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The PC fights back: U.S. sales decline is slowing

Brad Chacos | July 16, 2013
Last week, the headlines screamed that computer shipments had plunged roughly 11 percent in the second quarter, after dropping a disastrous 14 percent the quarter before that. While it's hardly good news, we've known for a while that the rise of tablets, "good-enough computing," and (maybe, just maybe) a lackluster response to Windows 8's new-look interface have been bad for PC sales.

As I and many others have said before, tablets are a big part of the reason why PC sales are hurting. No, most people aren't replacing PCs outright with tablets, but people are delaying their purchase of new computers, satisfied with the base-level oomph that their slates provide. Chou reiterated that the practice is definitely occurring.

Here's the thing: Growth in the PC industry requires both sales to new customers in developing countries and regular upgrades by people who already own computers. If happy tablet users delay buying new PCs en masse, that'll put a big hurt on PC shipments. And what do you know! PC shipments have plummeted over the past two quarters (remember: compared year-over-year), and have been shrinking for more than a year.

But Mikako Kitagawa, principal analyst at Gartner, says the slim drop in U.S. figures during the second quarter may indicate that things are starting to stabilize.

"The U.S. industry is definitely the most advanced [in terms of tablet adoption]," says Kitagawa. "So the U.S. market might see some slowdown of tablets eating into the PC space."

We're not out of the woods yet
"But in other regions, [the loss of PC share to tablets] is going to continue quite a bit," Kitagawa continues.

And make no mistake: Even with a minimal quarter-to-quarter drop, the PC industry is still in the doldrums, especially on a global scale.

"Usually, you see a seasonality in PC shipments, where the first quarter is the lowest of the year, and every quarter after that should be a little bit higher, really peaking in the holiday season," says Chou. "[The second quarter] results thoroughly bucked the seasonal trend."

The light at the end of the tunnel
Indeed, both Gartner and IDC anticipate two to three years of continued decline in worldwidePC shipments. (Here's hoping the United States fares better.) But to put a somewhat optimistic spin on things, current estimates predict that the PC's decline over that time will be slight. The second-quarter results matched predictions from IDC and Gartner, and both Chou and Kitagawa say their firms anticipate that the worldwide sales slump will taper off to a low, single-digit decline for the rest of 2013.

The ship is still rocking, but not as hard. Queasy stomachs, take heart.

"Once the PC becomes a certain level of market size, shrinking into the size it's supposed to be alongside tablets, it's going to settle down and go back to more steady growth--not strong growth--going forward," says Kitagawa.

Chou agrees, saying he expects tablet growth to taper off starting in 2014 or 2015, and PC sales to stabilize. Kickstarting the PC market will take more than tablet saturation, however: "A lot of that will depend on things like pricing, and how well Windows 8.1 turns out--how comfortable people feel using that."


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