Apocalypse Never: The PC Market In Perspective

The third-quarter sales figures are out from the usual suspects at Gartner and IDC, and they show (as was expected) a dip in sales from almost every major PC manufacturer in the US – even Apple, who have until now managed to continue selling more units despite an industry-wide slump.  This time, only ThinkPad manufacturer Lenovo and famed king of reliability ASUS managed to keep their heads above the waterline – and did so spectacularly, with Lenovo moving up to 4th place behind Apple in the US, and taking the number one spot worldwide away from HP.  Despite Lenovo’s successes, however, the industry as a whole declined for yet another quarter.  The question on many people’s minds is obvious: why?  Computers are faster and cheaper than ever, so why aren’t they selling as well?  As it turns out, it’s actually a fairly complex answer that can’t be easily boiled down to something pithy like “iPad sales,” no matter how hard some members of the tech press might desire to do so.

Certainly, the rise in ARM-based media consumption devices like smartphones and tablets plays a role.  As many consumers use their computers for little more than web browsing and keeping in contact over Facebook, a smartphone or tablet can easily replace a desktop or notebook computer for their uses.  While the use of these devices often depends on a computer to handle managing content and delivering updates, there is little need for that computer to be updated every two years, as the common logic used to run.

Therein, perhaps, lies the core reason for the drop in PC sales: most people simply don’t need new ones.  As a “tech guy,” I of course buy more computers than the average person.  Even I, however, haven’t met the traditional two-year replacement cycle for computers for the last few years.  My desktop is now approaching two years old and I have no intention of building a new one any time soon.  My MacBook Pro is a year old, and barring any more hardware failures, there won’t be any pressing need to replace it for some time to come.  Before it, I had my last laptop for two years, and could easily have held onto it longer if I didn’t essentially need a Mac for work.  Hell, my parents are still using a desktop built around a Core 2 Duo E6600 from 2006, and it has no difficulty keeping up with the workload they put it through.  Hardware has continued to improve as Moore’s Law always suggested it would, but new software simply doesn’t make good use of that hardware.  For a long time, multitasking and gaming were sufficient to drive adoption of new hardware by the general populace, but there are limits to how many applications one person will need to run at one time.  Nowadays, an 8GB DIMM of RAM runs less than $30, and there’s simply no way the average user will exceed 8GB of RAM usage during the daily operation of their machine.  A quad-core Ivy Bridge system will sit practically at idle while you browse the internet and type blog posts.  The same game consoles have been on the market for seven years, restricting how much power new games can effectively make use of.

Then, the impetus to replace a computer every two years has effectively disappeared.  While they’ve certainly continued to improve at a steady clip over the last several years, most people simply don’t need the power of new computers.  Intel and the major OEMs have, simply, become victims of their own success.  If a computer is reliable and powerful enough to continue meeting its owner’s needs for several years, they simply won’t buy a new one.  A decade ago, this was unthinkable: machines routinely shipped with 512MB (or often less) of RAM and inefficient, single-core CPUs.  Today, even a sub-$500 machine will ship with 4GB (or more) of RAM, a processor capable of processing four simultaneous threads, and even integrated graphics capable of running the latest games at low settings.  And there’s simply no way the average user will even come close to utilizing that kind of power.

Of course, there is another factor: the economy.  The global economy, for various reasons I won’t be getting into here and now, has been in a state of recession for years.  With that recession comes less discretionary spending from the middle class, and that discretionary spending has long been the foundation of the PC industry.  Having a computer is practically a basic necessity these days, but having the latest and greatest PC is a luxury fewer people can afford.  This actually tends to hit the mainstream brands the hardest – those who could afford to drop thousands on a maxed-out MacBook Pro and tens of thousands on a new Lexus every year can still do so, because they are so fantastically wealthy that they’re essentially untouchable by recession.  Middle- and low-income people, however, have to make careful budgeting decisions when times get tough, and a shiny new computer every year or two gets moved down the list compared to “functioning A/C,” “healthcare,” and “food.”  It’s a grim reality, but one that won’t be hanging over us forever – it never does.  It’s going to be a rough few years for companies like HP and Acer in the meantime, though.

So is this “the end of the PC era”?  No, of course not.  But it is a transitional period.  Companies in the PC space are finding new ways to add value to upgrading: new form factors, touch screen interfaces, 3G and LTE connectivity, better battery life, and higher-quality displays.  As much as Apple’s marketing team loves to talk of a “post-PC world,” it’s simply never going to happen.  A locked-down tablet is fine for checking Facebook or watching Doctor Who on Netflix, but until computers can read our minds and translate thoughts to paper, we’re going to need keyboards and mice for content creation; until ARM Holdings can squeeze petascale supercomputing into a 5W SoC, we’re going to need powerful desktops wired into the mains; until we all have 20/5 vision, we’re going to need screens bigger than 10 inches diagonal.  Besides, what is an iPad but a low-power touchscreen PC that you effectively rent from Apple?  So no, a slight decline in tradition PC sales does not indicate some sort of coming “Wintel Apocolypse” – though it may just indicate a shift in the wind.  I, for one, welcome our new Transformer overlords.

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