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What Will Happen to PCs as Tablets Surge?

In 2009, OEMs shipped about 2 million tablet computers before {complink 379|Apple Inc.} jumped into the market. In 2010, the iPad sparked roaring demand for tablets, and shipment jumped to 19.7 million units. The giddy year-over-year growth offers a striking insight into the future of tablets and the potential havoc they will create in the PC market, which has been, until now, a mainstay of the high-tech sector.

Personal computers currently account for a major share of global semiconductor shipment, and the market has, for decades, boosted sales of other accessories and non-active components. The PC drove strong demand for consumer printers, and gave companies like {complink 2376|Hewlett-Packard Co.} runaway profits from the sale of printer ink.

In addition, the PC market supports multibillion-dollar industries in many countries, including Taiwan, which got its start in the high-tech sector by supplying printed-circuit boards to foreign OEMs. Without the PC, we certainly would never have had the rapid growth of the contract manufacturing industry dominated by companies such as {complink 2085|Flextronics Corp.} and market leader {complink 2125|Foxconn Electronics Inc.} (Hon Hai Precision Industry Co. Ltd.), which had 2010 sales of $78 billion.

The shifting fortune of the PC market is changing the dynamics of the industry, although component suppliers may not feel the pinch as much as their OEM customers. By 2015 — just four years away — total tablet shipment will jump to 243.2 million units, up from the 66.6 million units anticipated for 2011, representing an increase of 265 percent, according to researcher {complink 7427|iSuppli Corp}

Apple, which lit a fire under the market last year with its first iPad, is expected to see its market share slip from 77 percent and 66 percent, in 2010 and 2011, respectively, to 36 percent by 2015, according to iSuppli. Windows-based tablets are forecast to grow steadily to about 16 percent of the entire market, from an estimated 5 percent for 2011.

According to Rhoda Alexander, director of monitor research at iSuppli: “The year 2013 will mark a critical juncture, as the tablet market turns into a battleground between media tablets using mobile operating systems, and PC-type tablets employing the Windows operating system.

“Microsoft and the PC makers will engage in a vicious battle to fight off the ongoing share grab from media tablets, even as many of these vendors offer media tablet solutions of their own. Expect to see a blend of slates, convertibles and dual- and potentially tri-screen solutions as alternatives to the media tablet onslaught.”

Over the next years, many of today's biggest personal computer suppliers will experience a dramatic decline in demand for PCs. For semiconductor vendors, including companies like {complink 2657|Intel Corp.}, which today dominates the microprocessor market, the increasing adoption of tablet devices by consumers and businesses presents a significant challenge.

Intel has responded to this shift, but because of its continued dependence on PCs for a bulk of its current revenue — PC client group sales of $31.6 billion in 2010 represented 72 percent of total revenue — it cannot afford to implement any drastic or sudden strategic changes that could hurt sales into the PC market.

Intel's management appears to understand the challenges and has been trying to alter the composition of its revenue mix. “We are transforming from a company with a primary focus on the design and manufacture of semiconductor chips for PCs and servers to a computing company that delivers complete solutions in the form of hardware and software platforms and supporting services,” Intel said in its latest annual filing with the US Securities and Exchange Commission.

Intel's four strategies for succeeding in the “changing computing environment” are explained in the SEC document:

  • Strive to ensure that Intel technology remains the best choice for the PC as well as cloud computing and the data center.
  • Expand platforms into adjacent market segments to bring compelling new solutions to the smartphone, the tablet, the TV, the car and the rest of the embedded world.
  • Enable devices that connect to the Internet and to each other to create a continuum of personal computing. This continuum would give consumers a set of secure, consistent and personalized computing experiences.
  • Positively impact the world through our actions and the application of energy-efficient technology.

Despite these efforts, many industry observers still believe Intel's dominance of the semiconductor industry is on the line and that the company may not be able to stem the erosion of its market share as OEMs push competing products for their tablet computers. PC OEMs will also get hammered if consumers opt for tablets rather than notebooks or desktop products. This is a likely scenario for many users who cannot afford both a PC and a tablet computer.

DRAM or memory IC vendors will experience mixed fortunes in the unfolding market development. Industry observers believe DRAM content in tablets will increase as OEMs incorporate PC-like functionalities in the products, but it's not certain this will make up for any lost revenue from declining notebook and desktop sales.

At an investors' conference I attended in New York on Tuesday, many of the attendees were taking notes on tablets — mostly iPads. Not a single notebook was in sight. The session on the rivalry between PCs and tablets concluded that we were entering a “post-PC era.” I don't think the PC is “toast,” as someone said in reference to Intel, but it's obvious the future of the personal computer is being written — on a slate.

