Death of Desktops?

As Apple (Nasdaq: AAPL  ) was introducing its latest line of notebook computers earlier this week, colorful CEO Steve Jobs revealed that its laptop business was now making up 42% of the company's computer sales -- and gaining.

"This is clearly the year of the notebook for Apple," he said to what should have been a giddy congregation at this week's Apple Expo.

He's right. Portable computing is hot. While fellow box makers Dell (Nasdaq: DELL  ) , Hewlett-Packard (NYSE: HPQ  ) , and Gateway (NYSE: GTW  ) aren't as close in terms of rivaling their desktop heavyweights with carry-on computers, they too are experiencing a shift in demand.

As Dell grew its stateside unit shipments by a respectable 23% this past quarter, it also saw its domestic notebook volume soar by 70%. Meanwhile, HP's laptop revenue climbed by 27% during the second quarter despite suffering a dip in desktop sales.

Movable types
We're a mobile lot, you know. Just as wireless handsets are replacing hardwired phone connections, are desktops simply becoming clunky paperweights?

You can't really pin the relative weakness in desktops to the economy as a whole because notebooks aren't exactly cheaper. Just about every computer maker has a low-end desktop that you can buy for $400-$500 while the entry-level notebooks are priced nearly twice as high. This is a trend. This is a real trend. And if it's alright by you, when I'm done with this column, I'm aching to drop-kick the Dell desktop that I'm working with right now into the nearest eco-friendly landfill and fire up my low-end Toshiba laptop (which, coincidentally, is where I finished scribing this piece).

As far as waves go, the box makers probably aren't minding this one bit. Desktops had become a cutthroat commodity business. It's easy to see why, since we're talking about flannel pajamas that never leave home. Laptops are evening wear, made to go out and be seen. Points and premiums are rewarded for fashion and style beyond the spec sheet. Apple had snazzy-looking desktops and few cared whether they were modeled after sunflowers or tissue boxes. But, my oh my, do those new PowerBook G4s look sweet or what?

The fact that notebooks give the manufacturers some wiggle room in terms of marketing is welcome. So is the fact that such direct sellers as Gateway, which live off free shipping promotions, are in a much better bargaining position when the delivered load is lighter. The laptop is becoming a win-win-win situation. Computer makers love them. Consumers are just as smitten. Retailers like Best Buy (NYSE: BBY  ) and Circuit City (NYSE: CC  ) welcome the big-ticket items coming in smaller-inventoried sizes.

Homeschooled fries
They say that a good education makes for a solid foundation, and it's easy to see why personal computers clamored for classroom placement. Apple's early lead in the education market was a great way to win its way into the homes of early adopters. Dell's now the new schoolyard bully and it works. Kids are brand-conscious and they favor familiarity.

But what's really going on here?

Many high-end private schools are now requiring their students to own laptops and bring them to class. With portable lesson plans in place, this new generation is being weaned off their desktop dinosaurs.

No offense, dear personal computer, but you're starting to cross the border towards obsolescence. When you think of the early days of home computing, one thinks of the prehistoric killer apps like word processing, spreadsheets, and databases. These applications have evolved into tasks that are more capably handled by other home appliances.

DVDs just look better on your living room television set. Music CDs just sound better on your home stereo system. I won't open a can of worms by saying that video game consoles are superior to PC gaming, but I will argue that it's much easier to fire up some multiplayer games in front of the PS2 than it is to have everyone crowd around your computer monitor.

Trophy Wi-Fi
But what about the Internet? Surely you won't hear me argue how surfing the Web is so much easier on Microsoft's (Nasdaq: MSFT  ) stodgy MSN TV (formerly WebTV). Of course not. However, thanks to the proliferation of wireless access point routers for the home, we can no longer call the Web "wired," now can we?

Instead of being holed up in that corner of your home that houses your desktop, you can tote your broadband-enabled laptop all over the place. In the kitchen while the stove's on. In the living room while the game's on. In the backyard while the kids are on.

Are laptops too awkward for everyday use? I don't think so, but folks who feel restricted due to the compact keyboard can take heart in IBM's (NYSE: IBM  ) ThinkPad prototype, which comes complete with a removable keyboard or the growing options of wireless mouse and keyboard peripherals.

So portable computing has gradually adapted to its original shortcomings. And just as the eight-track tape was replaced by the prerecorded cassette, which was ultimately supplanted by the compact disc, the same desktop that gave the mainframe the heave-ho is now supper for something smaller. No, not just anything smaller because handhelds never made much of a dent in replacing mainstream computing, but the lure of carrying your computer around the way you would a purse, the morning paper, or a cup of coffee is real.

That's why the days of the desktop appear to be binary-numbered. They served their transitory purpose and now computing has places to go and people to see. Desktops are the aging hermits. Laptops are the hip globetrotters with passports worth stamping.

Sorry to hear that you won't be coming along with us, PC. We'll write. Promise. We'll see what we can do about getting postcards delivered to the landfill.

Want to check out the latest in portable computing? Head on over to Amazon's Notebooks & Laptops store to compare the different models and explore the fresh fall releases.

Rick Aristotle Munarriz really does want to dump his desktop to spend more time with his laptop. It's just one of those relationship issues. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2011, at 9:44 AM, rav55 wrote:

    I guess nobody thought this article was worth even a negative comment. And I can't say anything positive about it either.

    "Death of the PC", whats next Rick Aristotle Munarriz? Are you going to predict the "Hindenburgh Omen" or the "Sky id Falling".

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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