The 3 big reasons tablets are eating the PC’s lunch

July 14, 2013

Judging by the latest PC sales figures from research firms Gartner and IDC, I’m not alone. Gartner reported earlier this week that PC shipments in the second quarter dropped to 76 million units, down 10.9 percent year-over-year. IDC pegged the shipment number at 75.6 million units, creating a drop of 11.4 percent compared to the same period in the prior year. In either case, PCs are in deep, deep trouble.

But why? What has happened to the PC space? Believe it or not, it might just come down to three simple factors.

1. Tablets, obviously

This wouldn’t be a TabTimes column if I didn’t mention tablets, right? Still, it’s quite clear, given the rash of bad news in the PC space, that tablets are chiefly to blame for the rapid decline in computer sales.

But don’t take my word for it. Earlier this week, Gartner principal analyst Mikako Kitagawa said the decline in PC shipments is due to changing customer preferences.

“We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets,” Kitagawa said.

The analyst went on to say that in key emerging markets, people are more likely to buy a tablet, due mainly to its cheap price tag, than invest in a PC. Plus, the touch functionality tablets offer deliver an intuitive experience that those who are new to the Web and applications benefit from.

In other words, in both emerging markets and in developed countries, consumers are finding reasons to buy tablets and ignore PCs. And as Jay Chou, IDC’s senior analyst said recently in a statement, not enough is being done by PC makers “in launching attractive products and addressing competition from devices like tablets.”

2. The dying desktop and mini-notebook

Years ago, we were hearing about the death of desktops. Nearly every analyst and market researcher said that the future was going to be one that was dominated by mobile products, and desktops, which tie people to their office chairs, would go the way of the Dodo.

I’m not sure that desktops will eventually die out – after all, there’s still a huge market for high-end graphics and plenty of professional applications that require or at least perform better on a big screen, as well as gaming – but it’s clear that desktop shipments will continue to decline.

Historically, that wasn’t such a bad thing for PC makers because notebooks would make up for the shortfall. Nowadays, though, that’s not happening.

One of the main reasons that is not happening is due to slumping mini-notebook sales. Kitagawa was quick to point out the many issues with the PC market, but the analysts comments were especially biting when it came to netbooks and other lightweight notebooks: the market for those devices has collapsed.

And therein lies the rub. Desktops were expected to decline, but notebooks – and especially lightweight notebooks – were expected to prop up the market. Thanks to tablets, that’s not happening.

3. The changing enterprise

The enterprise is a key ingredient in PC sales. Each year, companies around the globe buy up new computers in bulk. But there’s just one problem: a new trend has developed that is having a profoundly negative impact on the PC market: BYOD.

Companies around the globe are now allowing employees to bring their own products into the office and use them for corporate activities. And in a shockingly high number of cases, that means allowing those employees to bring into the office tablets and smartphones that, just a few years ago, the IT side would have never accepted.

For the corporate world, however, it’s a boon. Companies can save all of the cash they might have previously invested in PCs, and dedicate it to other solutions, like cloud-based programs. What’s worse for PC vendors – consumers are increasingly buying tablets and Macs and other products that the corporate world wouldn’t necessarily invest in.

So, the paradigm has shifted. No longer are PC makers able to credibly determine where their next sale is coming from. And in a huge number of cases, they’re finding that enterprise customers are more likely to buy their way lower margin tablets than their PCs.



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