Sony (SNE +2.15%) just announced that it was spinning off its PC business to a private Japanese investment fund citing "drastic changes in the PC industry" as one reason.
The changes the company might have been referring to is the decline in PC shipments (and increase in tablet sales) over the last few years. However, one company is bucking the trend and actually shipping more PCs, along with tablets.
Is this enough to satisfy investors?
PCs down, tablets up
Figure 1 depicts the sales trends comparing PCs and tablets. The estimate is that by 2015 tablet shipments will have surpassed those of PCs. Tablet sales already are larger than those of portable PCs.
Source: IDC (worldwide quarterly tracker)
The move to divest its PC business might be part of Sony's strategy to reverse another trend: declining revenue and flat earnings. After the move, Sony plans to focus on its tablet and smartphone business. Long suffering investors should benefit after the dust settles and the trends continue.
iPad started it
Figure 2, year-over-year growth, shows the downward spiral for PCs began about when Apple (AAPL 3.40%) introduced the iPad in 2010.
Source: Gartner.
The iPad has been a great seller for Apple, moving up to the No. 2 revenue generating spot within the company, and sales have increased each year. A casual observer would have thought that the iPad would have affected PC offerings from Apple too. Not so, last year Mac shipments actually increased by 19%. In short, Apple appears to have bucked the trend.
What's next?
Apple might rest on its laurels. Since it appears (in spite of record iPhone shipments last quarter) that growth in its top product category is slowing. The company announced reduced guidance, which drove the stock price down by 8%.
What Apple needs to return to its high-growth days, is to execute successfully within an entirely new product or services category. Indications are that the company is investing in infrastructure and ramping up hiring of staff to develop a wearable device like a smart watch, which would have applications in the health care and fitness industries.
A rumor that has been around for years is that Apple is developing some type of TV system, which could disrupt the entertainment industry. A possible prelude to "finally cracking TV," as the late CEO Steve Jobs once claimed is that the company is reportedly expanding its Internet infrastructure to increase bandwidth and other performance features.
A third potential innovation for Apple is in a retail payment platform. The company may leverage its big advantage in hardware/software integration, along with customer information stored in its iTunes databases, to improve how people pay for items at a register. And Apple will get a piece of all the purchases.
If one or more of those rumors pans out, Apple may return to the glory days of double-digit growth. So you may want to stay put, just a little longer, to find out.
Foolish conclusion
Sony, on the other hand, sees the writing on the wall. The company is shedding its PC business as the industry continues to decline. It's a good move and investors will probably see a positive result down the road.
While iPad shipments are on the way up, Apple needs to develop a new product or services category to offset potential sluggish performance from the iPhone. You shouldn't bet against it.
