Will 2014 Be the Year of the PC?

With worldwide PC shipments declining 10.9% year over year in the second quarter, marking the fifth consecutive quarter of decline, it seems as if the PC market has one foot planted in the grave. Given that mobile computing devices tend to be more affordable, almost as functional, and a lot more portable than their PC counterparts, the "death of the PC" storyline has legs. Not only have these factors supported the explosive rise of mobile computing, which has eaten into PC sales, they've also put pricing pressure on the PC itself. But before you go and sound the PC's death knell, you may want to wait to see what 2014 has in store for the PC.

Mr. Softy's strong arm
Thanks to the forceful hand of Microsoft (NASDAQ: MSFT  ) , the PC market will likely soon find support from U.S enterprise customers. Come April of next year, Microsoft will be abandoning support for the enterprise favorite, Windows XP. According to CLSA, 35% to 40% of all businesses are still running the soon-to-be 12-year-old Windows XP. With the April deadline quickly approaching, we're starting to see sales pick up in the U.S. market. In fact, the U.S. was the only bright spot of Gartner's dismal second quarter update. U.S. PC shipments only declined by 1.4% year over year, grew by 8.5% sequentially, and enterprises were the driving force of improvement.

According to Microsoft, the average time it takes an enterprise to fully migrate between operating systems ranges anywhere from 18 to 32 months. Since we're only just starting to see evidence of migratory behavior, it's likely that next few quarters of U.S. PC shipments could remain strong on a relative basis. If this were to be the case, it would support the notion that enterprises have been putting off migrating for as long as possible and are finally stepping up to the plate.

An aging fleet
According to Intel (NASDAQ: INTC  ) , there are over 500 million PCs that are four years old or older, and about 322 million PCs are expected to ship this year. The billion-dollar question is if said users will opt for another PC, or they've already embraced the mobile computing revolution and won't be looking back. The hope is that Intel's next-generation of cutting-edge processors will persuade these users to upgrade their aging PCs over the next year.

Of all of Intel's upcoming processors, Bay Trail gives the PC industry the greatest hope of a near-term resurgence. Positioned primarily as a tablet processor available this holiday season, Bay Trail will accommodate a myriad of affordable of portable computing devices capable of running the full version of Windows 8. Devices are expected to start in the $200 to $300 range, depending if you opt for a touchscreen. Between price and how Bay Trail smoked the quad-core competition, the chances are high that Intel's upcoming processor will be a hit among everyday users. Additionally, Bay Trail will allow PC makers to tap into the high-growth tablet segment, giving them an opportunity to expand their addressable markets.

Superior genes
Despite playing catch-up against ARM Holdings for the first four years of the mobile computing revolution, Intel may have a competitive edge going forward. That's because Intel's x86 chip architecture brings the added benefit of backwards compatibility, giving Intel-powered devices the ability to access legacy Windows applications. Consequently, the sea of low-cost Google Android tablets may lose some of their appeal against upcoming low-cost Wintel powered devices.

Plenty of fight left
Thanks to pent-up demand, compelling processor technology, and a little help from our old pal, Mr. Softy, 2014 may prove to be the year of the PC. Between these factors, I think we'll begin to see an improvement in PC shipments over the coming quarters. The billion-dollar question is if it's temporary, or it's the start of a shift back toward the PC side of things. I suppose the answer depends on just how strong the structural shift is to mobile computing and if Intel has given PC makers the right tools to excite users again.

Survival of the fittest
Truth be told, the PC never intended to compete against the tablet, and it took Intel over four years to become competitive against the ARM competition. The moral of the story? Evolution takes time, and so much of our technological lives are shaped by just a handful of companies. To help investors get a better sense of what company is on top, The Motley Fool has published a special free report that details the five most influential technology companies of our time. For those that want to be in the know, click here to keep reading.


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  • Report this Comment On July 17, 2013, at 12:45 AM, stevewestin wrote:

    Finally someone does some actual analysis instead of just repeating memes. Also interesting is that smartphone sales have slowed. Also there may be no great use case for many size tablets once the novelty purchase wears off. The most useful tablet I have right now (and I have an iPad, a Samsung android an RT and and a Surface Pro) is hands down the surface Pro which is really a full laptop on a tablet. And yes my work was holding off PC upgrades to catch Windows 8.1 and the new Intel hardware.

