Commentary

PC Sales: Someone Left The Cake Out In The Rain

Plunge. Sink. Plummet. Collapse. Those are some of the verbs used to describe the “free fall” in personal computer sales, based on two differing but similarly downbeat research reports, in stories across the web today. The lackluster debut of Microsoft’s Windows 8 is being held to blame but the rapid transformation of the cybermarket towards more nimble devices -- particularly tablets -– is probably the more fundamental reason for the data.  

In a report that surprised even its own analysts, as the San Jose Mercury News’ Dan Nakaso observes, International Data Corp. (IDC) found that worldwide PC sales plunged 13.9% in the first three months of 2013 -- the most precipitous quarterly drop ever. The research firm had anticipated a decline of 7.7%. In the United States, sales contracted 12.7% year on year, with a drop of 18.3% compared to the fourth quarter of 2012. Beleaguered Hewlett-Packard, with a 24% drop in worldwide sales, had the worst quarter among manufacturers, according to IDC.

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Gartner, meanwhile, says preliminary findings for the first quarter peg worldwide PC shipments at 79.2 million units, which is an 11.2% decline from the first quarter of 2012. Sales dropped 9.6% in the United States. Mikako Kitagawa, principal analyst at Gartner, points out that the recovering economy has done little to counteract the downward sales, which has been trending for six consecutive quarters in the U.S. And don’t expect it to.

“Similar to other mature markets, the U.S. will see the installed base of consumer PCs decrease going forward,” she predicts. “This is because many of these systems will not be replaced with PCs; they will be displaced by other devices, or simply retired.”

That could spell disaster for companies that expected the trend to pass like last night’s thunderclaps here in the Northeast.

“For companies already struggling to transition to tablets and smartphones, ‘the only message here is, “Go faster,”’ Roger L. Kay, founder and president of Endpoint Technologies Associates, tells Nakaso. “Unfortunately, some will get only part way through before some of the smaller companies go bankrupt. This could take some companies under.”

“At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," according to Bob O'Donnell, IDC program VP, clients and displays. “While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices.”

Both consumers and businesses are “keeping their distance” from Windows 8, as Ian Sherr and Shira Ovide indicate in the Wall Street Journal’s story on the data. O’Donnell says that the company “will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market.” 

Sources said to be in the know indicate to the Wall Street Journal’s Lorraine Luk, Shira Ovide and Eva Dou that Microsoft is indeed in rapid-response mode to the shifting marketplace and is “developing a new lineup of its Surface tablets, including a 7-inch version expected to go into mass production later this year.” 

It is also planning “price breaks for its flagship software and updates in coming months to its Windows operating software,” as it transforms itself into what CEO Steve Ballmer calls a "devices and services" company.

“One culmination of the new strategy for Microsoft is what it calls ‘Blue’-- frequently updated versions of its products including Windows,” Luk, Ovide and Dou report. “Microsoft is likely to talk more about Blue starting this summer, including new devices powered by Windows.”

Macs aren’t immune to the trend. 

“It seems fairly obvious that we are in what Steve Jobs called a ‘post-PC world,’ and the numbers are backing that up,” writes Rob LeFevbre on Cult of Mac. Although Gardner tallied a 7.4% upswing for Apple computers, IDC says sales declined 7.5%. Both firms say they base their figures on shipments to end users, points out Fortune’s Philip Elmer-DeWitt, so what gives? 

“What all this really shows is that unless these celebrated firms are working from sales figures supplied by the companies themselves, they're giving us numbers that look solid and definitive but are more like data soufflés,” he writes. “Kick them a couple times and they're liable to collapse.”

Which kind of reminds us of another food analogy that we could never quite get our head around but makes sense at a certain level about these bulky and outmoded devices some of us are so attached to: “Someone left the cake out in the rain/I don't think that I can take it/'Cause it took so long to bake it/And I'll never have that recipe again, oh no …”

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