Can the PC Industry Resurrect itself?

For many people, a PC or laptop could still be important. The industry is ready to move these people to touch-based systems with the next generation of user interfaces, at all types of price ranges.

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Spencer Platt / Getty Images

Passers-by look in the window of a store selling personal computers in Times Square in Manhattan, on April 11, 2013.

IDC’s recent report stated that PC shipments declined 13.9% last quarter, the worst since IDC has been tracking PCs. It says a lot about the state of the PC industry.

The role PCs are playing in people’s lives is changing, and the growing demand for tablets and smartphones has taken its toll on the PC market. Last week my son Ben, in his column for TIME Tech entitled “The iPad-Sized Nail in the PC’s Coffin” laid much of the blame on the iPad for deflating PC sales. Ben also made the point that people are either keeping their current PCs longer or if they buy a new PC or laptop, they buy cheaper models because they are “good enough” to use for any computing needs that can’t accomplished on a tablet.

But is the PC really dead? And if not, how will PC vendors respond to this challenge from tablets and smartphones?

It turns out that people have found they can do as much as 80% on a tablet that they used to do on a PC. However, they have also found out that tablets by themselves cannot meet all of their digital computing needs, especially for handling things like media management, extensive photo editing, making complex home movies, doing their taxes and other similar tasks. This suggests that if they only need a PC 20% of the time, the need to buy an expensive PC does not make sense for most people.

For the past 10 years, a good part of PC sales were for laptops and PCs in the $799-$999 range — those which have higher-end processors, extended graphics capabilities and more on-board memory and hard drive space than laptops and PCs priced well below $699. We are hearing from consumers that if they only use a PC or laptop 20% of the time, the highest price they want to pay is $599, with most preferring price points of $399-$449. This is why Ultrabook sales have been very disappointing for the PC vendors who hoped that their touch-based Ultrabooks priced from $799-$1099 would be big sellers.

While PC vendors are quite cognizant of the shift in consumer buying trends for PCs, they are not about to give up without a fight. Almost all are trying to do tablets of their own and some, like Lenovo, are even doing smartphones and have actually done quite well in the Asian and Chinese smartphone markets. I think that reality has sunk in for the vendors, and they now understand that the market for laptops and PCs in the $699-$999 price point are being marginalized.

The good news is that there is still healthy demand for upscale laptops and PCs in the $1099-$1499 price range. But demand for these is mostly in the IT, business and SMB market, a much smaller market than the consumer sector. Even though volume in these is smaller than those that sell into the consumer market, the margins are good, so these vendors are happy with what they call the premium market for PCs. However, they are also shifting much of their efforts to creating low cost clamshell-based laptops and tablets with very aggressive pricing, and hope to use these to entice millions of PC users who have tablets but still need a PC for some tasks to upgrade their current PCs to more up-to-date touch-based models.

In fact, Intel CEO Paul Otellini gave us some indication of Intel and its PC partners’ strategy last week when he spoke on a conference call regarding Intel’s recent earnings announcement. He said, “If you look at touch-enabled non-core Intel-based notebooks that are ultrathin…those prices are going to be down to as low as $200,” hinting perhaps at more affordable laptops and Windows 8 tablets on the horizon. We are hearing that all of the PC vendors are working on what they call “ultramobiles,” which are very low cost touch-based clamshells and convertible tablets for this holiday season.

Key to understanding ultramobile designs is that while some will look like normal laptops or convertibles, to get this distinction, and to qualify for Microsoft‘s low cost license to use Windows Blue, they have to be systems that only use Intel’s Atom chip or a similar competitive one from AMD. Ultimately, the vendors believe these ultramobiles could help drive PC sales higher due to consumers’ demand to upgrade their laptops to touch-based systems. By the way, clamshell-based Chromebooks are in this ultramobile category too, even though they use Google’s Chrome web browser as the operating system.

(MORE: Windows Blue and the Rise of Ultramobiles)

Consumers have gotten very comfortable with touch interfaces on their smartphones and tablets and it is logical that they would want a similar interface on any new PC or laptop they upgrade to in the future. Indeed, this is what Intel, Microsoft and their PC partners are banking on. While they accept that users’ primary computing tasks are shifting to smartphones and tablets, they are convinced that even if they use a PC for 20% of their digital computing needs, the next one they buy will be touch-based. While Intel, Microsoft and the vendors would prefer selling people touchscreen ultrabooks at higher prices, they are now realizing that consumers want really low priced touch-based laptops that are good enough to handle anything they can’t get done on a tablet or smartphone. This is why ultramobile devices are being created. It does not mean that consumers will not have higher-end Intel touch-based Ultrabooks to choose from as well, but most of these will be at least $599 and higher.