39 comments on “What Will Happen to PCs as Tablets Surge?

  1. Parser
    March 30, 2011

    Before the first iPad the meaning of a tablet computer was very different. It was the same laptop with touch screen interface. When iPad came out some writers tried to coin a new name the slate computer because this new device was not a laptop and owner could not load any standard programs driven by mouse. All menus were simplified and meanings were streamlined. Somehow the tablet computers died off and the new devices inherited this name. All two millions tablet computers build before the iPad cannot be counted to the sale of the new tablet computers. While somehow industry thinks that Windows operated tablets will gain momentum is not materializing. I see only two major competitors the iPad and new tablets with Android OS. All others will be far behind. Sales of laptops could shrink in advantage of a cloud computing through new tablet computers connected wirelessly to desktops or mainframes. It would be nice to have access to a supper computer just from an iPad anywhere in the world. 

  2. AnalyzeThis
    March 30, 2011

    While it's true that tablets are becoming increasingly trendy and popular, the PC market has little to worry about.

    First of all, tablets aren't really a replacement for a PC, they're a compliment. Just like laptops didn't suddenly destroy the market for desktops, tablets will not destroy the market for PC's. You'll still need a PC.

    Secondly, while tablets were surely popular with the attendees of the NY investors conference you attended, the form factor makes far less sense in corporate environments, the developing world, and people/organizations/companies on a budget: PC's in general are cheaper, have a longer life-cycle, are more durable, and more easily shared with others.

    Tablets are the latest hip, cool thing but is it the future of personal computing? No, I don't believe so.

  3. Backorder
    March 30, 2011

    Is the debate about replacing PCs with tablets? I dont think so. The debate is about growth. Desktops and Laptops had their boom period and now, just like mobile phones, tablets and smart phones will have a growth story. It is for all to see that companies which invest in a growing market succeed against those who invest in a saturated one. The longer life of PCs and laptops might actually result in less interest from OEMs going forward. For instance, have a look at how the indian market responded to mobile phones as against the landline. Of course, the fixed line phone has the same advantages as that of a desktop PC; Long life, cost, ease of sharing et al. but people still took explosively to mobile phones while the landline network grew at its own pace. I think the difference in growth rates is so large, one has to put the money where the growth is.

  4. bolaji ojo
    March 30, 2011

    You nailed the key criterion investors and companies will use for deciding “where to put their money.” Growth. We should not be surprised if higher sales of tablets eat into notebook and desktop sales. It is inevitable that there will be some impact because some people may opt for a desktop at home and, instead of a notebook, the tablet for mobile computing.

    The same calculation is being made by components manufacturers who must constantly review current market demand, new products, consumer and business preferences to know which section to support, how much resources to put behind it and which OEM to place their bet on. This is already happening in the tablet market and, as we all know, whichever company initially picked and supported Apple (Foxconn, for instance) and stayed on the company's best side is rolling in profit.

  5. Anna Young
    March 30, 2011

    DennisQ I agree with you that tablets are compliments and cannot ultimately replace PC.

    In addition PC is easily accessible to all and has been tried and tested. Tablets on the other, is perceived as an accessory item, some sort of fashion statement, has not withstood the test of times.

    I don't foresee tablets completely dominating laptop and desktop PCs

  6. jbond
    March 30, 2011

    I agree that tablets only compliment PC's and Laptops. Tablets do have many advantages over a bulky laptop or even a smaller netbook. At the same time they do have many disadvantages that the business world wants. I know of many people who use tablets while on a plane, only to transfer the data to their laptop when they reach their destination. As great as some of these tablets are, I don't see them replacing laptops, just like laptops haven't replaced the PC.

  7. Parser
    March 30, 2011

    Tablet computers similar to iPad in design opened up a new market for portable communication/entertainment device. This new market may affect sales of laptops only from point of cost. Some percentage of customers will not be able to afford both. Others will update their desktops to allow for personal cloud computing. Tablet computers like iPad will see the largest growth this year, not doubt about it. Just like these devices created new market they have created also new market for application specific usage from inventory control to science and entertainment. The growth is there and market saturation is not visible yet for at least a year.

  8. bolaji ojo
    March 30, 2011

    Tablets in the current form represent only the first wave of the device. While the demand is quite strong right now I believe the market will begin to change over the next few years as manufacturers add accessories and make them even more functional — more like notebooks. That second wave is already starting.

    One company has introduced a tablet computer that, unlike the iPad, can dock to use a keyboard, offers USB connectivity and maybe all the applications you can use on a normal laptop. iSuppli believes tablets will become more like laptops in future and have the processor, memory and storage of a conventional notebook. That will hurt the laptop market though it won't supplant it.

