Pity the Poor PC: First the iPad, Now iCloud
This has not been a great year for the PC industry -- and it's about to get even worse. With sales of mobile devices exploding, Gartner yesterday downgraded its forecast for PC sales this year to 9.3 percent or 385 million units from 10.5 percent.
Sure, lots of execs in other industries would kill to have a growth rate that high, and 9.3 percent is much higher than the projected growth of the entire economy. So why am I singing the blues for Michael Dell? In a word: momentum. Tablets, smartphones, and the cloud have it. PCs and PC-centric companies like Dell and Microsoft don't.
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A tale of lowered growth would have been far less doleful five years ago. In those days, a dip in sales would have been due to one of two factors: either a temporary slip in the economy or a buying pause as businesses and consumers delayed purchases while they waited for a new operating system from Microsoft.
Not this time. The recession is certainly a factor; businesses are spending less on everything, and so are many consumers. But is anyone sitting around thinking, "Gosh, Windows 8 and its cool touch interface will be here in 2012. Don't want to buy a PC now." But you can bet your butt that when the iPhone 5 (or 4S, as the case may be) rollout is close, the excitement meter will be off the chart.
What we're looking at is a perfect storm: The mobile revolution, the desire of consumers to accumulate digital content at home, and the consumerization of IT are together swamping the PC.
Netbook sales sliding
One telling point in the Gartner forecast is the cratering of netbook sales. "Consumer mobile PCs are no longer driving growth, because of sharply declining consumer interest in mini-notebooks [aka netbooks]. Mini-notebook shipments have noticeably contracted over the last several quarters, and this has substantially reduced overall mobile PC unit growth," says Ranjit Atwal, a research director at Gartner.
The PC industry, including Intel, invested tons of marketing and development money in those little guys, and after an initial burst of sales to early adopters, people didn't want them. Why? They were like buying a Yugo instead of a Toyota. Stripped down and underpowered, they simply weren't interesting.
The failure is all the more striking when you look at what Apple was doing at the same time. At the height of the miniboom in netbook sales, Steve Jobs was catching flack from pundits who thought he should produce a mini MacBook. He refused, instead focusing the company's energy on the iPad. We know how that worked out. As of the last quarter, the biggest drag on sales of iPad 2 was lack of capacity to meet demand. Simply put, Apple is selling every single one it can produce. Wouldn't Michael Dell like to be in that position?
The Gartner report maintains that sales of tablets are, by and large, not responsbile for the falloff in PC sales. "They don't overlap enough in function," says Gartner analyst George Shiffler. But people who can afford them may well be extending the life of their existing laptops and using the money they've saved to buy a tablet rather than a new laptop.
Although Gartner might be slower than some of us to predict the fall of the PC, the research company is changing its methodology to reflect the mobile consumer revolution. By the end of the year, Shiffler told me, Gartner will issue a unified forecast that encompasses several computing devices, including laptops, tablets, smartphones, and cellphones.
Speaking of Dell, there was some comfort for his company in the Gartner report. The research outfit sees some recovery in the sales of business PCs, an area where Dell is strong. "Businesses sharply reduced replacements and extended PC lifetimes in response to the recession," says Raphael Vasquez, a research analyst at Gartner. "Businesses have begun replacing aging PCs more vigorously. We expect the growing urgency for businesses to migrate away from Windows XP will drive significant professional replacements."
Isn't that a heck of a note, though? Businesses are replacing Windows XP, an OS that debuted 10 (!) years ago as of Oct. 25.
Then there's iCloud
Apple's share of the computer market is still relatively tiny, even though it keeps growing faster than the PC market as a whole, so the number of people actually using Apple's forthcoming iCloud sync-and-storage service to full advantage won't be enormous. But iCloud, which allows users to sync content transparently across multiple devices, is right, well, in sync with how people now view computing.
PCs are transitioning from a one-size-fits-all computing platform to a more specialized device, prized for their ability to complement other devices, says Gartner's Atwal: "Moving forward, PCs will no longer be a market by themselves, but part of a larger device market that ranges from smart televisions to the most basic feature phones. Within this market, consumers and professionals will increasingly use the combination of devices that best suits their particular needs."
We all have digital photos, music, and documents on our PCs, smartphones, and tablets, and keeping that content organized and accessible is really difficult. The PC has been the central repository of our "stuff," but that becomes less and less attractive as digital content multiplies and users want to take it with them. The answer to that problem is not a six- or seven-pound laptop, even if it does have a cool Windows 8 touch interface. That's not a rocket-science insight, but the PC industry doesn't seem to get it.
Then there's developer energy. Every time you turn around, there's another burst of creativity on the mobile front. Sure, lots of the apps you'll find in the iOS App Store or in the Android Market are pure junk. But compare the excitement over Angry Birds to the latest release of Office. That's momentum.
As I've said over and over, Microsoft isn't going away -- it is still a money machine. Dell and a few PC makers will hang on as well. But all those companies are on the wrong side of history, and that's not a good place to be.
This article, "Pity the poor PC: First the iPad, now iCloud," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.