News Column

PCs hang in, tablets … don't

July 14, 2014

By Jon Swartz, and Adam Ganucheau, USA TODAY



The PC industry just had its best quarter since 2012. Tablet sales are in a tailspin.

What in the name of desktop PCs, AOL and MySpace gives?

An improving economy, the demise of Windows XP and the evolution of the computing masses conspired to alter the PC andtablet markets. But change could be temporary -- a mere blip in the fading fortunes of personal computer sales, industry analysts say.

Shipments of personal computers worldwide were 74.4 million in the second quarter, a decline of 1.7% from the year-ago quarter, market researcher IDC said. The drop was the lowest since tablet sales surged in 2012.

IDC attributes the easing to short-term business PC replacements, interest in Chromebooks and renewed growth in the U.S., Canada and Europe.

Improving economic conditions and consumer confidence underscored the surge, based on a 2014 study of North American businesses by Spiceworks, a professional network for the information technology industry. It found 79% of IT professionals plan to purchase desktops, and 71% plan to buy laptops this year.

Personal computers -- and their power -- have also benefited from new technologies such as medical imaging, graphics rendering, 3-D printing, big data and cloud computing, according to Michael Dell and others.

"The world got enamored with smartphones and tablets," Dell told USA TODAY in June. "But what's interesting is those devices don't do everything that needs to be done. 3-D printing, virtual-reality computing, robotics are all controlled by PCs. Productivity is grounded in the PC. Where does the computing power come from? How would you run a hospital without PCs?"

The reason for the PC industry's brighter outlook is simpler, says Ammiel Kamon, executive vice president of products and marketing at Kontera, a data-marketing company. Once service for the defunct Windows XP ended April 8, people who needed to upgrade operating systems were in the market for new computers.

"Comeback is relative," says Mike Feibus, principal analyst at TechKnowledge. "Tablets aren't as shiny anymore, and consumers' PCs are getting old."

As PC sales rebound, tablet shipments are in a funk.

Research firm NPD DisplaySearch predicts tablet shipments will grow 14%, to 285 million units. By 2017, the annual growth rate will sputter to single digits, NPD says.

A confluence of factors have conspired to undercut the market: Young consumers watch video on smartphones; older users like laptops' larger screens; phablets have filled a void in between; and Apple has not upgraded the flagship market product, iPad, in more than a year.

Smartphones with screens larger than 5.5 inches are slicing into demand for smaller tablets -- those between 7 inches and 7.9 inches -- which accounted for 58% of global tablet shipments last year. Tablets are feeling the pinch in China and other emerging markets. (Fittingly, Apple's forthcoming iPhone 6 is expected to sport a larger screen to take advantage of the market shift.)

Tablets don't require replacement as often, too, because they're frequently the second or third computing option among consumers, says Patrick Moorhead, principal analyst at Moor Insights & Strategy. Nonetheless, he expects an uptick in tablet sales the rest of the year, possibly after a new iPad is unveiled.

A wild card has been the emergence of the ultra-mobile PC as a bridge between the traditional laptop/desktop computer and the tablet. "Ultra-mobile PCs have given business professionals and consumers the mobility they've demanded while still allowing them to run more resource-intensive business applications (that) tablets have traditionally struggled to address," says Jay Hallberg, COO of Spiceworks.

The market machinations have come amid a years-old chorus of "The PC is dead." But older users remain holdouts for larger devices with larger screens and type to read. Tablets are, for the most part, devices to play games and watch videos, Feibus says.




Jack Gruber, USA TODAY


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Source: USA Today


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