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Is the PC Dead?

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Tales of smartphones and tablets eating into more traditional computing have been largely anecdotal -- until now.

Shares of Microsoft (Nasdaq: MSFT  ) , Hewlett-Packard (NYSE: HPQ  ) , Dell (Nasdaq: DELL  ) , NVIDIA (Nasdaq: NVDA  ) , and even Intel (Nasdaq: INTC  ) opened lower this morning, after a grim report on the state of PC sales.

Industry tracker IDC is reporting a 3.2% year-over-year decline in global PC shipments during the first three months of 2011. It's the first quarterly dip since the end of the recession. Things get even uglier closer to home, where healthy gains by Apple (Nasdaq: AAPL  ) and Toshiba weren't enough to send stateside shipments plunging by a sharp 10.7%.

IDC points to the upheaval in the Middle East and natural disasters in Japan as possible reasons for the shortfall, even though the global economy appears to be holding up with its end of the bargain.

There's something else happening, and IDC does address the 800-pound Android gorilla in the room.

"Good-enough computing has become a firm reality," senior research analyst Jay Chou points out in the press release.

Of course. Companies aren't running spreadsheets on Android smartphones. Die-hard gamers may take some time before embracing the iPad. However, Web-savvy handsets and tablets are redefining the way many of us compute casually. A home that used to have a computer and a laptop could logically swap one out for a tablet.

It's happening, especially here in the United States. If anyone argues that the iffy stateside economy is to blame for desktop and laptop sales waning, ask them to explain why smartphone and tablet sales took off last year. Computing devices are being replaced with gadgets that are not as powerful or perhaps even as functional, but they are clearly more portable and fun to own.

Some of the PC-centric stocks taking a hit today should bounce back. Intel isn't going to miss out on the "good-enough computing" revolution. Graphics chip designer NVIDIA has even better seats and has moved firmly positive as of this writing. However, they won't all rebound. HP and Dell have struggled in the smartphone and tablet markets. Microsoft's operating system stronghold is a distant player in mobile -- and don't even ask about the tablet space.

If the trend continues -- and it will until tablets are exposed as a novelty or consumers need more computing power -- it may be dangerous to own some of the computing giants that seemed to have it all in the 1990s.

Will PC shipments bounce back? Share your thoughts in the comment box below.

Intel and Microsoft are Motley Fool Inside Value picks. Apple and NVIDIA are Motley Fool Stock Advisor recommendations. The Fool has written puts on Apple. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended a bull call spread position on Apple. Motley Fool Options has recommended a diagonal call position on Intel. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, and Microsoft. Motley Fool Alpha LLC owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz pecked away this article on an HP computer, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (10) | Recommend This Article (6)

Comments from our Foolish Readers

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 April 14, 2011, at 1:08 PM, TheDumbMoney wrote:

    The PC is not dead, but the netbook is toast, and the laptop is not far behind. If a major tablet maker figures out how to project a highly useable and functional full-size infrared keyboard on a flat surface (combined with a lightweight convenient, built-in, adjustable stand for the pad) while still allowing full use of the pad screen, then the conventional laptop is utterly dead, too. In my view it will happen within five years, but maybe much more quickly.

  • Report this Comment On April 14, 2011, at 1:16 PM, deemery wrote:

    It would have been -very instructive- if this IDC report had included Apple, which I suspect bucks this trend.

    What I think we're seeing is the death of the 'marginal PC'; a device used for email, web browsing and maybe media viewing. Instead, "power PCs", particularly laptops for people who have computational needs, will still sell. And that's a market that Apple has not locked, but they sure have a big share of the -high end- laptop market, from data I've seen.

  • Report this Comment On April 14, 2011, at 1:17 PM, deemery wrote:

    (I meant "included Apple in the world-wide figures." Apple shows up with substantial positive growth in the USA only figures.)

  • Report this Comment On April 14, 2011, at 1:21 PM, techy46 wrote:

    A tablet is a PC without a keyboard. So how can the PC be dead? Same for the smart phone, it's a PC that you use to make phone calls. The truth is that more and more PCs are being sold but market minipulators are trying to divide and conquer to run up one segment while driving down another while they play both groups with big money. All segments of enterprise and personal technology continue to grow quite well.

  • Report this Comment On April 14, 2011, at 1:25 PM, EquityBull wrote:

    Keep in mind all those tablets and smartphones typically consume from the cloud (facebook, gmail, photos, news, netflix, youtube, etc). While home desktops or laptops may wane somewhat the server market to support all these tablet/smartphones will explode to handle the demand of these devices.

    This server demand is all high margin and we saw it already in Intel's last quarter. So it is a zero sum game as they may lose the PC but gain in the server market where all these devices connect to in order to consume services.

    You have to be in the tech industry to understand this. The professional grazers that look at headlines and draw broad conclusions but have no clue about IT are completely lost on this fact. There lies the advantage to invest in something like INTC before they realize how big the server market will have to grow to support these devices. This is a paradigm shift.

  • Report this Comment On April 14, 2011, at 9:58 PM, baldheadeddork wrote:

    Rick, you ran this same argument out last week. I replied with the numbers behind the analysis, which showed PC's outsold tablets by almost 25:1 and the increase in PC sales in 2010 was three times greater than the entire tablet market

    So, what are the numbers here? How many tablets were sold in Q1 versus PC's?

    Call me cynical, but maybe when the claims of rising tablet dominance don't match the number of actual devices sold, maybe the companies doing the analysis are using tablets as a way to cover for their crappy forecasts.

  • Report this Comment On April 14, 2011, at 11:20 PM, TMFBreakerRick wrote:

    BHD, thanks for the great response last week -- and this week. I can sympathize with your skepticism. And, of course tablets weren't even a realistic item until April of last year so of course it's going to be a bit player. However, tack on smartphones and it's not so small.

    I belive my comments from last week were vindicated with IDC's numbers. A 10.7% slide in year-over-year shipments is significant. Yes, the biggest hit is coming from the laptop/netbook market. Acer was the hardest hit of the pack. Howevever, it is a changing of the guard that can't be ignored -- at least in terms of casual computing.

  • Report this Comment On April 15, 2011, at 1:18 PM, midnightmoney wrote:

    Two cents from Poland again: I have never once seen anyone using nor do I know anyone who has bought a tablet computer here in this very computer savvy country. I have seen people checking them out in shops. The transition to "smart phones" is afoot, but I'll bet the revolution you're talking about in computing is still a looooonnnnggg way off over here. PC and laptop sales I would bet are booming-- laptops in public are ubiquitous.

  • Report this Comment On April 15, 2011, at 1:38 PM, mhy729 wrote:

    I would actually expect perhaps a negative correlation between computer-"savviness" and tablet computer ownage over PCs/laptops. Thanks for the anecdotal info from far I've yet to see many tablets around here in Seoul, S Korea, but smart phones are just about everywhere. Makes you wonder what all these people did on their subway rides around the city before the iPhone and its descendants.

  • Report this Comment On June 22, 2012, at 11:17 AM, kazzcyan wrote:

    PC will live longer colaborating smartphones or tablets. Because smart phones and tables are

    slow PCs for me.

    The PCs have their work to do. Yes ,the most important mission is to create contents of webs,musics,videos,movies , 3ds ,and systems.


    But it is true that not all people use PC's.

    Only creaters ,partisans ,and engineers will use

    PC for their main stream jobs.

    Perhaps,smat phones and tablets will do for

    usual workers.

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