No matter where you turn, it’s impossible to escape that fact that the device world – PCs, tablets, smartphones and the like – is changing very rapidly. There are a number of reasons for the shifts we’re seeing in device demographics:
- Growing adoption of non-PC devices.
- Introduction of desirable tablet devices, such as the iPad and Surface Pro, as well as a myriad of Android-based tablet devices.
- Continued increase in sales of smartphone and “phablet” devices.
- Expanding Apple Macintosh market share.
Second order consequences
These changes are having a number of important market ramifications for consumers and businesses as well as for vendors across the market. For some vendors, a drop in PC sales couldn’t come at a worse time. Dell, for example, is in the middle of a very public process intended to take the company private. With staggering decreases in PC sales, one potential suitor – Blackstone Group – has walked away from the Dell deal. Such situations will make it more difficult for Dell to make the changes that it needs to reinvent itself for a fruitful future.
Beyond the Dell impact, consumers and organizations are changing their buying patterns as new devices become available in new form factors and it’s not always spelling good news for the traditional PC market.
2013 has not been good to PC makers
In the first quarter of 2013, the market saw a dire 14% drop in PC sales. It is speculated that this major drop took place due to the lukewarm – at best – reception that greeted the introduction of Windows 8 and the continued uptake of tablets, which provide many consumers with a “good enough” computing experience. In fact, Windows 8’s market share as of the beginning of April 2013 was a miniscule 3.31%. Even the much maligned Windows Vista still commands almost 5% of the operating system market. Windows 8 is barely surpassing desktop Linux, which does not bode well for Microsoft or for the overall PC market.
Windows 8 is partially to blame
Many blame Windows 8’s “franken-interface” as a primary reason for the drop in sales. In its attempt to bridge the gap between the traditional desktop PC and the growing tablet space, Microsoft’s Windows 8 “modern” interface takes shortcuts on compromises on both experiences and provides users with a confusing morass that must be discovered through trial and error. Microsoft’s attention to changing the interface may have come at the expense of adding business value to the operating system, which is making some customers question whether or not Windows 8 carries sufficient return to make the leap, particularly when significant new training may be required. As organizations maintain their Windows 7 environments, they may delay new PC purchases, too, since operating system upgrades often accompany hardware refresh cycles.
The Macintosh picture
Although Apple’s Macs have not been immune from the drop in PC sales – the company announced a 2% decline in year over year sales – Apple actually saw a corresponding revenue increase of 7.3% and it’s generally considered that Apple’s own products – most specifically, the iPad – are primarily responsible for this drop. In this case, the company still retains the customer, although the device mix still changes a bit.
Traditionally, PCs have run on x86 processors from Intel and AMD. As device demographics shift, this, too, is changing as mobile devices often work outside the x86 realm. Specifically, the past few years have seen the rise of ARM-based processors. In fact, ARM has become so popular that even Microsoft resurrected the NT kernel’s ability to work on multiple processor architectures and created Windows RT, a Windows 8 variant, that runs on ARM-based devices, including Microsoft’s own Surface RT tablet.
The reason is simple: ARM processors are energy sippers whereas Intel’s processors are energy gulpers. In the work of mobile, battery life in king and every component that is a power vampire is eyed with skepticism about its necessity. In the case of Intel vs. ARM, hardware makers have determined that Intel’s power draining processors are, in fact, not a necessity.
Given the deep links between x86 and the PC market, as more devices go ARM, that translates into a corresponding shift in the PC landscape, at least for now. If Microsoft can get Windows 8.1 to a point at which consumers and businesses will be more willing to adopt the operating system, Intel/AMD and Microsoft may yet be able to stem some of the bleeding.
Action Item: I expect that we will see some further erosion of the PC market, especially if Windows 8.1 fails to satisfy the masses that believe that Windows 8 is half-baked. On the consumer front, the slide from full PC to tablet devices is happening as people increasingly turn to tablets and smartphones as content consumption devices they can use anywhere. It’s more than likely that this shift will delay consumer purchases of new PCs as well.