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Finally, a Realistic Assessment of the PC’s Future

All around us, the evidence is overwhelming that the PC world is changing rapidly and in numerous ways — use, sales, share of the electronics/IT equipment market, application development, and, very importantly, the surrounding supply chain.

Certainly, the PC has a future in our homes and businesses, but don't let anyone convince you they know exactly how that future will look or where things will remain the same over the next five years. Within a few years, the PC market will lose its title as the dominant consumer of semiconductors — if it hasn't already. In the near future, the leading destination for many components used in traditional PCs will be tablet and smartphone plants.

The supply chain, especially the procurement and production elements, must be focused on accelerating that transition. I don't believe that's the case today, though the trends have been apparent for quite a few quarters. As consumers have migrated toward mobile devices, especially smartphones, the consequences for PC vendors and their component suppliers have become obvious. But apparently, they aren't obvious enough.

{complink 2657|Intel Corp.}, the company with the most to lose as this shift has accelerated, has worked to establish a beachhead in the smartphone market. Nevertheless, many well-meaning analysts and industry observers have continued to spout the misleading view that the PC sector is unshakeable. The general opinion for a while was that tablets and smartphones would serve as complementary products to the traditional PCs, rather than cannibalizing the market. Think again.

Paul Otellini, Intel's president and CEO, had this to say about the changes in his company's market during a fourth-quarter earnings conference call.

From a product perspective, 2012 was a year of significant transitions in our markets and a year of important milestones for Intel…
At CES last week, I was struck by our industry's renewed inventiveness. PC manufacturers are embracing innovation as we are in the midst of a radical transformation of the computing experience with the blurring of from factors and the adoption of new user interfaces.
It's no longer necessary to choose between a PC and a tablet.

Let's turn to an IDC report released Monday for further explanation. The research firm said it sees PC innovation accelerating over the next few years as OEMs struggle to stem their losses and blunt the impact of smartphones on the market. PC OEMs and chip vendors can no longer afford to be complacent, IDC said; they must compete on all levels with tablets and smartphone manufacturers to demonstrate the continued relevance of their products.

This view implies that PC vendors and their suppliers have been satisfied with the status quo until now. That would be putting it mildly. Until {complink 379|Apple Inc.} rolled out the iPhone and positioned it as an alternative platform for accessing the Internet, many OEMs didn't see smartphones as competing devices. IDC said in its report:

Complacency and a lack of innovation among OEM vendors and other parts of the PC ecosystem has occurred over the past five years. As a result, PC market growth flattened in 2012 and may stagnate in 2013 as users continue gravitating to ever more powerful smartphones and tablets.

Ouch. Some in the industry still believe tablets and smartphones aren't an arrow aimed at the PC market. I don't see tablets and smartphones replacing PCs in all situations, but they will encroach enough on that territory to leave a visible mark. That's why PC vendors, semiconductor suppliers, and manufacturers of other components need to develop a strategy that embraces the smaller form factors of tablets and smartphones and leverage their advantages over traditional computing platforms to create market-winning products.

Mario Morales, program vice president for semiconductors and EMS at IDC, said in a press release, “The key challenge will not be what form factor to support or what app to enable, but how will the computing industry come together to truly define the market's transformation around a transparent computing experience.”

That conversation is a couple of years late, but it's welcome nonetheless.

15 comments on “Finally, a Realistic Assessment of the PC’s Future

  1. prabhakar_deosthali
    January 23, 2013

    With the CLOUD  looming large  on the top and the smartphones and tablets eating out the bottom market, The PCs are caught in the middle and to survive in the middle they have to transform themselves into something new – and ther could be possibilities to explore new roles for these PCs apart from being the work horses for engineering related work, or graphics and animation related work, these PCs can tomorrow work as the hubs for all the things connected to internet in the INTERNET OF THINGS context or they could serve as middle ware for cloud computing platforms

    The PC manufacturers need to explore these new avenues to set PCs and smart phones/tablets apart with the new application domains

    Just Windows based PCs offering  office productivity suites may soon become a thing of past.

  2. bolaji ojo
    January 23, 2013

    I am not sure what PCs are supposed to transform into to become more attractive to buyers but I can say without hesitation that netbooks or ultrabooks won't do it. I've seen and used ultrabooks and they don't wow. Something else needs to come out of the innovation engine that vendors and OEMs are talking about.

  3. EBNBlogger
    January 23, 2013

    I keep seeing these articles predicting the end of the PC.

    What you have to keep in mind is that the PC is a workhorse that will do what no tablet or laptop can.

    Whatever amount of processors you can cram into a tablet or laptop, a PC can have 10 times or more in it. This is because it can draw power from the AC line.

    We have reached the practical limits of density in chips, unless there is a quantum breakthrough (no pun intended), size matters.

    So, when it comes down to the brass tacks of pure processing power, the PC is king.

    There is this idea that the cloud can provide the raw processing power needed by the tablet. This will be true only until there are a lot more users, then it becomes a bandwidth issue.

