The PC market is dying, tell me something I don’t know.
Late last week IDC came out with a report stating that PC sales had suffered their steepest decline in history last quarter, a drop of approximately 14%. This comes hot on the heels of a report by Gartner, which projected a decline of 7.6% for PC sales in 2013.
Some vendors had it worse than others. IDC says HP’s shipments dropped 22.9% from a year ago and Dell’s slid by 14%.
The reasons for this decline are probably obvious to Hardware Canucks readers: tablets and high-end notebooks have galvanized PC sales; users are satisfied with the PCs they have, and corporations don’t want to upgrade the PCs they have because they simply don’t need to.
For most users, the great revolution of the computing world over the last two decades has been the move to tablets. Intel and AMD have been able to add additional cores to CPUs, NVIDIA has done amazing things with GPUs, but most users don’t care. Statistically, they want ease of use and simplicity – things that a tablet does perfectly.
The advances by the likes of Intel, AMD, and NVIDIA have done revolutionary things for computing and gaming; the former’s contributions aren’t recognized by the layperson while the market for the latter isn’t growing as quickly as some manufacturers might have hoped.
PC manufacturers now have to deal with their own good enough revolution. The computer someone might have bought in 2010 will be good enough for another 2-3 years, should the person not want to push their hardware with the latest games or video editing. Of course for hardcore gamers and prosumers the hardware of yesteryear won’t come close to being good enough, but this segment of the population – which demands the best from manufacturers – isn’t big enough to keep the profit margins of PC manufacturers up.
While it may panic shareholders, the fact is PC manufacturers need to prepare for a zero-growth future. Some have their escape velocities set, like diversification into high-margin services or mobile devices. For Dell, this meant a complete corporate restructure – taking the company private to avoid the pressures of unrealistic demands by investors of year-over-year growth.
Manufacturers that have a diversified product line, like ASUS and Acer, won’t fall victim to the PC’s good enough revolution, but companies that rely on selling faster hardware year-over-year will face a market with no appetite for their product.