The PC Market Takes Another Hit -- Does It Matter?

Okay ... the headline may sound a little harsh to some tech investors; but it's a question worth asking. Even investors who own stocks in companies that make PCs should be asking it. Why? Because tech companies that want to be around a decade from now should stop looking at their PC sales numbers and figure out how they're going to make money with mobile.

We know where we're going
Just a few days ago, the International Data Corporation released the latest figures showing that PC sales dropped almost 14% year over year in the first quarter of 2013. But we all knew this was coming. Steve Jobs foretold it two months after Apple (NASDAQ: AAPL  ) launched the iPad. "We like to talk about the post-PC era, but when it really starts to happen, it's uncomfortable," he said at the All Things Digital conference in 2010.

Some of the worst news from the IDC report came against Microsoft (NASDAQ: MSFT  ) , with the IDC saying Windows 8 may be part of the PC industry's problem. Bob O'Donnell, IDC Program Vice President, Clients and Displays, said in a press release that, "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."

He went on to say that some PC buyers may be turned off from Microsoft's drastic changes to its Windows 8 OS because of a new user interface and increased costs for touch-capable computers. To pin all this on Microsoft seems a bit harsh, though, and it seems more likely that the demise of PC sales have come simply because tablet interest is growing.

Unfortunately for many traditional PC makers, they're not the ones benefiting from the popularity of tablets. If we take a look at IDC's data from the end of January, we see that Apple leads, with the most tablet shipments, followed by Samsung, and then Amazon.com (NASDAQ: AMZN  ) with it's Kindle line. 

Vendor

Q4 2011 Shipments
(in millions)

Q4 2012 Shipments
(in millions)

Apple

15.2

22.9

Samsung

2.2

7.9

Amazon

4.7

6.0

Asus

0.6

3.1

Barnes & Noble

1.4

1.0

Other

5.5

11.6

Source: IDC.  

According to these numbers Apple and Samsung are the only two tech companies that make computers, but also dominate in mobile. Amazon, which sells tablets solely for the purpose of selling content to its users, is beating other tech companies that have been in the game much longer than it has. Asus makes it on the list, but every other tech company that manufactures a computer doesn't even make it to the top five tablet shipments list. This is the problem for PC makers -- being lumped into the "other" category for tablet sales won't cut it in the high-stakes mobile market.

Maybe that's why Wells Fargo analyst Maynard Um said this week that he thinks the recent drop in PC sales will spur the industry into consolidation mode in the coming years. It's a likely scenario, as PC companies experience further computer sales declines without significant tablet sales increases.

Foolish investors need to take a good, hard look at where the computing industry is headed, and ask themselves whether or not their investment is going in the same direction. If more PC makers can't create tablets that consumers are willing to buy, then a chosen few, like Apple, and a handful of others will continue to dominate the market. The time has long passed for PC companies to make the transition to mobile – it's time to actually start making money from it.

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Read/Post Comments (7) | Recommend This Article (3)

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 13, 2013, at 10:24 PM, JCOLOV wrote:

    I will never go mobile using a SmartPhone or tablet.

    Those devices do not serve my needs in the least.

    The operating system on those devices are not secure enough, too easy to hack into.

    These mobile device pose a threat to security and safety.

  • Report this Comment On April 13, 2013, at 10:25 PM, doawithlife wrote:

    Q1 2013 pls

    Q4 2012 means nothing in the current landscape. Current trends is the only way to keep up on the market.

    Asus being one of two early adapters to full PC tablets jumped .6 in Q3 to 3.1 in Q4 after releasing Windows 8 Pro tablets. Samsung being the only other company jumped 2.2 to 7.9 after releasing Windows 8 Pro tablets. MS didn't release their Windows 8 Pro tablet until Q1 2013. So that would be very relavent if you want to keep ahead of things.

    Just by themselves 3.1-.6 = 2.5 and 7.9 - 2.2 = 5.6. 5.6+2.5 = 8.1. That would leave me to guess in Q4 last year Windows 8 tablets accounted for about 8.1% of all tablet sales. That does not even include the sale for the Surface RT(which sucks btw, sales and the device just sucks - get a Samsung/Asus Windows 8 Pro tablet instead - even the windows 7/Intel Atom tablets are better and cheaper).

  • Report this Comment On April 13, 2013, at 11:34 PM, tychicum wrote:

    There are really only two players. Apple and Googles Motorolla. The reason? The anti up into the game is ownership of the Operating System.

    Pure hardwares sales is a fools game and the way into ownershp of an Eco System is through the OS.

    Soon Google will turn on Samsung and the other Android leaches and want to get a real return on Android instead of giving it away for free.

  • Report this Comment On April 14, 2013, at 12:10 AM, jerrynsr63 wrote:

    It's too bad that the tablet era has lead to the dumbing down of the PC. I'm starting to think that that are other factors that have lead to this. Cloud computing and the dumbing down of the desktop may not mean much to you, but I'm a systems engineer and I can see that this could lead to a big brother approach to control and regulate what you can do.

  • Report this Comment On April 14, 2013, at 2:26 AM, tywren wrote:

    While tablets, smart phones, and other mobile devices will easily displace laptops for most people, the desk top PC will be much harder to kill. surfing the web can be done just as well from a mobile device, but for the gamer crowd playing games that are high graphics, high memory, and processor intensive, hand held devices have a long way to go.

    Another thing to consider is that while the user end may change, things on the back end are still servers, which are far more closely related to PC's than tablets. If nothing else, PC companies can shift focus onto that aspect of the business.

  • Report this Comment On April 14, 2013, at 8:51 AM, cwmsr wrote:

    Cost. You can buy a PC for a few hundred dollars but it's worthless and your smart phone has more capability.

    Today's world is largely games, digital photo's and music. A fast processor, video card and storage costs $1500 and up. That's as much as I paid for my first PC in 1987 which technology promised would become affordable. It has only become affordable if you buy a PC with near 1987 speeds and capabilities.

    Laptops are what's going to go. Heavy, oversized and don't have a telephone.

    Windows RT tablet, that's the failure! I bought one and returned it 2 days later. Got a full Windows 8 tablet and aside from storage space does everything my PC does except it does it in 10" and with only 11 ounces on an 18-hour battery.

    But the price for the full windows tablet was more than most PC's.... why?

  • Report this Comment On April 14, 2013, at 11:21 AM, Burstedbladder wrote:

    It's not going away. Especially for those that are in to computer design and graphics. Things that require a lot of memory and large screens to work on, and a 10" tablet with 2 to 4 gigs of ram just ain't gonna cut it for computer programers and graphic design artists, or for the heavy gamers out there.

    They like to build and do things, so the desktop isn't going anywhere anytime soon.

    They are seeding this story over and over to try and convince people to not buy desktops and to buy these tablets from Apple.

    No way in he!! am I going to surf the net on some small tablet. For me, they are just the in-thing, and will be the one to disappear over time.

    jussayin-

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