  9. Parser
    March 30, 2011

    Pen based full functional tablet computers were on the market since 2001. They have never taken off. With modern tablet computers the functionality is minimized to essentials and a small screen with multi-touch makes them very friendly. Besides all that they are very thin and easily portable. I think going back to full function tablet PC (or Mac) would be going backwards most likely loosing sales because of higher price.

    By the way, iPad 2 has an optional Bluetooth keyboard with a upright dock.

    And I agree the laptops will suffer.  

  10. maou_villaflores
    March 30, 2011

    PC will still exist since we have SW application that needs a powerful machine like Photoshop and CAD. Tablets are in demand today because of the rise of the cloud computing technology – wherein users can easily access anything without storing data/information in the device.

  11. Hardcore
    March 31, 2011

    Tablets are great,

    Carry them to a business meeting, give them to staff for inventory control or integrate them as part of a quality audit/ ethical audit system, they make excellent data gathering work kit or provide valuable information sources for quality audit staff, in the form of pictures or textual instruction.

    But give them to a PCB/electronics design engineer or a toolmaker to assist in designing their products and you are likely to meet a sticky end. Even with Apple's latest addition of dual processing cores and gaming capability, the Apple Ipad2 tablets are still too underpowered to perform certain computationally intensive tasks, without causing a depletion of the battery life. Then there is the issue of screen size, even a 10 inch screen is not adequate in 'most' design situations.

    I say 'most', because I was speaking to a chinese kitchen designer the other day, and he needed a system to show kitchens & bathrooms  to prospective customers, currently he is running about with the equivalent of 6-7 reams of A4 paper in his bag, more interestingly he is not particularly computer literate (he cannot use a PC, but he has an Android tablet!!), plus he is unwilling to carry a portable computer about with him, in case it is stolen.

    As such, we can possibly conclude that the tablets will start to open new market areas that have traditionally been closed to  portable or desktop systems, but at the same time there will be a significant impact on the low end portable market, specifically because people were using portable computers because nothing else was available, so I would expect this group to migrate over to tablets, but remain loyal to their desktop systems.

     

    However having said that, I suspect apple is 'upto' something and planning to target the low end desktop market as well, specifically because they have now added the option of additional monitors to the Ipad2 ,why else would you need large monitor support?, it is not as if you can carry the monitor about with your Ipad device.

     

    HC

     

     

     

  12. SunitaT
    March 31, 2011

    @maou_villaflores ,

     I totally agree with you. In current scenario PC's are must for computational intensive processes. May be in near future we will be getting tablets with same computational capability as PC's. Emergance of Cloud computing is one more factor which will determine the fate of PC's. If we are able to use cloud's to implement computational intensive processes then I think it will hinder the growth of PC's.

  13. maou_villaflores
    March 31, 2011

    Thanks but I think PC will still remain for many generations since there are large software applications that needs a bigger memory and a stable machine performance.

  14. SP
    March 31, 2011

    I feel only companies use PCs these days for workstations. I feel with prices of laptops being so low, if theres anyone who uses PCs for personal use.

  15. Adeniji Kayode
    March 31, 2011

    For sometimes now we have been trying to compare the tablet(IPAD) with PC and LAPTOP and the major conclusion has been that IPad has come to stay but can not bench laptops. But then looking in to the fact that if more features are added to Ipad, it may come close to over taking laptops.Laptops might become something that may not be generally in use by everybody as it is today, probably an equipment for some set of people due to the nature of their profession.

    I agree with Bolaji, if the future eventually becomes what isuppli says, then Laptop market will greatly be affected.

     

  16. Backorder
    March 31, 2011

    “It would be nice to have access to a supper computer just from an iPad anywhere in the world. “

    I like the vision of this one!

  17. Ms. Daisy
    March 31, 2011

    The PC will still remain a major player, considering the fact the “baby boomers” who are going into retirement need means by which to communicate with the world. This older population have declining hand dexerity and a general coordination that is in decline to handle the touch screen applications of the tablets.

    Also, many offices that deal with graphics and large data like mine need large software applications that has a bigger memory. I was infact dissuaded by my IT manager from buying the tablet because of the memory requirement I need at all times. Yes, another must for me is stablility of PC's performance. I guess i belong to that target market.

  18. Ms. Daisy
    March 31, 2011

    I suppose you are one of the lucky few. I just happen to belong to the baby boomers too!

