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Let's face it: PC sales haven't exactly been stellar.
Between the poor reception of Microsoft (NASDAQ: MSFT ) Windows 8 and the mobile computing revolution, the PC user replacement cycle is currently at risk of being prolonged. That could have far-reaching implications for the entire PC industry. In the first quarter, PC shipments fell nearly 14%, marking the fourth consecutive quarter of decline, strengthening the impression that PC makers are running out of time to revitalize PC sales.
The PC has undoubtedly hit a rough patch and is currently undergoing an evolution that could give it a fighting chance in the age of mobile computing. Here's what to expect from PC makers in the second half of this year.
Intel's (NASDAQ: INTC ) Ivy Bridge successor, Haswell will give PC makers the ability to design PCs that better compete against tablets without sacrificing on productivity. Devices powered by Haswell should get in the neighborhood of 13-hour battery life and will enable slimmer form factors. Ultimately, Haswell's technology should drive increased proliferation of hybrid PC devices, which combine the best elements of tablets and PCs in one form factor, an area I'm especially excited about. Naturally, the cost of these devices won't come cheap at first, but could whet appetites of those who looking to converge computing devices.
Greater focus on touch
Part of Windows 8's poor reception has been attributed to the fact that touch-enabled devices either remain in constrained supply or command too great of a premium for users to justify. In this context, it's pretty apparent that the hardware side of the PC industry wasn't ready for what Windows 8 was aiming to accomplish.
By the end of the year, PC hardware should begin catching up its touch-enabled software since touch screens will be required on the next generation of Ultrabooks. As far as pricing goes, touch-enabled Ultrabooks are expected to start at $599 for consumers, well above the $460 average selling price of notebook PCs, but far below their original $999 starting price.
The tablet has proven to be more than adequate for today's world of everyday users. In the mind of these users, there's very little to justify the higher cost associated with purchasing a PC over just buying a cheaper Google Android tablet. Like it or not, PC makers are effectively competing on price against the sea of lower-cost tablets.
Lenovo (NASDAQOTH: LNVGY ) has done an excellent job in cutting costs, becoming more vertically integrated, and driving new levels of innovation. As a result, Lenovo has maintained its shipment volume and increased its market share, despite the challenging macroeconomic headwinds the PC industry is experiencing.
Aside from lowering prices, which could put profitability at risk, PC makers are likely to benefit from releasing a slew of low-cost Windows 8 tablets powered by Intel Bay Trail. A $200-tablet running the full version of Windows 8 has the potential to revolutionize the entire tablet landscape.
It's not over yet
Between compelling designs aimed at modernizing the PC computing experience and lower prices on the horizon for Ultrabooks, the PC industry could get that much-needed shot in the arm. However, it still remains unclear if these factors will actually translate into brighter days ahead.
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.