unfortunately, the perfect storm hit the PC sector and there will be collateral damage.

The PC Is Only Mostly Dead

It would be silly to argue that the PC is dead. Desktops and portable desktops (a.k.a. notebooks) will remain in the marketplace. The PC is not going away. However, something which has been critical for PC manufacturers to thrive is going away: value. The bottom line is that PCs have lost their value to the mass market. Even if the iPad had not been invented, I still believe the PC market would be in the same position it’s in today. Granted, the decline may not have been as steep, but I am convinced that growth would still be flat to slightly negative.

In the minds of consumers, PCs have become like cars. People hold on to their PCs as long as possible and resist upgrading because they feel no pressing need. This doesn’t necessarily mean that they will never upgrade, just that they will wait as long as possible. This is the key point I want to get across because the lagging refresh cycles, which are now the norm, demonstrate that value has left the traditional PC segment.

Is It Windows 8’s Fault?

Many are blaming Windows 8, but I do not believe Microsoft‘s latest operating system is the problem. However, it’s also not the solution. I believe in the premise of Windows 8 and its concept of merging mobility and touch-based user interfaces with powerful desktop computing. That being said, Windows 8 is a transition OS for Microsoft as the company truly looks to unify platforms. My guess is that unity will come with Windows 9; we will have to wait and see whether Microsoft has the answer that it and its partners desperately need.

iPad Is the Culprit

Realistically, the netbook is the real culprit. The netbook showed many consumers that a simple, cheap notebook would suffice. Then the iPad came along and is the primary culprit for sucking value out of the PC industry. If we are all honest with ourselves, when we say tablets are to blame for the PC decline, we really mean the iPad. Tim Bajarin wrote a great column last week called the Revenge of Steve Jobs, where he lays out similar thinking. Steve Jobs‘ creation brought the industry he could never dominate to its knees. The iPad has changed the conversation and brought Apple’s competitors onto a playing field where it has an unfair advantage. This new battleground will be crucial to the success of many who are entrenched in legacy markets.

Focus On the Future, Not the Past

The key to going forward is to focus on where the value lies. Right now value has shifted from clamshell and desktop form factors to truly mobile devices like smartphones and tablets. This is where consumer value lies and this is where profit opportunities exist.

The notebook will remain valuable to a smaller segment of the market. The segment that relies on performance, screen size, and workstation-like tasks will still pay premiums for those devices. The masses, however, will not. I expect the steep declines from the first half of the year to be less steep by the end of the year. This will be driven by sub-$500 notebooks called ultramobiles, which will be on the market by this holiday season. The lower cost will help volumes normalize to a degree but at those price points, and with retail commission, making money will be tough.

Any company making personal computing hardware needs to set its sights on the future, plotting a strategic course to keep itself relevant in it.

MORE: Windows Blue and the Rise of Ultramobiles

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.

21 comments
ascordo
ascordo

I think there's some serious ramifications with this.  I don't disagree with what's killing the PC market, but I think consumers are easily fooled and "zombified" into thinking that something like the iPad is an actual real computer.  It's not, it's really the evolution of the PDA, or in non computer terms .  a multi-tool - one of those things that's nice to have around as it can do most things, but it's really not that great at any of of them.

I train in schools, many of which have brought ipads in by the truckloads.  There are many problems with iOS devices in the enterprise compared with Windows based devices.  Most notably on my end (the user end) is that teachers want to do things with them like they would have done with laptops.  Many times, doing something that would not have been that involved now take multiple steps and apps to do.  Let alone printing issues . .  as most schools tend to have older printers that won't work with iOS devices.