  19. Jay_Bond
    March 31, 2011

    I loved having my Iphone. There are still things about it that I miss compared to my Blackberry. Thankfully I still use it for music and games. One component I didn't like that much is the same thing I don't particularly like about the Ipad. No keyboard and no way to connect to one. I think tablets that allow you to hook to keyboards and allow other external components to be connected will be very sought after. I myself saw the Ipads lack of connectivity as a flaw that needed improvement.

  20. pinxlin
    March 31, 2011

    No  wonder  that the  future of  mobile devices  this  doomed  and damaged, it must  be  cautious  in speaking  of  chips  from both  Intel and  AMD  without  neglecting  the other  manufacturers .
    At the start of  the  note,  marked  iPAD  trends  to conclude  that  Intel has  not brought  a  share  of the market .  This is  a  lesson  even  for those who  marked  the era  of  the Personal Computer  ( in  reference to  IBM) .  The  Personal  Computer  will never go  in our  lives  there are several  examples , most notably  seen  in  Hollywood  where everything  is  done  based  PC 's ,  the  case  of  IPAD  is new and  its rise  has not  flash  if  it  was  popular ,  a specific industrial sector  is who  manipulates it  was  recalling how  the growth  of  the Personal Computer  and what  is the  trigger for  this  new system :  greater interoptibilidad  with  the user.  At the  same time ,  no action is taken demographic  growth  only  know  the  sales figures  in  the United States ,  not  America  or  Europe  but  in Japan , not  Asia .
    Hopefully  there  is  what happens .

  21. Susan Fourtané
    March 31, 2011

    maou_villaflores, 

    Desktops may remain in the market for some more years but not as the number one kind of computer being sold. Laptops have taken the first place for very good reasons. 

    Tablets don't come to replace the laptop either -at least not so yet. Tablets and laptops are for different uses and needs. They will sell well because it's the new toy in the market. It doesn't mean  they will replace the laptops. 

    -Susan

  22. larry@meetvc.com
    March 31, 2011

    Agree with Susan,  Tablets and laptops & .. are for different uses and needs


    iPOD ecosystem is for ” downloading ” music through internet;
    iPHONE ecosystem is for ” downloading ” handset game/app..through internet ;
    iPAD ecosystem is for ” downloading ” e-book, video.. contents.. through internet.
    My son & his friends use NB/PC for playing cool online game ;
    My son & his friends use TV & Wii…for playing cool video game;
    My son used my smart phone for playing game when waiting for train/bus/dentist …
    My son is asking me to buy PSP now. 
    My wife may need tablet PC for online shopping.
    I use NB mainly for business purpose. 

    Difference boxes serve different needs !!!

    27 days ago


  23. Adeniji Kayode
    April 1, 2011

    There has been a fall in the demand for desktop as a result of inventions of laptops and the major reason for that is the compact nature of laptops.

     Same way it will be for laptops, if Ipad will offer more features and smaller size compared to laptops, it will surely gain the attentions of common users and heavy computations will keep laptops around but at reduced demand  

  24. Susan Fourtané
    April 1, 2011

    Adeniji, 

    Not only the compact nature of laptops but also, and most importantly, their portability. Nowadays, to be able to transport your work station with you in a small case wherever you go is important. Or even just move your laptop to a different room. WiFi has become of great importance, too.  

    The way I see it is that most of us will keep the laptop at home/office for the heavy work and move around with a tablet. 

    -Susan 

  25. Susan Fourtané
    April 1, 2011

    Larry, 

    So basically you say that you use your laptop for doing business so your son and wife can have all the fun with the devices you buy. 🙂

    -Susan 

  26. PurchasingGuy
    April 1, 2011

    Without getting in to the dexterity of us baby boomers (I have a xoom and love it by the way…), your basic premise is flawed. 12 years ago, the PC's I built for desk top applications had a slower processor, less RAM and less storage than my Xoom. We certainly don't know what will happen in the next couple of years.

    In my opinion, what we will see is a super portable tablet like a Xoom or an iPad that will just dock with your keyboard, mouse and monitor like your lap top does today. It will be connected to the main Server where all the intensive programs will run and you just un-dock it and take it with you like you do your lap top today. Not much is needed for this to happen in my opinion. There is already an Android version of MS Office that has decent capability.

    I really look forward to not having to lug my laptop through airports…

  27. Adeniji Kayode
    April 1, 2011

    Susan, I agree with you on that, that laptops are coming to take the place of desktops at homes on tables while Ipads  become essential for any other thing apart from heavy work.

    I also believe with time laptops might become a tools for professional programmers, graphic design or something relating to that while ipads will be found mostly with just common users.,

  28. Adeniji Kayode
    April 1, 2011

    Purchasing Guy:

    you made good observation on that, while making this comment, i was thinking the reason why laptops will still be around for a much more time is that Ipads still need laptops to perform, convert or perform a heavy computation on files before they are downloaded on ipads.

