Is the PC Dead?

Throughout earnings season, and onward, a question has been running through my head: Is the PC dead?  

You heard about the death of the PC from declining earnings at chipmakers Intel (Nasdaq: INTC  ) and AMD (NYSE: AMD  ) . Computer makers Hewlett-Packard (NYSE: HPQ  ) and Dell (Nasdaq: DELL  ) haven't shown any signs of hope. Even Microsoft (Nasdaq: MSFT  ) disappointed investors with its earnings report.

Meanwhile, sales of tablets and smartphones continue to set records. A new lineup from Apple (Nasdaq: AAPL  ) along with solid tablets offerings from Amazon (NASDAQ: AMZN  ) and Google (NASDAQ: GOOGL  ) won't help matters.

But before we call the PC dead, let's keep a few things in mind.

We've been through this before
This isn't the first time we've called for the death of the traditional PC. I remember when tiny network computers were supposed to replace PCs in the workplace nearly a decade ago. That fad didn't last long. Then there was the netbook phase of tiny laptops that had plenty of power to do the work most people needed done. A lot of squinty eyes later, the netbook is all but dead.

These two devices were supposed to change computing the way we knew it, and they failed to upend the industry. So is the tablet different? In some ways, it really is.

Instead of beginning as a business tool the way netbooks and network computers did, the tablet started as a toy or a luxury. The iPad gained popularity as a home gadget that was convenient and portable. For some businesses, it made operations or presentations easier, but it was an add-on to the PC for the most part, not a replacement.

That's beginning to change with Windows 8 and the Surface keyboard, but it's still largely true. The tablet won't replace the PC unless it adds capabilities users need, like a keyboard and mouse. If it did that, it would just be a laptop.

Refresh cycle hasn't started
There are two other factors driving slow PC sales right now. First is people waiting until a new line of PCs comes out with Windows 8. We're already starting to see new innovative features on Windows 8, and if you're in the market, why not wait a few months?

But often overlooked is the fact that PCs aren't changing nearly as quickly as they used to. I'm working on a three-year-old MacBook, and it has more than enough power for the functions I use. Eight or 10 years ago, a three-year-old computer would be a dinosaur. The replacement cycle is simply getting longer.

PCs are far from dead
If you've ever tried to write a paper or work in a spreadsheet on a tablet, you know that some functions simply can't be beat on a desktop or laptop. They're built for word processing and more complex tasks than a tablet. The PC won't die quickly because tablets simply can't offer the same capabilities.

It's also important to keep PC numbers in perspective. Slash Gear predicts that PC sales will fall 1.2% to 348.7 million units. That's still an astounding number of PCs, and even if sales fell 1.2% for 10 years, the industry would sell a lot of PCs. Numbers like this don't sound like death to me.

A merger is more likely
What I think is more likely is a merger or morphing of the PC market much like we saw with laptops. Tablets will eventually become an extension of the PC. Windows 8 is taking steps in this direction for Windows users, and the Apple cloud is beginning to make strides in this respect as well. Lenovo has also introduced a laptop/tablet combo that may provide a peak into the future.

We're in a bump in the road for PC makers, chip companies, and Microsoft, but we're far from the demise of the PC as we know it.

A buying opportunity?
It's been a frustrating path for Microsoft investors, who've watched their company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Fool contributor Travis Hoium  is short Amazon.com and manages an account that owns shares of Intel and Microsoft. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw

The Motley Fool owns shares of Apple, Amazon.com, Dell, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Amazon.com, Dell, Google, Intel, and 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. The Motley Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (11)

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 October 31, 2012, at 11:21 PM, Klippenstein wrote:

    Hey you removed the "The PC is Dead" sign from the end of every post. Is that for real (for now)?

  • Report this Comment On November 01, 2012, at 8:46 PM, optimist911 wrote:

    This question has been asked time and time again over many years now. The answer is "no."

  • Report this Comment On November 01, 2012, at 9:36 PM, NOTvuffett wrote:

    I don't think it should come as a surprise that people have been delaying the purchase of new pc's because of the generally poor economy for most of the planet. I also get that desktop pc's have been supplanted with other devices for users with minimal needs.

    I also wonder if pc sales data accounts for sales of parts sold to assemble your own computer. It has become easier over the years.

  • Report this Comment On November 01, 2012, at 9:50 PM, Mathman6577 wrote:

    PC's are probably not dead but will be a low growth product for a few more years at least.

  • Report this Comment On November 02, 2012, at 9:32 AM, bbreden wrote:

    PCs are not truly dead nor will they ever be. They are just going through a metamorphosis. From desktops to laptops to tablets; they are all personal computers of a different flavor. Technology is constantly shrinking the components. One day your PC will be on your hip or in your purse and when you walk into your office it will automatically connect wirelessly to a keyboard, monitor, and printer setting on your desk. The question is which company is going to adapt the technology quickest to fill the desires and needs of the customer.

  • Report this Comment On November 03, 2012, at 4:41 PM, nathanmeyers wrote:

    The PC is dead in the way that washing machines are dead. There may not be a lot of innovation going on, but they won't be going away anytime soon.

  • Report this Comment On November 03, 2012, at 5:32 PM, eibe wrote:

    Obviously the PC and the laptop are not dead. But the "refresh cycle" is dead. Just like with the upgrade from bw to colour TV; Once everyone had one there was no growth.

    Regarding PC's Moore's law is broken. A few years ago every new PC was twice as powerful as it's predecessor 18 month ago. But not anymore .My vintage 6 year old PC has (almost)the same power as a new one. No way I would buy a new one. Guess that is the same for everyone with a working brain.

  • Report this Comment On November 06, 2012, at 9:44 AM, althotos wrote:

    I started out with PCs as a hobby some 30 years ago. A little over 25 years ago, it became my profession as well as my hobby. I was there when the PC was born, I watched it grow from a desktop oddity to the the server dominance in the data center. I work with these very powerful servers, specifically the database servers. For me the PC has evolved to include the mobile devices such as the Android phone I carry in my pocket and the Nexus 7 my stepdaughter uses as the window to the world. I doubt that my work desktop, keyboard and pointing device are going to go away any time soon, but the entire nature of computing continues to change. I am delighted to see the gadgets of my childhood from the shows like Star Trek actually coming into existence. This is a very exciting time for technological change and innovation.

  • Report this Comment On December 10, 2012, at 5:06 PM, JoanieOne wrote:

    My young nephew was in my hair salon here in Atlanta playing with my smartphone the other day (just got a WP8 w/AT&T, 4GLTE; am psyched!) and he said, "They should have a cord that you can use to connect your phone to the wall or something so you don't lose it." Imagine that!

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