Time called on PC era as declines continue

Another quarter of declines in the PC market has led some to declare that the desktop era has come to an end

Time is being called on the PC era after the latest IDC and Gartner figures showed no signs of improvement in the market and even raised the prospect of the end of XP support as something the industry should look forward to as a reason the market might bounce back slightly.

The PC refresh cycle appears to have been warped by the timing of the end of XP support next April with the bounce that many had hoped for from Windows 8 never materialising.

In the meantime the declines continue with IDC numbers showing a 11.4% drop in the second quarter compared to the same period last year with the analyst house highlighting the continued struggle with the transition to touch-based devices and competition from tablets and other devices.

IDC said there was one silver lining for the channel with Q2 providing an opportunity to continue to lower inventory going into the second half of the year and there were also positives in the US performing better than expected and HP and Dell recording slightly better growth than in recent quarters.

"With second quarter growth so close to forecast, we are still looking for some improvement in growth during the second half of the year," said Jay Chou, senior analyst, IDC Worldwide PC Tracker.

"Slower growth in Europe and China reflect the risks, while the improved US outlook reflects potential improvement. Still, the weakness in emerging markets is a threat to a core long-term growth area. In addition, while efforts by the PC ecosystem to bring down price points and embrace touch computing should make PCs more attractive, a lot still needs to be done in launching attractive products and addressing competition from devices like tablets," added Chou.

Gartner provided similar numbers and reasons for the ongoing decline with its Q2 global drop year-on-year coming in at 10.9% making it the fifth consecutive quarterly decline, which is the longest in PC history, with Europe being particularly weak with back-to-back quarters of double-digit decline, with it down 16.8% in the latest set of numbers.

“We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets,” said Mikako Kitagawa, principal analyst at Gartner. “In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC. This is also accounting for the collapse of the mini notebook market.”

The result of the record breaking length of the declines is to raise the prospect that it is time to call an end to the PC era with some in the market questioning if growth can return to the market.

“The PC era was over some time ago. We are just seeing it become starkly evident now. We track tech investment activity closely and more money has been going into internet opportunities than software and hardware combined in the last 18 months, in anticipation of this trend. If you’re a store chain called PC World you might want to rethink your brand quickly if you want to be associated with the future of technology rather than antiquity. These numbers are also a huge cloud over the recent Dell deal, which now looks like a mega deal headed for zero returns," said Victor Basta, managing director of M&A advisory firm Magister Advisors.

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