    At some point the tablet becomes merely a DT (dumb terminal) that has no inherent processing power at all, just a remote user input/output device.

    All is well and good with that idea, but, what about connectivity, security, privacy?

    What if the cloud provider does not want you to run your programs or store certain data? It is their server, they can pick and choose.

    Do you really want your life hanging by a string that can be cut anytime or anywhere. Remember Google terminating accounts based on whether or not they thought you were a real person?

    A perfect solution only works in a perfect world.

     

  4. bolaji ojo
    January 23, 2013

    The tablet is indeed really a “dumb” display terminal although manufacturers don't want users to believe that. You can input some data in response to questions, fill surveys, login to websites and use apps but beyond that right now, the primary function of most tablets is for accessing information. The same applies to phones, smart or not.

    As you rightly noted also, there are many heavy processing activities that cannot be conducted on a tablet and the Cloud isn't going to change that. Nonetheless, the PC is still under pressure because some buyers are instead opting for tablets. This doesn't and shouldn't mean that the PC will go away.

    I believe what companies like Intel are saying is that they need to be innovative in terms of how they design the PC. The traditional functions of the PC will still be required but perhaps the form of the device might need to change. I don't know how it is supposed to look or even if the change is necessary but OEMs are responding to the diversion of money from PCs to tablets. This makes sense.

  5. Anna Young
    January 23, 2013

    @Prabhakar, I agree, it's a challenge for PC manufacturers to explore and transform traditional PC's role. Smartphones and tablets are already living a visible mark anyway. One wonder how pc's future will turn out.

  6. Mr. Roques
    January 23, 2013

    In a talk with an INTEL exec, he was trying to convince us of the future of the PCs, and when asked about tablets, he put the off, only to later talk about INTEL's plan to build chips designed for them. 

    Many people think of many devices in the future, but what about only one with different peripherals? I understand the industry will be happier with many devices but I believe one device will be enough.

  7. Nemos
    January 23, 2013

    I believe that also, the dilemma PC or tablet it is a fake one, and you could realize that if you buy a tablet to replace your PC, even for a regular user this, it sounds like a joke, and if you don't believe me just try it. The PC market is living and will be alive at least for the next 5 -10 years.

  8. bolaji ojo
    January 24, 2013

    It all depends on what you plan to do with the device. If you need to heavy processign work, you'll need a PC and if all you want is a device that can access the internet and do basic computing then the tablet may suffice.

  9. bolaji ojo
    January 24, 2013

    Anyone who argues that the PC market is dead or in severe decline hasn't joined the workforce yet. The argument is not whether or not the PC is going to disappear. I don't think that will happen soon. However, its form factor may change and that's where innovation comes in. If you have a tablet that can hook up to a smaller and powerful processor with a flexible rollup keyboard why do you need to carry a box?

  10. Anna Young
    January 24, 2013

     Quite true, there are still some setbacks associated with the use of tablets or smartphones devices compared with traditional pcs they just can't match up (for now though). Traditional PCs still offers greater level of flexibility when it comes to mobile computing, I agree. However, it appears manufacturers are spending more time  innovating tablet pcs and other smaller devices.  Until the manufacturers come up with a viable solution to remedy the situation, I'm afraid the future is gleam for traditional pcs.

  11. Houngbo_Hospice
    January 24, 2013

    @Anna,

    “Some in the industry still believe tablets and smartphones aren't an arrow aimed at the PC market. I don't see tablets and smartphones replacing PCs in all situations, but they will encroach enough on that territory to leave a visible mark.”

    That is very well said! I am sure most PC makers are aware of that irreversible fate of the PC industry. But some are clinging fast to the idea that we will still need PCs for some/many tasks that cannot be done with smartphones or tablet computers. 

  12. Nemos
    January 24, 2013

    “If you have a tablet that can hook up to a smaller and powerful processor with a flexible rollup keyboard why do you need to carry a box?”

    Because despite how the tablet market wants to advertise their products as powerful and fast still there are not .

  13. Anna Young
    January 24, 2013

     @HH, Well it's a divided opinion even amongst the experts too. It's obvious that tablets and smartphones are limited to perform certain tasks at the moment. The point is tablets/smartphones PCs are transforming. Where will it leave traditional PC? I'm sure traditional PCs won't just disappear overnight. Its functions might eventually transform. Who knows?

  14. Anna Young
    January 24, 2013

     Nicely put Bolaji.  Like you said having “a tablet that can hook up to a smaller and powerful processor with a flexible rollup keyboard” plus, it's portable, light and easy to store away. This is the transition we are talking about. Would we still have the traditional PCs to compliment? Hard to predict where all of these changes will lead.

  15. bolaji ojo
    January 24, 2013

    I agree. However, I am saying that manufacturers could also create powerful processors that can literally fit in the palm of your hand that can be hooked up to a tablet. The tablet functions as a monitor when you hook it up to the mini-processor. In other words, we can have other form factors that are as powerful as PCs.

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