Will PC Sales Ever Stop Declining?

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Unless you've been living under a rock for the last five years, you're well aware that the consumers have largely shifted away from buying PCs and allocated their dollars toward mobile computing devices -- aka smartphones and tablets. Considering that 65% of all PCs end up in the hands of consumers, this trend was not welcomed by Microsoft (NASDAQ: MSFT  ) investors. As a result, worldwide PC shipments have remained under pressure and demand has for the most part has stagnated.

The dawn of the post-PC era completely blindsided Microsoft, resulting in Team Redmond playing the always-fun game of catch-up. To date, Microsoft's efforts have been largely met with a lack of consumer enthusiasm. Moreover, it remains uncertain if Microsoft will ever play a leading role in the mobile computing revolution. Regardless of how the mobile computing saga plays out for the beleaguered tech giant, the company has (for the time being) an existing PC business that's more than keeping its head above water. Will Microsoft always have the luxury of having an enormous PC business to fall back on?

Still falling
In the context of PC shipments, less worse could be taken as a sign that the industry is closer to reaching a near-term bottom. However, when less worse is the result of a lowered forecast, which originally called for growth, it's a sign that the PC industry has yet to find its footing. IDC recently lowered its forecast and it now expects PC shipments will decline by 1.3% in 2013, down from an original forecast of 2.8% growth. IDC believes Windows 8 underwhelmed consumers and touch-enabled PCs continue to remain in limited supply. Going forward, IDC expects growth to be "limited" in both 2014 and 2015, and the contraction will continue thereafter. In other words, the PC landscape is expected to remain pretty bleak for the foreseeable future.

The smell of desperation
In an effort to remain competitive against tablets, Microsoft has reportedly offered license discounts to OEMs that build Windows 8 machines with a form factor less than 11.6 inches. This development plays into the harsh reality that Windows 8 sales are off to a worse start than Vista. It's not that Windows 8 is an inherently bad operating system, it's that for users to take full advantage of the touch-enabled OS, they need compatible hardware. Contrary to Microsoft's belief, Windows 8 has failed to entice users to upgrade their PCs ahead of schedule for the ability to use a touch screen.

Haswell to the rescue?
If Microsoft is unable to stoke PC sales, perhaps Intel's (NASDAQ: INTC  ) upcoming Haswell processor is? Coming this spring to an Ultrabook a near you, Haswell offers the single greatest generational leap in battery performance in the company's history. Ultrabooks powered by Haswell are expected to last around 13 hours on a single battery charge. Combine Haswell with a touch screen and all of a sudden the PC becomes a contender against the sea of tablets. If Haswell's delivery is anywhere near its promise, it holds the potential to singlehandedly drive increased demand for PCs. Perhaps consumers have been largely holding out for a PC that's noticeably better than current offerings? Could Haswell be the one the world's been waiting for?

No wind in the sails
For the most part, the PC industry has remained resistant to the sea change brought on by the explosive rise of smartphones and tablets. Naturally, this resistance has hurt the PC industry as consumers shifted their focus toward mobile computing. For the time being, the PC still holds a valuable place within society since there has yet to be a mobile computing device that can match the same productivity level of a PC. However, the PC industry needs more than just a wall that separates the tablet from completely overrunning the PC in the years to come. Perhaps Haswell is the industry's calling for now, but longer term the PC ought to evolve into something greater than the sum of its parts. I'm not really sure what that will look like, but I'm pretty sure that if Intel can't stop the bleeding, the PC as we know it may ultimately become a legacy product in the coming decades.

It's been a frustrating path for Microsoft investors, who've watched the 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.

Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On March 13, 2013, at 10:26 PM, marke54805 wrote:

    What the...?

    Hey, Motley... You and Yahoo get married?

  • Report this Comment On March 13, 2013, at 10:27 PM, coldbomer wrote:

    the h'''l with the smart phones and small screens that most cant cant even see. I wont something to look at that I can sit down and read in comfort.

  • Report this Comment On March 14, 2013, at 12:51 AM, techy46 wrote:

    Personal computers should include convertibles, desktops, game consoles, smart phones, tablets and Ultrabooks. Unit ssles of personal computers never have declined until Wall Street gamblers and PC's Dead pump and dump artists needed to change the definition to suit their investment strategies.

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