So what does this mean for consumers this fall? Although consumers have been able to buy what we call value notebooks well under $599 for some time, most of these use older processors, non-touch screens, traditional hard drives and are bulky with poor battery life; their days are numbered. The industry will still offer some of these types of value notebooks for at least another year. But the push will be very strong from Intel, AMD and Microsoft to drive everyone to touch-based laptops in various price ranges, making it more likely that if a person needs to buy a new PC there will be a touch-based Windows 8 laptop they can afford. I suspect that within 12-18 months, non-touch-based laptops of any flavor will be hard to find.

What consumers can expect this fall are ultramobiles using either Intel’s Atom processor or the Temash version from AMD, with touchscreens, SSD drives, and thin and light designs. They will come in many flavors. Some will be traditional clamshells, sporting screens from 10.1 to 11.6 inches. Some will be what we call convertibles, which are clamshells that look like a traditional laptops but the screens pop off to become tablets. Some models will be like Lenovo’s Yoga, a laptop in which the screens folds back completely to make it a tablet, except the screen is not detachable. And some will be exactly like Microsoft’s current Surface Pro or Surface RT models. More importantly, they will all be priced under $599 with some coming in as low as $399-499 by the holidays.

Vendors will also offer Ultrabooks that use Intel’s dual-core processors, flash memory, touchscreens and also be thin and light but they will all be at least $599 and up.And of course if you really want a powerful PC or laptop, these will be available too, all in touch versions, starting and $999 and above. We also expect to see many new Windows Blue tablets in the 7″ to 9″ screen sizes in time for the holidays.

Although the PC market is changing, it is clear that for many people, a PC or laptop could still be important. The industry is ready to move these people to touch-based systems with the next generation of user interfaces, at all types of price ranges. PC makers will try and make themselves as relevant as possible to the business and consumer markets for as long as they can.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every Monday on TIME Tech.

38 comments
MariaBeatriceC
MariaBeatriceC

@TIME because if we use&eject holy tech without discovery Freedom&Peace opportunities it gives us we'll profane holy brains who created it;)

MariaBeatriceC
MariaBeatriceC

@TIME Dear Techland I afraid this too many speed-changing of tech. Still now I stay unbeliever an front Magic of HITECH! We must use well it

MariaBeatriceC
MariaBeatriceC

@TIME Cellophones're speed way. But if I want EXPLORE and REFLECT world & extraworld & write post about I NEED MY PC! I not change so easy!

MariaBeatriceC
MariaBeatriceC

@TIME Why "resurrect"? As invalid I must look at my pc to enjoy my beloved sites. Watcing the NASA' ASTRONOMY PICTURE of the DAY I resurge;)

Mauryan
Mauryan

Just like TV did not wipe out the radio, radio did not wipe out the print medium and iTunes did not destroy the traditional music industry, mobile devices will not eliminate the need for laptops/desktops. A number of their functionalities have shifted to the mobile devices. Consumers now rely more in the mobile devices and less on traditional computers because, they do not need much input for their activities. But enterprise market always need devices with input capability, more power and speed. That has been the core market for PCs and laptops all along. Some of what they were used for have shifted to the tablets and smart phones. And that is a permanent change. Unless the Wintel cartel comes up with a new use for the PC/laptop, their market will shrink to its own level and stay there. Microsoft has no clue where things are heading. They are trying to respond to everything that is changing with their old and tested method of coming up from behind and running over everyone. That is not going to happen anymore. So they have to choose which way they are going to go in the future. If Google manages to penetrate the enterprise market, Microsoft will find it very difficult to compete. There is a huge crowd out there that hates Microsoft for its shoddy products. Competition is needed and it is coming. The next big change will come from Google into the enterprise market. Intel will survive supplying chips to everyone. Being creative is the only way to survive in the tech world. No one can rest on yesterday's laurels. Apple is learning that now.

Falseflag
Falseflag

@adamgriffiths So what's your take on it? You didn't really indicate a preference on which way you want or think it should go.

JosephErtel
JosephErtel

@TIME @Techland Maybe in the consumer world, but the business machines still lives on. Tablets are less productive all the way around.

BrettTurner
BrettTurner

1.  People still need PCs "for handling things like media management, extensive photo editing, making complex home movies, doing their taxes and other similar tasks."  I agree.

