Why PCs Aren’t Dead…Yet

If you’ve been following the business news lately, you’ve been hearing that demand for PCs is in decline. According to market researcher IDC, in the last quarter, PC shipments were down worldwide by 13.9%. And IDC forecasts that for all of 2013, PC shipments could be down about 7%.

If you read the headlines, you might be led to think that the PC is dead and no longer of value. That is very far from the truth, though. Even with PCs being down 7% this year, we will still see over 340 million PCs and laptops sold around the world. While we will continue to see some erosion in PC demand each year going forward, PCs will continue to play an important role in business, education and even in the home. However, their usage model will be changing, which is inevitable given the fact that the PC is no longer the center of our digital universe.

To get an understanding about the future role of PCs, tablets and smartphones, let’s look at how we at Creative Strategies think they will be used in homes, schools and business.

For consumers, we see a real shift in the way they use digital technology. Most people’s lifestyles are very mobile. They go to work, go to school, go shopping, and go on social outings. Very few people are homebound, and digital technology needs to keep pace with people’s mobile lifestyles. So the tech world has given them powerful smartphones, tablets with bigger screens and laptops that are thin and light — and some with enough power to meet all of their digital needs.

At the small-screen end, smartphones have become go-to devices for consumers and business users alike. Mary Meeker of Kleiner Perkins stated in a recent talk that “smartphone users reach for the phone 150 times a day, which includes 23 times for messaging, 22 times for voices calls, 18 times for checking time, along with multiple times when using it for social media, camera, alarms, music, playing games, looking at the calendar, launching Web sites and using search”.

The other key point that Mary made is that wearable devices could make hands-free access to our smartphone content a major killer app for wearables. I can attest to this, since I have a Pebble Watch tied to my iPhone and a Bose Bluetooth headset that gives me access to my phone’s data and callers without having to pull my phone out and look at it, for the most part.

Consumers and business users now have tablets to access their digital worlds, too. In fact, the proliferation of tablets — and especially relatively cheap tablets — have had a real impact on PC sales, which is partly why demand is down. We’ve found out that people can do about 80% of what they used to do on a PC on their tablets now, which means that a PC’s importance to them has been somewhat diminished. Many in our surveys tell us that if the PC is only used 20% of the time for things like managing their media library, doing long emails and document creation, and paying their bills, that they are either going to keep their current PCs longer or if they buy new ones, they will buy a cheap PC to replace an older one.

This is both good news and bad news for PC makers. The good news is that consumers still see the need for a PC in many cases. Interestingly, we see a lot of homes now that have turned their laptops or all-in-one PCs into the home information center, where it stays put for all to use. Their more “personal” digital screens have become tablets and smartphones, and they only default to the PC if needed for what we call heavy lifting tasks. The bad news is that for most consumers, buying mid range PCs and laptops will give way to the new normal, which will be laptops and PCs priced at under $500. This may help drive PC numbers up a bit, but it shrinks margins and really impacts PC makers’ bottom lines.

A rather interesting twist on this pricing issue is with business users. They continue to want PCs with more power and bells and whistles, as it remains the backbone for a lot of the work they still do in the enterprise and small- and medium-sized businesses. These laptops and PCs tend to be priced above $1,000, so this is why HP, Dell, Lenovo and others serving the business community continue to innovate at the high-end where these PCs have better margins and really help their overall profitability.

And in education, PCs and laptops are not going away anytime soon, either. School administrators are still buying PCs and laptops in pretty good numbers, with very few shifting to tablet-only programs for their students. In fact, in a lot of schools, we see tablets augmenting the students’ digital experiences — not replacing the PCs or laptops that still play key roles in the educational process.

In the short term, demand for PCs will slowly decline. They will never again be at the growth levels the industry has seen for the past 25 years. However, we see them continuing to play an important role with consumers, schools and businesses even if tablets and smartphones become more central to people’s digital lifestyles. In fact, a lot of us researchers believe that for at least the next five to seven years, the industry will still sell 320+ million PCs worldwide annually, regardless of the role smartphones and tablets play in our lives in the near future.

Will the day ever come when PCs as we’ve known them become relics of the past? Possibly, although it is more likely that they will morph into different sizes, shapes and form factors than the ones that populated our digital landscape for the last 25-30 years. In many ways, they already have. A smartphone or a tablet is just a PC in a different form factor today. But the desktop PCs and laptops we have known for much of our lives will still be a key part of our world for quite a while, acting as the digital workhorses in many homes, schools and businesses.

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.