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 {complink 7014|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 {complink 3426|Microsoft Corp.} 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.
I am one of the few people who hasn't considered the PC dead (yet!) And I'm not ready to…unless Microsoft's Surface can do everything my PC does.
It probably won't. Then there's also the business adoption rate. I doubt most businesses will want to replace their current infrastructure devices with tablets. At least not any time soon.
I like PC – Desktop PC with two 27inch monitors. I am waiting for Windows 8 and will upgrade soon with it.
The trend in developing countries is a natural result of increased computerization at all levels. In just couple of years here in India, all majority of government services like tax payment, income tax returns filing, railway reservations, airline reservations, share transactions, banking almost everything has gone on-line.
This transformation has led to each family necessitating a PC at home. PC has become a household gadget like TV or fridge.
On education front also the entry level at which the students would want to have their own PC/laptop has come down from graduate level to school level.
Government has made PC literacy a must for a government job right from the lowest clerk level.
As a durable and shared device PC or a laptop fares better than a smartphone or a tablet.
So it is natural that the PC demand in the developing countries is on upswing.
I wonder if the growth is in the developing countries then will the margins (and earnings) be lower? This might make for a not so rosy next few years.
@ Barbara,
i,m with you on that, for now there is yet to be a complete and capable replacement for PC
@porcharle,
For now, businesses that are really bent on using tablets instead are still very few.
I think there is this thing about trying new things generally, Its take time to adjust to new things.
@prabhakar,
you are right on that, on the other hand, i,m not sure if the government of these developing countries could trust her workers with tablets yet.
The options might be to train them which may be an additional expenses
then proper handlings/ maintenance
With high volumes i think they can make good margins and establish themselves in the markets.
Government has made PC literacy a must for a government job right from the lowest clerk level .
I agree with you on that. I think that's the trend now in most of developing nations, there is encouraging use of information and communication technology within government agencies.
As the governments of developing nations invest more money development of new infrastructure there will be positive growth in the demand for pc's. But the growing tablet and ultra book markets can have negative impact on pc sales.
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.
“ 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.
“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.
By 2016, emerging markets will represent approximately 69 percent of total global PC sales, according to IDC
Bolaji, Great! It's a good business opening for electronics supply chain industry and one not be missed. I'm sure more resources have been diversified to this part of the world.
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.
This information proves the PC isn't dying anytime soon! It is still a big necessity in this world. I think it will be a while before other technology (laptops, tablets) take over any.
With more and more services being virtualized, will we get to a point when we definitely don't need to change the PC? Maybe a better, bigger display but the CPU would remain the same.
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.
@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.
Well, maybe someday those apps will get virtualized but yeah, a group of people will always need more and more computing power.
But what about the rest of us? With the thin clients that HP, Dell and nComputing are pushing so hard, they might be digging their own grave.