2.  None of these things can be done comfortably from a touch interface.  To edit a phto, to put together a movie, to do most of what I need my PC for, I need the fine control of a mouse.

3.  Until it is possible to do fine-control tasks with touch alone just as easily as with a mouse, there will be a strong need for the traditional PC interface---the desktop.  This is why Microsoft made a big mistake by deemphaizing the desktop in Win8---a mistake which it is now to some extent recognizing.

4.  As long as there is need for the traditional desktop interface, the PC is not going to die and tablets are not going to take over the world.  Tablets will be popular and most people will have several, but the PC will still be around.


DeweySayenoff
DeweySayenoff

This is the single-most idiotic analysis I've seen this week: "Consumers have gotten very comfortable with touch interfaces on their smartphones and tablets and it is logical that they would want a similar interface on any new PC or laptop they upgrade to in the future."

I think not.

Here's why this is a flawed analysis.  The tablet and smartphone are held with one hand and touched with the other.  A PC or laptop aren't.  It's not sales.  It's not marketing.  It's FORM AND FUNCTION.  With laptops and PC's you sit further away from them and touch doesn't give you the control you need when doing the things mentioned in the article, like editing movies, photos, gaming and other PC-centric activities.  It's that simple.  The FORM FACTOR dictates the best UI for a device.  It's called form following function and is a rule that well engineered devices follow. 

This is the biggest complaint I hear from my clients - that the PC makers are going in for tablet (which, by the way, aren't being adopted nearly as fast as PC's originally were, which makes one wonder upon what analysis they're basing their predictions about tablets) interfaces on non-tablet devices.  You don't USE a PC like a tablet.  Why the hell would you put a touch interface on one?

I agree that the PC market is far from dying off.  The problem with all market analysis is how very short-sighted it is.  If a product isn't moving out the door faster than the Road Runner being chased by the Coyote, they declare it dead and move on.  It's quarter-to-quarter based day-trader mentality.  There are BILLIONS of PC's out there that WILL BREAK eventually.  There are only a couple hundred million tablets.  And yet, they throw the PC's under the bus in favor of what's selling now - with sales beginning to cool off. (The iPad mini, for example, isn't selling nearly as well as it did when it first came out.)

I have always maintained that the tablet is a fad.  Consumers are finally beginning to realize just how awful they are to work with for anything other than minor consumption.  They're toys, at best.  I've had several of my clients buy them, and the majority of them have mostly put them to the side because they aren't fast enough, can't do enough and are harder to use.  It can't escape its form factor no matter how much one tries to dress it up.

LOGICALLY, one needs to look at the whole market.  Not just what people are buying today, but what they have and what they're ACTUALLY doing with their devices.  I doubt 80% of all computing needs can be done AS WELL on a tablet as it can on a PC.  There's a vast difference between ability and proficiency.  Our lives aren't getting any easier, either, so we'll need to be proficient and efficient and tablets do not provide us with that the way PC's do.  The trend in Smartphones is toward replacing tablets and THAT is the logical extension of use here.  People are FINE wiht different UI's for different devices.  But the way they're talking they seem to want to put Cessna controls in a 787 and that just doesn't fly nearly as well for the larger plane.  They both fly, yes, but they have entirely different uses, sizes, abilities, and needs and must have different ways of dealing with them to achieve the best results.  Otherwise, we're looking at massive mediocrity in PC efficiency, and I don't think the masses will stand for that.

Escreix
Escreix

@xataka resucitar? Es que ha muerto? Si no paran de venderse tabletas y telefonos!

joven_indignado
joven_indignado

@xataka muy complicado se pone el mercado. Los gustos estan cambiando y lo portable esta muy de moda.

roris22
roris22

i don't like this note... :c make me sad.

RichardRabins
RichardRabins

Tim is one of the smartest analysts in the industry and I think his analysis is very much on target with this article!


The take away I got from reading this article is:

 "You still need a traditional laptop/desktop some time, especially in business, but don't need to constantly upgrade. You also will expect touch in addition to mouse on laptop/desktops."

This conclusion is consistent with the data from Mary Meeker who is a partner at Kleiner Perkins which she shows that even though PC sales are declining, there are still a lot of PC's sold (352 million last year going down to 270 million in 2017) and more importantly the installed base of PC's and laptops world wide will hold steady at about 1.5 Billion machines

The implications of this are clear - if you are building BUSINESS applications in this new PC and Mobile era, you will (from a cost effectiveness point of view) absolutely need a development platform that can build applications that run on mobile devices as well as on the traditional PC/desktop web (albeit with a touch interface.)

