What’s Happening to the PC Market?

It is no secret that sales volumes in consumer electronics and computing devices now have shifted strongly to smart phones, tablets and e-readers, and away from PCs.

As but one example, PC shipments in Western Europe totaled 16.3 million units in the fourth quarter of 2011, a 16 per cent decline from the same period of 2010, according to Gartner.

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For the full year, PC shipments also declined 16 percent from 2010, dropping for four straight quarters.

“Despite aggressive pricing and special holiday deals for PCs, consumers’ attention was caught by other devices, such as smartphones, media tablets and e-readers,” said Meike Escherich, principal analyst at Gartner.

You can blame economic conditions, a transition to Windows 7 or any other cause. But the simplest explanations often are the best (Occam’s Razor, for those of you familiar with the theorem).

Simply, there is a product substitution process at work, with buyers–both consumers and business customers–shifting incremental spending to tablest, smart phones and e-readers.

That doesn’t mean PCs and notebooks aren’t valuable. But it clearly means users can make do with the existing installed base of PCs, for the most part, with incremental spending shifting to the newer product categories.

One of Google’s studies of tablet use over a two-week period, which had users recording every occasion that they used their tablet, shows that tablets really are not PCs, any more than smart phones are used in the same way that PCs are used.

Most consumers use their tablets for fun, entertainment and relaxation while they use their desktop computer or laptop for work, Google User Experience Researchers Jenny Gove and John Webb say. About 91 percent of the time that people spend on their tablet devices is for personal rather than work related activities.

And, as it turns out, when a consumer gets a tablet, they quickly migrate many of their entertainment activities from laptops and smart phones to this new device.

The most frequent tablet activities are checking email, playing games and social networking. The study also found that people are doing more activities in shorter bursts on weekdays (social networking, email) while engaging in longer usage sessions on weekends (watching videos/TV/movies).

Tablets are multi-tasking devices with at least 42 percent of activities occurring while doing another task or engaging with another entertainment medium. Tablets aren’t PCs

As it turns out, lots of things people can do on PCs don’t “need” to be done on PCs. Content consumption, email and other communications actually represent most of what many business users really “have to do” on a PC.

Also, tablets are more accurately described as “untethered” devices than “mobile” devices, to the extent that tablets primarily are used at home. Unlike smart phones that go everywhere and laptops that travel between work and home, few consumers take their tablets with them when they leave the house.

Western Europe: PC Vendor Unit Shipment Estimates for 4Q11 (Thousands of Units)

Vendor

4Q11 Shipments

4Q11 Market Share (%)

4Q10 Shipments

4Q10 Market Share (%)

4Q10-4Q11 Growth (%)

HP

3,612

22.2

4,287

22.1

-15.7

Acer

2,176

13.4

4,041

20.8

-46.1

Asus

1,879

11.5

1,850

9.5

1.5

Dell

1,718

10.5

1,899

9.8

-9.5

Lenovo

1,416

8.7

1,243

6.4

13.9

Others

5,487

33.7

6,078

31.4

-9.7

Total

16,288

100.0

19,398

100.0

-16.0

Note: Data includes desk-based PCs and mobile PCs. Media tablets are excluded.
Source: Gartner (February 2012)

That shipments of tablets are expected to grow from 72.7 million units in 2011 to 383.3 million units by 2017, according to NPD, would not surprise many observers.

Growth in emerging markets, expected to account for up to 46 percent of worldwide shipments by 2017, an increase from the 36 percent share in 2011, might be more surprising.

The tablet forecast also illustrates an important change in connected appliance trends. In the past, “PCs” have been one category of appliances, while MP-3 players, phones and digital organizers, game devices, cameras and e-reading devices have been distinctly different categories.

These days, many of those devices have overlapping functions. Taken as a whole, the changes suggest the crucial role “content consumption” now plays as a lead application for most devices. Though PCs, cameras and organizers still largely have “work or business” use cases, virtually all the other devices are oriented around content consumption.

If results of a U.K. consumer poll are any indication, tablet PCs are about to change Web browsing, gaming and reading preferences.

According to survey conducted by Cooper Murphy Webb, Apple’s iPad is the preferred method of reading newspapers and magazines among consumers already owning the device. Tablets change behavior

The poll also found that a plurality of iPad owners prefer the device for reading books and gaming. Perhaps surprisingly, respondents indicated they used their dedicated gaming consoles and iPads about equally when gaming. If that holds up, it could mean trouble for game console suppliers.

And a significant percentage prefer the iPad for Web browsing as well. That finding is less surprising, if one assumes the tablet device is designed to be used as a content consumption device.


Worldwide Tablet PC Emerging vs. Mature Market Shipment Forecast Breakout

PC shipments are lagging because people are discovering the things they want and need to do often can be done “better” or “more conveniently” on a different device. Products have life cycles. We are just seeing another example of that, in the PC market.

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