But I am also going to point blame at Windows 8.  One, the marketing was not done all that well with it.  I personally love Windows 8.  And in my case, Windows 8 prevented me from buying a new laptop.  See I had an aging Dell laptop, over 6 years old.  It had seen it's best days behind it.  Even with a fresh install of Windows XP, it would take me 8 to 10 minutes to have it start up and have an Office 2007 document open.  I was going to recycle it and buy my wife a new one for some online courses she's taking.  I figured no harm in trying the Windows 8 beta.  Installed it.  Other than intel not supporting the graphics card so it has generic graphics drivers, Windows 8 brought new life to it.  So I bought Windows 8 Pro for it.   Now that thing is fast.  In under 1 min 30 sec I can boot up, log in, and be in office or email, etc etc.  It even starts up from a complete off faster than my iPad 2.  For what she's doing in the online class, this machine is the best at in the house . . even better than my i7 powerhouse laptop. 

 Eventually, as more of my software becomes Windows 8 compatible all my computers will be upgraded to Windows 8.  It should get me a few more years out of all my older computers. . . .  so yeah . . Windows 8 is to blame in my case.  Though I would love a Surface Pro.

atti46
atti46

actually Pc,s base of cpu it,s how creation development due to time minds peoples a gift for u whole of a world but wifi s latest technology ,but plz don,t 4get old technology in coming of new next generation touch system.this s major .......

 

JoshDanby
JoshDanby

I rather think the article's validity is heavily dependent on the specific markets it covers - I would agree that for many casual users for whom a large desktop unit is impractical then yes, that market was bound to see a huge decline. However for professionals desktops are still very relevant. At the high end they are used by people such as creative professionals in the audio, video, design and games industries and a high end desktop unit is still vastly superior to any portable device by several orders of magnitude, even a top end laptop far surpasses the performance of the top spec tablet. For other businesses desktop PCs are cheaper and far easier to maintain or repair, also most offices have absolutely no need for mobile devices as standard - they tend to be gadgets reserved for management or people working in the field. Also, although it's a relatively small market share for PCs, the move to X86 architecture for both PS4 and Xbox means many developers will stop making crappy PC ports now so we could very likely see an increase in high-end PC gaming again. There is also Valve's upcoming "Steambox" console which will essentially be a small form factor desktop PC.

vwkountz
vwkountz

I believe Tablets exposed what most people wanted PC's for in the beginning, fun and convenience.   Tablets lets you do enough browsing and communicating without needing a PC.  I will not upgrade my PC and I will not upgrade Office because in the end.   Those two products do what I need them to do, so upgrading is not even on my mind. There was Windows ME, Windows Vista and now Windows 8, so with that track record.   I believe Windows 9 will be when I upgrade.  Microsoft keep your eye on Facebook's "Home" app because you will need to do the same to stay relevant in the mobile market.

DavidCheunng
DavidCheunng

tablet is great for email and "light" internet brsowing.

however, the main reason for pc sale slow was due to lack of new hardware.

In 80's computer tech move so fast you got to upgrade your pc

from XT/AT to 386 due to window require much more gfx/ram power then MS-DOS.

then it come with 386 to 486 to P1, each is big step with their memory/HD upgrade.

after P1 cpu start slow down, dice getting so small it start hard to increase their speed. (multi core for me just for marketing unless you using it for vm) but gfx card pickup due to Quake and start their 3D era.

instead of upgrade cpu people focuz on upgrade gfx card start from 3dfx.

by now, there no need to upgrade cpu since they pretty stay the same.. (the 920 i buy 5 year ago almost as good as i7 3770k)

you dont need better gfx card since most game dont push to max (unless you using for CAD)

 people dont really need buy a new pc unless old one break down.

 

barry.b.do
barry.b.do

I believe you mistaken the number of people that need 'heavy lifting'. I do not see tablets taking over the enterprise users (all of us when we are at our day jobs). I also cannot do work at home on a tablet and need a laptop or PC to do the job (imagine doing spreadsheets or presentations on a tablet!). The masses still use PC's. Perhaps you should say 'all casual PC users will switch to tablet'.