     Is it possible right now to own an ipad without a need for a laptop along side with it?

  29. bolaji ojo
    April 1, 2011

    That's what I expect to happen. PCs and notebooks will still have a role but eventually manufacturers will find a way to migrate most of the functionalities of the PC/notebook to tablets. Once this happens fewer people will use notebooks and opt for tablets.

    In the workplace companies may still offer notebooks and servers will continue to play their current roles. Some workers will use and need PCs and Macs that need faster processors, higher RAM and storage but these are increasingly less applicable to many employees.

  30. PurchasingGuy
    April 1, 2011

    Keyode,

     

    No, today not. And with the connectivity issues associated with an iPad, probably never. But a similar tablet running a version of Windows Mobile 7 or a similar OS, I think it would be possible.

  31. larry@meetvc.com
    April 1, 2011

     

    Susan :

    Yes !  Basically  I use my laptop for doing business  & for social networking like Linkedin/ facebook & for reading news, watching video. 

    I will use Tablet PC installed with Window O/S for both business/social needs.   My NB is loaded with Android & Window, but most of the time I use Window O/S.   

    BR, Larry  http://www.linkedin.com/in/larrytsai 

     

  32. itguyphil
    April 1, 2011

    I think laptops are more for business and tablets for pleasure. I call it content-on-demand with the tablet. I guess the tablet can serve both purposes in crunch time but I don't consider it an permanent replacement for a laptop.

  33. Susan Fourtané
    April 4, 2011

    Adeniji, 

    Exactly. If we think about it, many regular users of the Internet and many of the most common applications don't really need much nowadays. Their needs can be basically covered by an iPad or any other tablet for that matter. As soon as manufacturers and apps developers see the potential this can bring, more and better designed tablets will be launched to the market at a lower price, too, following demand. Then tablets will become the real portable gardet we will carry with us all day every day leaving the laptop at home for our other needs. 

    -Susan 

  34. Susan Fourtané
    April 4, 2011

    pocharle, 

    No, tablets are not only for pleasure. They have proven to be efficient and useful in different areas where mobility, information storage and Internet access have been required by people performing their jobs. Good cases of tablets at the work place are those in healthcare, education and journalism to mention a few. Tablets in business have also their space. 

    -Susan 

  35. Susan Fourtané
    April 4, 2011

    Larry, 

    Have you already found a tablet that best covers your needs for business and social networking yet or you are still in the search for the best option for you? 

    I read you have your laptop leaded with both Android and Microsoft OS, what OS would you prefer for your tablet? 

    -Susan 

  36. Adeniji Kayode
    April 5, 2011

    Bolaji: Thanks for that.

    I wonder how ipads will look like if it is to have all the functionalities of the PC especially when we are in the era of “The smaller it is,the sophisticated it is”

  37. Hardcore
    April 6, 2011

    Hi Adeniji,

    The major issue related to Desktops/laptops & tablets is not actually functionality, but rather screen 'real-estate'.

    It would not matter if you had the fastest tablet on the planet if it only had a 6-7 Inch screen, unfortunately many of todays tasks require  a large desktop area, in the case of a programmer , you would need your programming IDE to write code, a debugger screen to track the execution, and further real-estate to see the results of the program being developed. Thanks to emulation technology moving into the 21st century it is now possible to emulate many devices on the computer you actually writer the code,  as a result you loose the need to have a separate device connected to your development system.

    One key area is in the linux desk top, that is utilized for the android based systems, you can actually emulate a full android device under your desktop system, reducing the need for physical hardware.

    But the result of all this development integration is screen real-estate which generally rules out development on laptops or tablet based systems, even though they have the required functionality.

    I have said previously that the company who can integrate a display unit into the human optical system with the required resolution, would blow away the complete computing market, because at that stage you could have a wrist watch sized device acting as your 'desktop' you would no longer be constrained to the users requirement to 'see' a physical screen, keyboard & mouse  functionality could be integrated into eye tracking systems.

    HC

     

     

  38. Ariella
    April 6, 2011

    HC, what about the possibility of projecting the screen, so it can go from a wrist watch sized device to a screen as large size as large as you like?

  39. Mr. Roques
    April 16, 2011

    While I believe that the laptop industry is not going to break because of the tablets, it will shrink (or not grow as much). One concern is for netbooks, which in my opinion will no longer have room to live. As long as tablets do a good job of creating a user-friendly input mechanism, netbooks will soon be forgotten.

    Tablets are not only for leisure, it's taken me some time but I've now seen a future and market for them.

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