The PC market isn't quite dead yet. In fact, recent forecasts indicate the market will continue to grow at a respectable single-digit level for the next several years. Today, researcher IDC said it sees a 5 percent increase in 2012 PC shipments, rising to 382.6 million units from 364.5 million units in 2011, and maintaining a solid upper single-digit growth rate through the next several years to reach 528.5 million units by 2016.
While demand from developed economies is expected to remain tepid, IDC believes emerging markets will continue to pick up the slack and account for 59 percent of total shipment in 2012. By 2016, emerging markets will represent approximately 69 percent of total global PC sales, according to IDC. The research firm cautioned, however, that continuing economic turmoil and industry-related issues promise to hinder the PC market, including problems in Europe and North America as well as uncertainties about the deployment date for the latest Microsoft Corp. (Nasdaq: MSFT) Windows operating system.
Aside from weakening demand in mature economies where most consumers and enterprises already have PCs and see no compelling reasons to upgrade or purchase new computers, IDC highlighted pressures on government budgets as another reason PC shipments may continue to be weak. Small and midsized companies, the researcher said, are hesitant to jack up capital expenditure at this moment because public spending remains under pressure while consumer demand hasn't been as robust in the last year as it was several years ago.
David Daoud, research director for personal computing at IDC, noted in a press release:
In the United States, the PC market will continue to witness the perfect storm over the next two quarters before we see any meaningful resumption of growth. Most consumers and businesses in need of PCs already have PCs and see no immediate reason to upgrade or expand. The market is also evolving amid a heated presidential election campaign, adding more stress to consumer and business confidence, with both segments refraining from spending or hiring. The good news, however, is that the forthcoming release of Windows 8 promises to bring new classes of products that could lead to a stronger refresh cycle as the year ends.
Surging demand for tablet PCs will pose some challenge for PC sales in the near future, especially if younger consumers continue to gravitate towards the smaller form factor device at the expense of notebooks and desktop computers. IDC notes that a brewing price war in the tablet PC segment among manufacturers of Google Android operating system-based devices could make the product more appealing and further hurt demand for traditional PCs. Some of the decline could be offset by a rapid takeoff in demand for ultrathin notebooks.
Jay Chou, senior research analyst with IDC's Worldwide Quarterly PC Tracker, observed in the news release:
PCs continue to face pressure from a weak economic environment and growing competition. Consumer sentiment could be revived with UltraBook or Ultrathin systems provided the right price is reached. More price-cutting in the Android tablet landscape could free up some budget for PC purchases, but could also focus consumers on tablets rather than PCs. Ultimately, we expect modest PC growth this year as the industry works through the transition to Win8 and related devices.
@Clairvoyant, I think it might be true. Consider XP after Win 98 then consider Vista or 7 over Windows XP. Each need a better system to function effectively. The baseline specs on the installation disks suggests the same. Since, the computational power is growing exponentially I think that increase in resources at the program level is going unnoticed.
It's possible, Mr. Roques, but I doubt it. Each Windows OS version that comes out is more demanding on the system than the previous version. Also, any users who use PC's for gaming or CAD work (for example) will always be upgrading, as the programs are always becoming more demanding on hardware, as graphics and computation requirements increase.
The people that are using the tablets now typically won't be the decision-makers. It is the tech savvy that like to stay on top of new trends. Hopefully those people will make the information transfer to the key personnel that would be responsible for adopting new technology.
"I wonder if the growth is in the developing countries then will the margins (and earnings) be lower"
@Flyingscot: I think the growth in developing countries may be higher compared to developed countries. In developd countries, PC market is already saturated. Every household has a PC or a laptop. Wheras in developing countries, there's still room for growth and the number of PCs is expanding as they become cheaper and more affordable.
"This transformation has led to each family necessitating a PC at home. PC has become a household gadget like TV or fridge. "
@Prabhakar: I agree. From being a luxury item 4 or 5 years back, PCs have become a necessity. One of the factors has certainly been the increase in demand whereby every household is required to have a PC for necessary tasks like filling out online forms etc. The other has been the reduction in prices over the years which has made PCs affordable for everyone.
Interesting post, Bolaji. Do you have any idea about the growth rates of laptops and tablets? It may be interesting to compare the PC growth rate with them. Growth rate for PCs may not be that low but it may be very low compared to laptops and tablets.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.