JohnTooley
JohnTooley

Sounds liek someone knows whats going on over there.


www.AnonGotz.tk

ErikGlimpse
ErikGlimpse

People who think trucks ((custom) desktop PCs) are going away are out of touch. Study a little more, and then write an article about tablets.

luscusrex
luscusrex

Finally, I agree with your assessment of the under $500 Ultramobiles will start moving the pc format ahead. Every one is talking about the Ultramobiles but at $1000 + a pop it's a no go, (and if I had the $1000+  I would go for an Apple not a Windows based OS  so I can also be an elitist)  when I can still buy today a dual core 15" laptop from Acer , Lenovo for around $200. And yes I know one is a Lexus and the other a Ford fiesta.  Regardless if I need a laptop for work and unless I needed for CAD or making movies I am thinking in the $200 to $300 range. 


dabble53
dabble53

Why am I so slow to upgrade my PC? Because of the monumental hassle of transferring all my data and programs (and often having to reinstall all that software.) Make it A LOT easier and I'm likely to upgrade my hardware a little more often.

sleeplessinva
sleeplessinva

Most normal average users don't need a PC.  However, a tablet does not have the productivity software that is needed to spawn the tools that are needed tomorrow.  In today's market, the tablet and laptops are great for the DIY market of computing.  It's enough to get the job done.  However, if you want to build a house, you're going to need to bring something more serious and bringing your little screwdriver to a work site is just not going to cut it.

PC sales may come down, but it won't go away.  Not for a long time.

PaulDirks
PaulDirks

All this tells me is that 80% of the market only regards computers as media delivery devices. Anyone who actually still needs to work needs a PC.


timetechcommentor
timetechcommentor

@ascordo I love how it is always everyone else who is being "zombie-fied". Maybe a lot of people can and do use iPads and Chromebooks now instead of PCs, and just have no real need for anything else. This isn't about them being fooled, it is about them having different needs from you, and those needs being perfectly addressed by the the iPad.

benbajarin
benbajarin

@ErikGlimpse Did you read the entire column? I actually pointed that out, that PC remains for those who need it for heavy lifting work.  The main point being that is a small amount of people compared to the larger mass market who can get by with tablets.  

benbajarin
benbajarin

@dabble53 Great observation.  OS X has a fantastic migration tool and it continually surprises me how bad the Windows version is at migration. 

benbajarin
benbajarin

@sleeplessinva Correct, and as I point out it doesn't go away but it does look like its being commoditized.  This was my point that value (consumers who will pay more, and thus giving OEMs a chance to make money on the hardware) is going away by the large majority of the market. 

benbajarin
benbajarin

@PaulDirks exactly.  It is only valued to the few who need it for core tasks and thus find it valuable.  The mass market does not depend upon it for work and therefore its not valued, so the low cost leader wins.  

Value has shifted to mobile devices. 

dabble53
dabble53

@benbajarin @dabble53 The *nix OSes generally are much easier at migration. And OS X fits in there as it is based on BSD.

MS-Windows, with its devil incarnate registry and dll hell can't help but be a pain in the a$$ at migration. But then, if you could migrate easily, you'd not have any reason to buy new releases of the applications you lost your installation media for.

eldersignin
eldersignin

@benbajarin @PaulDirks ,  Good comment.   Its like the direction of the wind.  To a guy in a house on land, it means little.   To the little sailboat in the harbor, it means everything. 

Also remember viewing connection.   Small is nice to carry but big is nice to see.  I love the apple tv connection where I can just click and see my stuff, big screen. 

Just a thought. en

benbajarin
benbajarin

@eldersignin @benbajarin @PaulDirks Yes exactly.  I've been doing some analysis of this but I wonder what the possibility is that notebooks altogether shrink in install base.  I like the idea of a desktop big screen solution paired with a tablet.  These devices can stay in sync and work together or independently.   

I've always thought of notebooks as portable desktops and with the advent of the tablet I wonder how useful a portable desktops is to the masses any longer.  Will be interesting to see how this plays out.