The PC's fate hinges on tablets, but it's 2014 or bust

'Glimmers of hope,' says analyst, of industry rescue by more capable tablets

The downturn in the personal computer industry may be ready to reach rock bottom, where it could stabilize even as cheap tablets stay hot, an analyst said today.

In a piece published earlier this week on Techpinions (subscription required), Ben Bajarin of Creative Strategies theorized that there are, in fact, "glimmers of hope" for the PC business.

"It appears the PC market is stabilizing in the U.S., meaning that quarterly negative growth is lessening," wrote Bajarin. "What [the data] also shows is that tablet growth is also slowing in the U.S."

Bajarin cited numbers from industry researcher IDC and financial firm Morgan Stanley, figures which do show a flattening of the once dramatic growth gains by tablets and of the ongoing PC shipment contraction.

For example, IDC recently estimated that PC shipments will end 2013 on a -10% note, but anticipated that the historic decline would weaken in 2014 to -4% before steadying the following year.

The new normal for PC sales

Under those assumptions, IDC expected that the new normal for the PC industry will be approximately 300 million machines shipped annually, a far cry from the "Peak PC" of 2011, when computer makers ordered 364 million systems, but better than the swirl to the extinction drain of the last 24 months.

On the tablet side, IDC just reduced its forecasts, saying earlier this month that growth would slow from 53.5% in 2013 to 22.2% in 2014, and slump to single digits by 2017.

Bajarin acknowledged that the glimmering he saw was, for now, just that: A glimmer. It will take at least another six months, perhaps longer, for the image to develop.

"There are an estimated 180 million to 200 million four- and five-year-old PCs in use," said Bajarin in an interview this week. "We've seen a major increase in battery life for notebooks [this year], so if people are going to actually upgrade those PCs, it's got to happen next year. It should be a pretty big refresh cycle."

But if PC shipments do not pick up, that means people aren't using those older personal computers; instead they've turned to alternatives and may never look back.

Analysts figured that the upgrade cycle would occur in 2012, then switched their forecasts to 2013. But the upgrades failed to materialize in either year. "It hasn't happened," said Bajarin. "Last year, consumers held onto a huge number of old PCs."

They're doing so for a variety of reasons.

For many, their older PCs are "good enough," a term that strikes fear into the hearts of PC makers and Microsoft, whose Windows largely relies on new machines for its revenue. The old systems, even those running almost-outdated XP or the reputation-challenged Vista, continue to serve their often-limited functions like email, Web browsing and casual gaming. Realizing that, consumers don't see the point of upgrading a perfectly useful PC.

For others, the personal computer may be collecting dust because tasks it once performed have been poached by tablets and smartphones.

Tablet diversity

But blaming all tablets for the decline in personal computers is misguided, Bajarin argued. There are tablets and then there are tablets.

Like many industry analysts, Bajarin has wrestled with how to count tablets, how to categorize tablet subsets, and how to compare trends in tablets with those of PCs to see if the mobile, touch-based devices are the reason for the personal computer's decline.

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