  • Report this Comment On July 17, 2013, at 4:39 AM, sypoth wrote:

    :The death of the PC" is a misnomer that anyone with any real knowledge of the machines can tell you will never happen. PC stands for Personal Computer and the term extends from micro computers which are the size of a refrigerator all the way to smartphones, tablets and yes even google glass. IF it's a computer meant for personal or recreational use it is a PC.

    That said, the death of the desktop or laptop has been predicted to happen soon for the last twenty years, to be honest it's an old prediction and will never come true, Tablets and Smartphones may serve most people who only use a computer for their most simple of functions such as music players and surfing the internet, however for word processing, animation, design, gaming, storage server, service hosting, and comfort while in use nothing beats an old fashioned computer. Laptops will always be popular among users that need the full power of a computer but can sacrifice upgrade ability for the ability to travel, and desktop computers are unparalleled in versatility with nearly limitless and easy to install upgrades that cost a fraction of what upgrading or should I say replacing a smaller device costs while bringing more benefits. They are also power houses that literally a low end can run laps around the most powerful of tablets and smartphones despite being mid grade models. At least as long as you are not running windows 8 that is. However not many users ever tap into even 1/1000000 of their computers power and the "slowing down" they feel is due to viruses, malware, adware, invalid registry entries, fragmentation of data, and a host of other problems caused by improper or lacking maintenance they do not know how to do. Even self proclaimed "computer experts" usually know very little about computers. Asking them to do something simply like opening the task manager ends with you doing the same with them as you would a novice with the exception that most novices will not try to guess what you want them to do next and will try to learn from you.

    Moving on, windows 8 has actually drastically set computers back, 8.1 claims to be an upgrade by allowing one to multitask between a limited number of programs, but both are undeniably faster, this is because Windows 8 pours all of it's power into a single task and 8.1 pours it all into a handful of programs. My Windows 7 machine is also fast when it's only doing 1 or 2 things, but I have more than double the maximum allowed tasks of windows 8.1 running at any one time all of which are active and in use not necessarily by me but still all are in use in service to me, and if I wanted I could triple that efficiency with Linux as I have with other PC's I own but on this one Windows 7 has yet to reach it's limits so I have no need for a lengthy retooling process.

    Now many will try and argue that Tablets and Smartphones are not PC's, but then again these people have never heard of Pocket PC's a common term for Palm pilots and a limited line of handheld devices with various operating systems that brought the power of a computer to the palm of your hand, some even supported an add on that allowed them to be used as cell phones and this was eventually built into them giving rise to smart phones, which when you follow their history backwards past the iphone which made them popular to begin with despite being technologically inferior to other models already out on the market but were not as well known are just glorified pocket pc's with a built in cell phone, note, PC is still in it's name and all smartphones are literally just upgrades. Tablets are also not a new thing laptops used to have model lines that could become tablets and laptops are just another kind of PC much like Desktop. Modern Tablets however are just scaled up smart phones minus the phone, and as we already know and was previously stated smart phones are just Pocket PC's that can make phone calls, so that makes tablets just a scaled up Pocket PC, the PC moniker is still used.

    Apple users also need to get off their high horses, PC also talks about Apple products as Steve Jobs himself has said Macintosh's are PC's and any expert will tall you that the "Mac vs PC" commercials are actually "Mac vs Windows Vista" commercials while trying to make the people gullible enough to buy one feel special and entitled and had anyone cared to file a lawsuit it would have turned out much like the OSX 10.0.0.0 vs Linux lawsuits in which apple literally lost millions in lawsuit after lawsuit by knowingly selling an operating system that used a kernel or core component for those that don't know better that by law must be distributed for free. Quite literally the only change between OSX 10.0.0.1 and 10.0.0.0 is the Linux Kernal was replaced with a Unix Kernal so it could be legally sold.

    But for as long as computer devices that are intended for recreational AKA personal use are being made and sold the PC will never die.

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