Grand Funk: PC Sales are in the Doldrums

PC sales decline in 2012
Eyebrow-rasing stat: Worldwide PC shipments declined in 2012 … the first drop since 2001.

If people had any doubts about the inexorable rise of tablet devices and smartphones, the sales results for the holiday season would surey erase them.

In fact, for the first time in five years, holiday PC sales have actually declined. Tech industry tracking firm IDC reports that personal computer manufacturers sold just shy of 90 million units worldwide during the last quarter of 2012. That’s down more than 6% compared to PCs sold in the final quarter of 2011.

What makes the news doubly troubling for the PC segment is that, unlike in 2009 when sales of all tech devices were hammered by a worldwide recession, this time around sales of other devices such as tablets and smartphones have grown substantially.

And considering 2012 as a whole, the news is even worse. The estimated 352 million PCs sold were ~3% lower than in 2011, which makes this the first annual decline in more than a decade – since 2001 in fact, when the 9/11 attacks roiled markets and impacted sales of all goods across the board.

And it isn’t trouble for just one manufacturer, either: The 2012 sales drop hit all of the big players including Dell, HP and Lenovo.

What about the prognosis for 2013?

It’s not much better. IDC is forecasting mediocre growth in the PC segment (less than 3%) — although at least that isn’t a decline.

But on the downside, it’s very possible that tablets will actually outsell PCs in 2013 – a possibility that would have seemed unthinkable just one or two years ago.

We’re hearing a number of explanations for the slump in PC sales. One of those is that Microsoft’s new Windows 8 operating system isn’t doing much to excite buyers – at least not so far.  The surge in new PC hardware purchases, which commonly occurrs when newer versions of Windows have been introduced, hasn’t happen this time around.

More fundamental than the Windows 8 conversion rate are signs that PCs are losing their edge over other devices in the perception that they’re the most secure, reliable and efficient options.

This shift may be less about PCs themselves or their quality, and more about the aggressiveness by folks like Apple iPad and their incursions into the PC “space.”

2 thoughts on “Grand Funk: PC Sales are in the Doldrums

  1. I’ll repeat part of what I wrote in reply to your earlier post on 2013 marketing predictions:

    “Is the ‘age of the PC’ really coming to an end? I think the ‘experts’ are missing a big elephant in the room — the computing needs of content producers are very different from those of content consumers.

    While tablets and smartphones are much handier than PCs for content consumers, they are horrible substitutes for content producers. To better appreciate this point, grab your iPhone, iPad or Galaxy and try to create a fancy graphic with it. It might be technically possible, but who in their right mind would even bother?

    In my view, it would be better to say, ‘the age of IT convergence on a single PC platform is over.’ The one-size-fits-all solution delivered by the dominant Windows platform (and also the Apple Mac) over the past 15-20 years will give way to a diversity of mobile and stationary computing devices tailored to the specific needs of content producers (who require all the bells and whistles that a traditional PC delivers) and consumers (who are looking for a tiny fraction of a traditional PC’s functionality, delivered in a convenient and satisfying way).

    Incidentally I think this is the underlying reason why Windows 8 is getting flak in the marketplace these days for being ‘confusing’ — it’s still a one-size-fits-all operating system that’s merely camouflaged to create a more satisfying experience for content consumers.

    In other words, it’s very likely that smartphones and tablets are cannibalizing (and will continue to cannibalize) the market for PCs, but this is likely true only for people who do not intend to produce any content using the device they are buying.

    The fact that PC sales declined by “only” ~3% in 2012 suggests that the market segment consisting of people (or businesses) who don’t produce any content at all is rather small. I think it’s fair to say that most people are both content producers and consumers — but at different times and contexts; for example, at home versus at work, or behind a desk versus on the move. Consequently they will still demand PCs in addition to smartphones and tablets, and the combined market for PCs, smartphones and tables should continue to grow and will probably accelerate as more and more people who are both content producers and consumers (like me) purchase multiple devices for different occasions.

    This is the segment that Microsoft is targeting with Windows 8, and the proof can be seen in Microsoft’s own licensing rules for applications like Office. In past years Microsoft enforced (or at least tried to enforce) a strict one-license-per-device policy, but today you can buy one Office license from Microsoft and deploy their software on multiple devices, such as your PC and your smartphone or tablet.

  2. Thank you, Nelson Nones; An excellent addition to the post and right on target!

    I thought perhaps I was behind the curve, but I didn’t see the ease or convenience of creating articles or spreadsheets or any of the other “products” of my work on an IPad.

    As an independent consultant who works mostly from home, I do look forward to the day when it is easier for “laymen” to sync multiple devices.

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