Richard Rabins

richard@alphasoftware.com 

 


GaryRMcCray
GaryRMcCray

The fact is the PC - Computing market has achieved saturation, there are now so many PCs out there and even used PCs that in the US at least anybody who wants one can have one.

And the further fact is that as far as consumers are concerned they all do pretty much the same thing, OK maybe the 3D gamer would disagree, but he's probably got an XBox anyway.

Once you have saturated a market, sales drop off and the PCs don't Die fast enough to keep it accelerating like it once was.

The only way you can restart this boom is with some compelling hardware development that reboots the industry.

Of course they tried that with 3D TV but then tried to gouge the consumer so much for (3D capable) for something that the TV could pretty much already do with almost no additional expense to the manufacturer they killed their own market.

A return to the old virtual reality craze is coming, but now with really capable equipment and eventually something that looks like a pair of eye glasses with 1080P (or better) stereoscopic variable transparency and selectable display options.

That will reboot the PC industry and at this point no amount of razzle dazzle short of that is likely to put Humpty Dumpty back together again.


khaledmourad99
khaledmourad99

The King will be the Windows 8.1  Mini Ultrabook (10"flip touchscreen) = tablet + Netbook


people will buy PCs for their comfortable big screen and ergonomics on desk/lap


tablets is like a fashion and will transform into ultrabooks

zaglossus
zaglossus

No, I like my mouse on my desktop. I don't want to be reaching up to touch the screen.

IntangibleGuy
IntangibleGuy

This comment is missing a few facts. 

It doesn't matter if consumers buy $600 laptops or $600 ipads. Which means, consumers still forking out about the same amount of money for computing devices, it's simply that devices have changed but not the amount of money spent.

Update cycle has even become shorter !!! Not for laptops, I agree on that but for smartphones (which actually are computers) consumers on average ditch their devices after 2 years and head for a new one. When was laptop update cycle ever so short ? That being said, instead of one $500 laptop, consumers buy two $500 cell phones during the same period of time !! Not that shabby.

Value add !!! Ask Apple ! Why just sell a piece of HW, if you can bind the consumer for years to your app store.


As you can see, things have changed but not for the worse. Consumers are willing to spend at least the same amount of money for their computing needs like before. They just acquire a different palette of gadgets. I mean seriously, who at their right mind would spend $600 on a phone (if it were just a phone) ? But as has been proven, consumers are perfectly willing to do so.


Garzhad
Garzhad

The PC will never die. It might drop into a niche solely populated by hardcore gamers, but it will never die, as consoles and all the mobile crap will NEVER approach an actual PC's computing power and ability to render high-end graphics.

Garzhad
Garzhad

@DeweySayenoff 

I personally hate touch interfaces. Sometimes they don't register the touch. Other times I accidentally touch a button I didn't intend to(damn you iheart radio and your lack of ability to remove disliked tracks!) and have to back space or whatever. I rarely if ever do that on keyboards and when I do it is far quicker and easier to correct.

I also Hate the small screens, but what can you do for portable media. And that's what I use my mobile devices for. As a means to relieve boredom while out and about and away from my PC. Music, pics, video, mediocre games that at least pass the time, ect. When it's time for serious entertainment, I want highly accurate, easy-to-use controls like a mouse and keyboard, and a minimum 24" ultra-def screen.

Neither laptops or other portable devices will ever match a PC for sure. There simply isn't enough space. When technology advances to the point liquid nitro is needed to keep various exotic components cool, there will be no feasible way to implement said cooling in these tiny, scaldingly hot running devices, and they will suffer as a result.

You also can't overclock tablets/laptops to any appreciable extent either, which is another niche that will keep pc's going. With a bit o technical know-how and quality, heat resistant components you can get Far more than a given PC's price tag would seem to indicate.

PC's and their big brothers the super computers will always be the kings in science circles, as they are the only devices that provide adequate computing power for complex tasks, as well as any kind of video/graphics editing(complex graphic renders in various programs can fry laptops) gaming, overclocking enthusiasts, any business requiring powerful, workhorse computers ect.

Luscus
Luscus

@DeweySayenoff  I agree with you, I own a desktop, a couple of laptops a couple of different tablets and several computer phones, I don't even like to read my emails on a tables because they chop down functionality in that form factor. So the Tablets are for play and laptop is for work. Not to say that if I can buy a 15"laptop for $300 and a touch screen, i may once in a while use the touch function, but mostly it will be keyboard and mouse.